Food waste startups have raised at least $125 million in the first 10 months of 2018, according to ReFED, the nonprofit dedicated to decreasing the $218 billion of food waste in the United States.
A new report from ReFED also revealed that grant funding from foundations reached $134 million in the first three quarters of 2016, increasing 70% over five years.
“We’ve seen tremendous momentum around food waste reduction,” Alexandria Coari, ReFED’s capital & innovation director, told AgFunderNews. “Consumer awareness has increased, major food businesses have made commitments to food waste reduction, sound public policy continues to emerge, and, as shown by this report, investment in food waste solutions has increased significantly.”
The report included a special section on foundation funding, a key component for the reduction of food waste according to ReFED, which estimates that $290 million of the $1.8 billion annual total investment needed to reduce US food waste by 20% should come from philanthropic funding.
“Philanthropic funding, especially from foundations, continues to play a critical role in supporting food waste reduction and innovation,” reads the report. “Since the establishment of ReFED’s foundation funding baseline in 2012, food waste funding picked up speed with the number of individual funders, recipients, and grants growing at an average yearly rate of 22%, 15%, and 21%, respectively.”
Top foundation funders include The Rockefeller Foundation via their $130 million YieldWise Initiative and The Walmart Foundation. An example of strong public funding was made by CalRecycle, a branch of California’s Environmental Protection Agency, which granted $100 million in climate investments since 2014, including $10 million to food waste prevention and rescue grantees since 2016.
Foundation funding generally remains focused on making grants, versus using impact investment-style mechanisms like PRIs or MRIs. While average grant size hovered around $30,000 between 2012-2015, this figure increased significantly to $56,000 YTD 3Q16.
Approximately $20 million of foundation funding was direct funding in the form of 355 grants and 261 unique funders with an average grant size of $56,000, while $114 million was indirect funding, or a portion of general funding given to food banks and similar social enterprises.
Startups: a Necessary Part of the Solution
The report shows food startups are continuing to develop innovative solutions that redefine how efficiently and effectively the world is able to reduce food waste.
The report references that US startups collectively raised $125 million in funding in the first 10 months of 2018 and fall into one (or more) of the 27 prevention, recovery and recycling solution categories identified in the Roadmap to Reduce US Food Waste. The deals included are as follow.
- WISErg – $19.2m, January 2018
- FoodMaven – $8.6m, January 2018
- Bluecart – $5m, April 2018
- California Safe Soil – $1.4m, April 2018
- AgShift – $2m, April 2018
- Apeel Sciences – $70m, July 3018
- Full Harvest – $8.5m, August 2018
- Goodr – $1.1m, August 2018
- TeleSense – $6.5m, August 2018
- ReGrained – $2.5m, September 2018
- Ripe.io – $2.4m, September 2018
- Wasteless – $2m, October 2018
- Spoiler Alert – $N/A
- Imperfect Produce – $N/A
Another food waste-related deal captured by AgFunder Research is Hazel Technologies, which raised $3 million in Series A funding in March.
Outside of the US, Chinova Bioworks, a food tech startup with a novel food preservative and an AgFunder portfolio company, raised $2 million in seed funding in August. There’s also an argument that AgriProtein, the insect farming group based out of the UK and South Africa, is also fighting food waste, by feeding it to black soldier fly for animal feed. AgriProtein raised $105 million in late-stage funding in June.
“These for-profit and nonprofit entrepreneurs are turning a former waste stream into a form of social and economic value,” Coari said. “Businesses and investors can find more than 450 food waste innovators in ReFED’s Innovator Database.”
She added that while venture capitalists see lots of technologies that can increase food production by 5 or 10%, by fixing the food waste problem, the food supply could increase by 30% or 40% at a cheaper cost. ReFED’s hope is that reports like this help more investors recognize the best return on investment is finding clever solutions to improving food system efficiency.
ReFED works with investors, innovators, food businesses, and policymakers to implement solutions. As food waste has become a global priority, ReFED has observed “unprecedented growth” in the number of new and innovative products and services that turn wasted food into jobs, hunger relief and environmental benefits.
“While the food recovery hierarchy developed by the Environmental Protection Agency prioritizes food waste prevention, solutions in this category are only beginning to receive significant funding—an exciting development as prevention solutions have the potential to yield the greatest economic and environmental value per dollar invested,” Coari said. “As foundation funding of prevention solutions begins to grow, venture capital and impact investment dollars can also provide vital support to the sector in the years to come.”
“The capital & innovation team, who authored the report, serves as the leading source of data and insights on food waste related activity and runs unique programs aimed at catalyzing the more than $18 billion investment needed to create $100 billion in societal economic value,” Alexandria Coari, ReFED’s capital & innovation director, told AgFunderNews.
As well as collecting data and insights around the space, ReFED also acts as a strategic advisor to the Kroger Co Foundation’s $10 million Zero Hunger/Zero Waste Innovation Fund, manages 450+ food waste solution providers in a living innovator database, facilitates innovation demo days and workshops, and leads a food waste funder initiative.