In the growing sustainability movement, startups seeking to rescue ugly produce and fight other food ... [+]
With the sustainability movement growing, startups seeking to rescue ugly produce and reduce food waste have become a hot buy for venture capital firms and other private investors.
FoodMaven—a four-year-old Colorado startup whose online marketplace helps farmers, meat processors and food distributors find a home for their ugly produce and other excess inventory that was previously destined for a landfill—is the latest example of that trend.
This week, it closed a $15.3 million funding round, and has now raised $22.4 million to date. Among FoodMaven’s investors are members of Walmart’s founding Walton family, and former Whole Foods co-CEO Walter Robb sits on its board.
“There’s definitely a growing understanding of a big problem that needs to be solved” when it comes to food waste, FoodMaven CEO Ben Deda said in an interview. “Forty percent of food supply in the U.S. ends up going to waste. There’s a good amount that’s completely good to use. There’s a lot of local products that can’t find distribution.”
With the growth in funding and Colorado proving the startup’s model works, FoodMaven plans to expand its service outside of that state, first to Dallas-Fort Worth in Texas. Nationwide expansion is the target, Deda said.
That makes sense. Among the more than 400 customers FoodMaven works with in the Colorado area, it distributes to customers with a nationwide footprint like Hilton and Bon Appétit Management Company, which runs food service for museums, universities and others.
FoodMaven is already in talks with those two companies about expanding to other markets, Deda said, adding that its customers pay on average 30% less than the market rate for food on its platform.
With timely last-mile delivery of perishable food critical to its success, a big part of FoodMaven’s growth relies on buying small food distributors, Deda said.
“Our strategy is growth through acquisitions,” he told me. “This is a data and logistics problem. We have an insufficient marketplace. We try to match up supply and demand. … Restaurants operate on slim margins. Anything to reduce cost is a win for them. Suppliers get rescued revenue.”
FoodMaven is just one in the long list of food-waste fighters of different kinds. Startups in the space last year raised a record $224 million combined in private investment in the U.S. via a record 30-plus deals, according to nonprofit group ReFED’s analysis of data provided by Crunchbase. As of November this year, it has tracked another 14 deals, raising $63 million in total.
Other startups include Apeel Sciences and Hazel Technologies, which seek to extend the shelf life of produce, and Imperfect Foods and Misfits Market, which sell ugly produce on the cheap directly to consumers. There are also startups converting food scraps to fertilizers or turning household waste to jet fuels.
About $220 billion a year is spent in the U.S. on growing, processing, transporting and disposing food that’s never eaten, according to ReFED. USDA, which estimates food waste totals 30% to 40% of the country’s food supply, targets cutting U.S. food waste by 50% by 2030.
Globally, three billion tons of food—one-third of all food produced for human consumption—is lost or wasted, according to the UN Food And Agriculture Organization. Food loss and waste total about $680 billion in industrialized countries, more than double the $310 billion in developing countries, FAO said.
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