August 30, 2018

Swedish investment firm Kinnevik has led a $12 million Series A for Karma, a tech company working to reduce food waste across Europe. Additional investors in the round, which brings the company’s total funding to $18 million,  include Bessemer Venture Partners, the oldest venture capital firm in the United States; the Stockholm-based global appliance manufacturer Electrolux; and existing investor e.ventures, among others.

Founded by Hjalmar Ståhlberg Nordegren, Ludvig Berling, Mattis Larsson and Elsa Bernadotte, and officially launched in 2016, Karma is a virtual marketplace that allows restaurants and food retailers to sell unsold food at a discount direct to consumers, who come pick up the food on-site.

“We are delighted to announce this investment which will accelerate our mission to reduce food waste globally,” said Karma CEO and Co-Founder, Hjalmar Ståhlberg Nordegren. “We have known the team at Kinnevik for a long time, and they have the long-term perspective and operational expertise that we were looking for in partners. We are also delighted to be working with two new top-tier partners in Bessemer and Electrolux who bring unparalleled expertise in their respective fields”

Every year, food valued at $1.2 trillion is wasted – of this, 30 percent is lost from restaurants and retailers. To date, Karna has helped 1,500 restaurants, grocery stores, hotels, cafes, and bakeries sell leftover food to 350,000 users of the Karma app. Since its launch in Sweden, Karma has partnered with some of the country’s largest supermarkets, top-tier restaurants, and well-known brands including Sodexo, Radisson, and Scandic Hotels.

“Karma turns would-be wasted product into bargains for customers and profit for merchants – this makes way too much sense not to exist in this world,” said Kent Bennett, partner at Bessemer Venture Partners. “Beyond the product today, we think owning the communication links between customers and their favorite local merchants could have enormous long-term value.”

Building on the base of this success, Karna was able to expand into London in February of this year, and is already tied-in with more than 400 restaurants city-wide including Aubaine, Polpo, Caravan, K10, Taylor St Barista’s, Ned’s Noodle Bar, and Detox Kitchen.

“While the Karma team is really going after a good cause, we share a very fundamental belief with the founders: to have a lasting and meaningful impact … and have an attractive business model,” said Jonathan Becker, partner eventures. “We couldn’t be more proud of what Hjalmar, Elsa, Ludvig, Mattis and the whole team have achieved in just a few years, and can’t wait to see what they do next.”

Realized Potential

Food loss throughout the supply chain in the EU is costing 60 billion euro per year, according to Paul Bosch, food and agri analyst at Rabobank Food and Agribusiness Research.

While it’s true that food waste presents an enormous and complex social and economic scenario, there has been a relatively recent shift in the collective view of the problem. Investors, particularly agtech and social impact investors have realized the potential for not only social benefit, but the $2 billion market opportunity that exists in developing solutions to this challenge.

Armed with a business case for action, agtech investors, innovators, and entrepreneurs are taking the lead, collaborating to fund and develop groundbreaking solutions to the agricultural and food waste challenge.

In October of last year, UK-based Winnow Solutions, a tech developer of smart solutions that help commercial kitchens reduce food waste, announced it secured its latest US$7.4 million growth capital round led by Circularity Capital, Mustard Seed, and D-Ax. This round followed an oversubscribed US$3.3 million Series A for the company led by Mustard Seed and D’Ax in January of the previous year.

More recently, within the past few weeks, Full Harvest, an agtech platform providing a new food supply chain model to mitigate waste through a B2B marketplace providing end-to-end logistics solutions for surplus and imperfect food, announced it closed on $8.5 million in funding led by Spark Capital, and including new investors Cultivian Sandbox Ventures, Jenny Fleiss, founder of Rent the Runway, Jon Scherr of CircleUp, and Adam Seplain of Marc.vc. Previous investors, including Wireframe Ventures, also joined the round.

-Lynda Kiernan 

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.