A nutrition-driven food discovery app has caught the attention of established agriculture technology investor Finistere Ventures in what could be described as a break away from the venture capital firm’s usual stomping ground.
ShopWell Labs, the maker of the US-based mobile application, has raised $3.4 million in early stage funding in a round led by Finistere, and including Fairhaven Capital, a tech-focused VC firm, Munich Venture Partners, a clean tech VC, S2G Ventures, a food and agri-focused firm, and ATA Ventures, a firm with a digital delivery focus.
Hoping to help consumers make smarter food choices, ShopWell calculates personalized scores for food items, and makes recommendations, including “better for you” alternatives, essentially giving consumers their own personalized nutrition coach, according to a press release.
It already has 2 million users and evaluates over 300,000 items which can be found by consumers via a barcode scan or product search. With plans to partner with retail outlets on their online stores, to help customers narrow their selection and meet their own personal nutrition goals, the app is pursuing a growing trend for consumers to take more control of what they eat.
But how did Finistere, known for investments into life sciences and biotechnology solutions for the agriculture sector, come to invest in this consumer-facing mobile app?
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“One of the challenges for companies close to the input side of production in the food chain is that it’s hard to get a good sense of the pull through from customers. Consumers are voicing a pretty dramatic change in the marketplace for higher quality and higher nutrition foods. We see that in terms of an increase in organic sales, for example. So we have been very sensitive to that change,” Spencer Maughan, partner at the firm, told AgFunderNews. “We’ve also taken into account healthcare incentive schemes such as Obamacare, where consumers are incentivized to improve their nutritional intake. Plus we have partnerships with food and drink companies like PepsiCo, so it seemed sensible to really analyze the sector and find a rich data platform that interfaces with consumers, to get insights into where demand for crops will be going.”
Free for consumers, the app’s chief executive, Dr Elliot Grant, has started conversations with five major food retailers about selling them anonymous data insights into what consumers are looking at in their stores, and how popular their products are compared to others. If, and when, ShopWell is integrated into retailers’ websites, it will be able to offer more detailed analytics into what consumers are actually buying, not just what they are looking at.
While clearly this is data that are of benefit to retailers and food companies, it could also have a huge impact on the activities of food producers and the technologies around food production, argued Maughan.
“There is so much crowdsourcing in the sharing economy and a democratization of value chains, that this really could be something that directly links people, through software, to other parts of the value chain, to influence what products are created from the ground up,” he said.
Grant’s motivation meanwhile, sits very firmly in the desire to help consumers eat healthier. With one-third of US adults already obese, and predictions that one in three adults will have diabetes by 2050, he argues that the US is in the middle of a diet-related health crisis. “Even if we convince one or two people to change their habits and eat more protein or less processed food, that’s a success,” he told AgFunderNews.
Grant also believes that the recent trend for alternative protein food products — which saw pre-revenue Impossible Foods raise a whopping $108 million in Series D funding last week — should fit well with his thesis. “We really see ourselves as a means for shoppers to discover healthier alternative and new products on the market, such as plant-based proteins, that they might not have come across before.”
The need to help food companies better understand their consumer base is another key focus for Grant. “Food companies don’t often hear back from consumers, and even the higher quality research firms don’t have an audience of shoppers. So when I acquired ShopWell, I really saw the potential to create an amazing audience of shoppers to give feedback about food and providing food companies with passive data, or the ability to run surveys.”
So where next for ShopWell?
Internationalization is not a short term goal. The US already provides a huge market with a large number of people with dietary complaints in need of the service, said Grant. If and when it does expand overseas, it will start with English-speaking countries first, but it’s not an easy expansion, as each country has its own nutritional guidelines and regulation, he noted.
With this week’s funding, which takes the company’s total fundraising efforts to $11.4 million, ShopWell will increase investment in partnerships with retailers, food manufacturers, and other key members of the food system. At some stage, this could include partnering with recipe providers, according to Grant.
This latest round reflects a new start for ShopWell, which was first founded by IDEO in Palo Alto, a design and innovation consulting firm. Seeing that the timing was right to bring this technology to the bigger market, Grant acquired the assets of ShopWell through his existing company HarvestMark, a fresh food traceability platform, in 2013.
HarvestMark was sold to Trimble Navigation earlier this year when Grant spun out ShopWell into a separate company in order to focus on his new venture.
Finistere made the investment out of its $150 million Fund II, which launched in January.
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