Capital Providers
Stakeholder Recommendations
Capital Providers
Stakeholder RECOMMENDATIONS
Capital Providers
Summary
In the fight against food waste, Capital Providers play a critical role in funding the development and adoption of food waste solutions – many of which have a strong potential for investment returns, in addition to their environmental and social benefits. In fact, ReFED estimates that an annual investment of $18 billion over the next ten years can not only divert 56 million tons of food from being wasted each year, but it would result in $78 billion in annual net economic benefit – a five-to-one return. Plus, every year, it would reduce greenhouse gas emissions by 113 million metric tons, save six trillion gallons of water, and recover the equivalent of four billion meals for those in need. Over ten years, it would create 60,000 jobs.
Effective action against food waste requires a smart matching of the correct type of capital with the appropriate opportunity, and in many cases, a blended finance model integrating multiple types of capital is required to fund food waste solutions from conception to adoption. Of that $18 billion annual investment, ReFED estimates that $5 billion should come from catalytic sources with the patience and risk-tolerance to unlock impact – thereby having a multiplier effect that can stimulate larger amounts of capital from more traditional sources, overcome system-level barriers, and de-risk new innovations.
But no matter what your funding goals are, there are opportunities for you in food waste.
$18B
Annual InvestmentTypes of Capital
Public
Government Project Finance - $2.3B
Tax Incentives - $105.8M
Government Grants - $2.4B
Philanthropic
Non-Government Grants - $1.3B
Impact-First Investments - $1.0B
Private
Venture Capital - $1.2B
Private Equity - $1.1B
Corporate Finance & Spending - $7.2B
Commercial Project Finance - $1.6B
Working with ReFED
ReFED offers subject matter expertise on all aspects of food waste, including a deep understanding of the financing opportunities associated with developing and scaling food waste solutions. We offer a range of resources designed to help Capital Providers like you at every stage of their funding journeys – whether you’re an experienced food waste investor or just starting to explore the space.
Data and Solutions
The ReFED Insights Engine is the most comprehensive resource on food waste available. It’s a free, online tool comprised of data from more than 50 different datasets, overlaid with ReFED’s analytics to highlight where and why food waste occurs most frequently, and what are the most effective solutions to target it. You can also use the tool to identify solution providers to fund; quantify the environmental and social impact of investing in solutions; and more.
Learn MoreFood Waste Capital Tracker
A new tool in the ReFED Insights Engine, the Capital Tracker offers a deep-dive look at private capital food waste investments over the last ten years – from industry-wide trends to deal-level details. Through an extensive analysis of investment data sourced from PitchBook, ReFED has created a first-of-its-kind platform to support capital providers and solution providers in developing food waste funding strategies.
Learn MoreJoin the Food Waste Funder Circle
Designed for private investors and public and philanthropic funders interested in using their capital to solve food waste challenges, the Food Waste Funder Circle offers regular programming about investing in food waste innovations; deal flow reports and pitches from solution providers that are actively fundraising; and opportunities to work with like-minded funders on industry challenges.
Learn MoreJoin the Food Waste Action Network
The Food Waste Action Network is a space designed to inspire collaboration between individuals and organizations from across the food system and from a diverse set of backgrounds. Through member networking, demo days, partner events, and more, join with other FWAN members in creating a sustainable, resilient, and inclusive food system.
Learn MoreCatalytic Grant Fund
The ReFED Catalytic Grant Fund is a new initiative designed to provide recoverable and non-recoverable grants to for-profit companies, nonprofit organizations, and other initiatives across the food waste solution spectrum.
Learn MoreCapital & Innovation Market Update
A monthly report on news, insights, and trends in food waste activity and funding for capital providers and solution providers of all types, ReFED’s Capital & Innovation Market Update is an indispensable resource for anyone serious about funding the food waste space.
Learn MoreAreas to Fund and Support
To help funders understand how the particular type of capital at their disposal may be deployed to maximize impact in the food waste space, ReFED conducted a comprehensive assessment of the financing opportunities associated with developing and scaling dozens of food waste solutions, including the costs and benefits by stakeholder type, potential return on investment, impacts, and more.
Learn MoreAdvisory Services
The food waste landscape offers a range of opportunities for investors, and ReFED regularly supports food businesses, capital providers, tech companies, and others through customized advisory services to develop investment strategies, support due diligence, and design programs that help them achieve their unique goals.
Learn MoreDevelop Your Funding Strategy
Food Waste Capital Tracker
The Capital Tracker is the newest tool in the ReFED Insights Engine, providing an in-depth look at private food waste funding activity (venture capital, private equity, and M&A) over the last ten years, including current and historic deal-level investment data and analyses of sector trends – all presented in a variety of customizable, interactive views.
