Over the past few years, companies across the world have become more conscious of their environmental impact. In October 2015, new legislation required all large shops in England to charge 5p for single-use carrier bags. More recently, public outcry about plastics contaminating the ocean has led to a range of restaurants and retailers phasing out plastic straws, including fast-food giant McDonald’s. With an increasing amount of investment being pumped into food waste startups, could there be a change in focus?
The alarming impact of food waste has been public knowledge for over a decade. In 2007, the Waste and Resources Action Programme (WRAP) released a research report on The Food We Waste, and found that the UK bins around a third of all purchased food. In 2013, the UN found food waste to be so harmful for the environment that, if it were treated as its own country, it would rank as the third largest emitter of greenhouse gases, after the US and China.
What measures are being taken?
The UK’s largest food retailers have indeed made some attempts to reduce their waste, including Tesco, Morrisons and Sainsbury’s. But adjustments on a corporate scale are not easy to make, affecting both logistical setups and profit margins. The House of Lords’ 2014 Food Waste Prevention report notes this pressure, nevertheless insisting retailers ‘must ensure that incentives and promotions offered to consumers do not transfer waste from the store to the household’.
However, there is always room for improvement and large retailers may only go so far – are they willing to make large sacrifices to their sales numbers in the noble name of environmental sustainability? Only time will tell.
Fortunately, the resulting grey area opens up a viable space for smaller and more agile companies to make some headway with food waste prevention and management. We take a closer look at some of the companies looking to make a difference.
Who’s stepping up to the plate?
Waste prevention companies
One of these companies is OLIO, a company that has developed a waste-reducing app that allows businesses and individuals to list surplus food items for neighbours to purchase or pick up for free.
Just last week, OLIO announced a £4.54m fundraising round to finance job creation. Contributions were made by Octopus Ventures, Accel, Quadia, Silvergate Investments 2, Bran Investments, with participation from business angels. This is the third round secured by OLIO, taking their total investments to £7.35m since inception in 2015, with a pre-money valuation of £9.6m.
TakeStock provides a similar e-commerce service, but is aimed at the SMEs in the food industry, allowing suppliers to buy and sell surplus stock. TakeStock are at a less developed stage than OLIO with just £300k in funding, but have also garnered some positive media attention. In August of 2017, TakeStock received praise for its role in helping redistribute 25,000 fish meals to help feed more than 4,000 people across Manchester.
Winnow provides waste monitoring technology aimed at the hospitality sector, identifying where costs can be saved in commercial kitchens . Winnow attended the Upscale accelerator in early 2018, and have secured more funds than any other food waste prevention company, with a massive £11.5m of investment. Circularity Capital and Mustard Seed are two of its biggest investors, and they count IKEA, Hilton and Novotel as some of their clients.
Waste management companies
Contrastingly, companies such as Biofuel Evolution, Argent Energy and Brocklesby take advantage of existing food waste to produce biofuels. Some of these companies have been around for a while; Brocklesby was first registered in 1997 and only began scaling in 2010. But Biofuel Evolution is a lot younger, registered in 2016 and with no fundraising, despite attending the Entrepreneur Accelerator in 2017. Argent Energy was acquired by Swires for £80m in 2013, making it one of just two clean energy food waste startups to successfully exit, alongside RUR3 Environmental.
Entocycle and Entomics use food waste to farm insects for animal feed, providing a more sustainable and scalable alternative to traditional composting solutions. The insects, primarily the larvae of black soldier flies, convert low value biomass in to higher value insect mass and can be used for animal feed in just a week. Entocycle has received £205k from Innovate UK, with the latest instalment of £16.8k announced just last month. This joint project with bug breeder Beta Bugs aims to develop a non-GM technique to quickly evolve new strains of black soldier flies that are easier and cheaper to farm.
Just one year younger than Entocycle, Entomics was registered in 2015 and has received over £470k from Innovate UK, a £60k grant from Agri-Tech Growth Fund and £370k in investment. The latest grant is being used to improve product development pipelines and prepare them for commercialisation. Their latest pre-money valuation stands at £2.72m.
What’s the outlook?
Fundraising in to food waste startups has been steadily increasing since 2014, when there was only one fundraising worth £75k. In 2017 there were six rounds totalling £7.6m. Just 12 relevant companies are currently being tracked on Beauhurst, and only three businesses, Leafield Feeds, Argent Energy, and RUR3 Environmental, all waste management services, have a had a successful exit. This is clearly an emerging market with lots of potential, especially if large corporations and wider society don’t up their game and reduce their waste.
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