Spoiler Alert, a software and professional services startup that helps food businesses manage unsold inventory and reduce food waste, has raised a strategic round of funding from Maersk Growth, the venture arm of the world’s largest transporter of food.
Early-stage food and ag investors Valley Oak Investments and food system-focused investor Acre Venture Partners also participated in the round, as well as multiple undisclosed investors. The bridge round follows an earlier $2.5 million seed round in 2016 and precedes an expected Series A in 2019.
This marks the seventh investment for Maersk Growth, which has invested in grain monitoring tech Telesense, Blockchain of Food startup Ripe.io, Sensor Transport and LoadSmart alongside two more that are as yet undisclosed Peter Jorgensen, venture partner, told AgFunderNews.
The company has also launched an accelerator program called FoodTrack to focus on technologies combatting food waste in particular. FoodTrack is set to announce the participating companies for its second cohort tomorrow on AgFunderNews and plans to launch a third cohort in the coming months.
“We transport 30% of food and perishables in containers globally. Around the world, 75% of food waste happens up to the point of the consumer, and that is different from country to country but the vast majority of this is actually a supply chain issue,” Jorgensen told AgFunderNews.
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Maersk Investment Process
Maersk has received 850 pitch decks so far this year, according to Jorgensen who says the company’s investment initiative gives it the chance to make a positive difference as a large corporate, not just a provider of funds.
“We have representation in 126 countries and we have a majority of big food companies as our customers. At Maersk, we believe that we can provide quite a lot of value and benefit as a strategic partner to startups, so we need to see how we will be able to mobilize what we call our rocket fuel as a strategic,” explains Jorgensen. “If we cannot apply our strengths, then we are probably not an ideal investor for the startup. It needs to be something where we can see that we are adding value.”
While Jorgensen isn’t ruling out any investment categories, anything focused on pre-harvest in the food supply chain system is likely beyond focus.
“What we are trying to do is build the next wave of supply chain technology and innovation. We want to be the global integrator of container logistics at sea and overland. If you look at activities where we are today and then broaden it out a bit beyond the initial core, that is where we are looking, at the wider periphery.”
Eliciting direct customer feedback is a key component of Maersk’s due diligence process, according to Jorgensen who said that hearing from Spoiler Alert client Sysco was a major selling point before investing in the startup.
“We interviewed Sysco as a key customer of Spoiler Alert and the feedback and the praise that we got for the team and the solution is something that as a big B2B industry player, we understand how difficult it is to get anyone like ourselves as a customer and when you can persuade companies like Sysco you have something.”
Expanding Spoiler Alert
“These proceeds are heavily focused on building out our team to accelerate product development, which means heavy investment on our product and engineering fronts, as well as our customer and sales teams,” CEO Ricky Ashenfelter told AgFunderNews. “Right now, we are heavily focused on building out our management team. We are bringing in a director of product, a director of customer success, and looking to more than double our engineering team and then add additional headcount on the business development and customer success sides.”
The overall fundraising process was smooth sailing for Ashenfelter, who describes the round as less about raising funds and more about getting Maersk involved. The companies began discussions during Summer 2018 and as things progressed, he realized fairly quickly that there was a great opportunity for mutual benefit.
“We are looking forward to having them as part of our board because I think they bring tremendous perspective and expertise on logistics and supply chain that our existing team will benefit from,” Ashenfelter explains. “They bring tremendous connections through business development due to all of the food companies that use their services.”
With a new injection of funds to make key hires, the Boston-based company is posturing itself for a Series A raise in 2019 where it will focus on investors that are strong in the enterprise software and supply chain aspects of Spoiler Alert’s model.
How Spoiler Alert Helps Fight Food Waste
Spoiler Alert works with operators of food distribution centers and partners with companies through a software and services model that enables item-level tracking and reporting of food recovery and waste diversion activities, while facilitating food donations, discounted sales, and organics recycling to local, regional, and national networks of outlets.
The company recently debuted a new inventory module that provides greater integration with a food company’s enterprise resource planning and warehouse management systems. Finding a way to integrate with companies in an industry that isn’t always the most tech-forward has been a high priority for Ashenfelter and the team.
“We also offer a cloud-based solution that gives organizations item-level insight into different inventory indicators that is intended to help them reduce the amount of product they are wasting in the first place and to get ahead before it becomes landfill-bound or low-value bound,” Ashenfelter adds.
Earlier this year, Spoiler Alert announced a successful trial with meal-kit delivery company HelloFresh, where the startup helped HelloFresh cut food waste in its supply chain by 65%.
Born out of MIT in 2015 and named to the 2018 Top Green Providers list by Food Logistics magazine, Spoiler Alert already lists major food distributor Sysco and meal delivery service HelloFresh as customers as well as an undisclosed group of retailers. The company specifically targets large companies and distribution centers but is product category agnostic.
“We target anywhere there is bulk aggregation of finished goods. Perishable products have the highest need for outlets of movement because they have a ticking time clock. We don’t do any work with prepared foods or food service and we also don’t work in grocery stores. It’s about allowing our team to focus in on the niche application of the product and attempting to limit or mitigate behavior changes as part of the equation like smaller volumes and workforces that have high turnover rates. We felt at least at our stage we could have a bigger impact upstream.”