In its third food waste-related investment since September, last month, Maersk Growth participated in a funding round for Spoiler Alert, which makes software for food companies that provides real-time data to help manage unsold inventory.
Joining other ag-focused venture capital firms including Valley Oak Investments and Acre Venture Partners, the investment by the growth unit of Maersk, a global shipping company, is part of a wider effort to find new areas of growth and become an end-to-end logistics provider.
In September, the unit participated in a $6.5 million Series A funding round for TeleSense, which offers hardware and software packages designed to reduce food waste and a $2.4 million seed round for food-focused blockchain software provider Ripe Technology.
Boston-headquartered Spoiler Alert was founded by MIT graduates in 2015 and offers software that helps manage unsold inventory by enabling item-level tracking and reporting of food recovery and waste-diversion activities. The company also maintains local-, regional- and national-level networks of off-take options to help facilitate discount retail, recycling and donation of surplus food.
Selling largely to food manufacturers, distributors and retailers, Spoiler Alert’s existing customers have included meal-kit provider Hello Fresh and Sysco, the multinational foodservice company.
The size of Maersk Growth’s investment in Spoiler Alert was undisclosed.
Peter Votkjaer Jorgensen, a venture partner at Maersk Growth, told Agri Investor the unit generally looks to make equity investments of between about 9 and 13 percent.
Getting through to the C suite
As was the case with each of its two previous food-waste-related investments, Jorgensen said Spoiler Alert’s ability to attract consequential food companies to its platform was part of what made the company attractive.
“When you are investing in early-stage companies, you don’t have seven years of P&L and detailed forecasting, you have to rely on a few key metrics,” Jorgensen said in explaining the key role that consultation with Spoiler Alert’s existing customers played in Maersk Growth’s decision to invest. “As a big corporate, we know how difficult it is to get through to the C suite and the decision-makers in such big companies. The fact they have achieved that, tells you something about their tenacity.”
Because some degree of surplus food is inevitable, Jorgensen said he believes it best to focus on measures, such as Spoiler Alert’s software, that can aim to reduce, rather than completely eliminate, wasted food.
Currently, Jorgensen explained, there is a secondary market for food that has an expiration date approaching but may be viable in other markets or channels. Though most food manufacturers, distributors and retailers donate a certain portion of unsold inventory for uses such as feeding the hungry or supplying prisons, many are often reluctant to donate to local discount retail channels that could threaten their market position.
By utilizing Spoiler Alert’s software, Jorgensen said, companies can continue to pursue the public relations benefit of donating a portion of its excess food free from such competition concerns, while recovering some of the value otherwise lost through donated food. Because most food companies and distributors often operate on very thin profit margins, Jorgensen said, even such small degrees of optimization possible through Spoiler Alert’s software can have a significant impact on a user’s bottom line.
“You don’t want to put anything into landfills,” Jorgensen said. “Whatever goes into landfills, we should try to move up to donation. A big chunk of what goes to donation, we should bring up to discounted sales.”
Under the terms of its investment, Jorgensen said, Maersk does not currently have access to the data created by use of Spoiler Alert’s platform, though its position on Spoiler Alert’s board does give the company some visibility regarding the broad trends revealed through use of the platform.
Looking ahead, Jorgensen said Spoiler Alert’s efforts to establish a “curated marketplace” matching companies looking to reduce donations and contributions to landfills and varied consumer groups and recycling options could expand beyond national borders.
“As other technologies become better – in terms of packaging and preserving, (where we may also find our way into investing ) – maybe the sirloin [an example of food otherwise wasted], instead of selling it in Detroit, maybe I can send it to Lagos, in Nigeria.”
Jorgensen said Maersk Growth is likely to finalize at least one more food waste-related investment this year and look to replicate that same pace of food waste investment in 2019.