Sign up for our Capital & Innovation Market Update Monthly Newsletter
A monthly report on news, insights, and trends in food waste activity and funding for capital providers and solution providers of all types, ReFED’s Capital & Innovation Market Update is an indispensable resource for anyone serious about investing in the food waste space.
Capital & Innovation Resources
The ReFED Capital & Innovation Market Update | September 2023
A monthly report on news, insights, and trends in food waste activity and funding for capital providers and solution providers of all types:
ReFED Capital Innovation & Market Update | September 2022
The ReFED Capital & Innovation Market Update | August 2022
The ReFED Capital & Innovation Market Update | July 2022
The ReFED Capital & Innovation Market Update | April 2022
The ReFED Capital & Innovation Market Update | February 2022
The ReFED Capital & Innovation Market Update | January 2022
Events
Coming Soon
Funding Needs By Capital Type
Capital of all types is needed to advance and scale solutions to reach food waste reduction goals, but funders don’t always know where their money can make the most impact. Below, we have analyzed the role of nine different capital types in supporting food waste reduction – within each capital type, we’ve highlighted the financing opportunities associated with the seven key action areas from our Roadmap to 2030, as well as the specific investment needed to fund each solution. (The Solutions Database in the ReFED Insights Engine also shows funding required by capital type.)
Please Note: A particular financing need may be met from a variety of sources. As such, these estimates and funding mix recommendations are only approximations of the scale of resources needed.
Government Grants
Solutions
Needed
Government grants are considered to be concessionary, philanthropic capital at the federal, state, and/or local level that can support initiatives often lacking a market-based application (i.e., that lack a profit motive) or do not yield direct, monetizable benefits (i.e., longer-term projects with higher positive externalities, such as consumer education programs). This funding may play the role of “first capital in” for solutions that are perceived to be high risk. Government grant programs can be highly impactful when funding nonprofit and for-profit solutions that support the public good.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Avoid over-production, then harvest as much as possible. For wild-caught products, source only what is needed.
Financing Opportunity
This capital type can be beneficial in kick-starting the startup costs of organizations working to ensure that what is grown is utilized to its highest and best purpose. Government grants have previously assisted initiatives focused on creating markets for imperfect produce; this will likely continue, as others form and incentives need to be provided to encourage producers to harvest produce that would otherwise be left behind, which often requires additional picking and packing costs. Additionally, program-specific government grant funding can aid in the ongoing costs associated with on-farm gleaning and donation efforts.
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Leverage technology to create smart systems that help efficiently move products to maximize freshness and selling time.
Financing Opportunity
Government grants can act as catalytic, risk-taking capital ahead of more traditional investors, especially in the earlier stages of product development and adoption.
Refine Product Management
Solutions
Needed
Solutions
Overview
Align purchases with sales as closely as possible and find secondary outlets for surplus. Build out systems and processes for optimal on-site handling.
Financing Opportunity
Government grants can act as catalytic, risk-taking capital ahead of more traditional investors, especially in the earlier stages of product development. Additionally, for a solution such as Waste Tracking, which requires upfront hardware and software costs, local government programs can provide incentives to spur adoption by smaller foodservice operators.
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Design facilities, operations and menus to make as much of each product as possible. Upcycle surplus and byproducts into food products.
Financing Opportunity
Government grants can act as catalytic, risk-taking capital ahead of more traditional investors, especially in the earlier stages of product development, R&D and pilot projects. In the case of Manufacturing Line Optimization, government grants can help reduce the upfront costs (e.g., costs related to service disruptions, capital expenditures, etc.) associated with the change-over of operations, particularly for small and medium enterprises.
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Drive consumers towards better food management and less waste by creating shopping, cooking, and eating environments that promote those behaviors. Shift culture to place more value on food and reduce waste.
Financing Opportunity
Despite this being one of the most impactful action areas to fight food waste, the associated solutions (e.g., Consumer Education Campaigns, K-12 Lunch Improvements) can be harder to fund by more traditional sources of capital, since the return on investment is mostly derived from societal good and lacks a direct financial return. Especially for those solutions that drive the most impact but require a significant investment to work effectively at changing behaviors, government sources may be the most appropriate capital provider. That said, governments could invest in partnership with private stakeholders, including philanthropic funders, in consumer education efforts that increase awareness, offer food waste reduction strategies, and promote a culture of active waste avoidance. Additionally, government grants may be necessary to incentivize changes, particularly from a health and nutrition perspective. Grants covering the upfront costs of Trayless Dining systems and training can incentivize changes in smaller restaurants and medium-sized chains. Different levels of government can also provide grants to trade associations, academia, or nonprofits for areas requiring further research, such as Package Design and their impact on waste levels.
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Further the rescue of high-quality, nutritious food by increasing capacity, addressing bottlenecks and improving communication flow.
Financing Opportunity
Government grants have a role to play in the intersection of food waste, hunger relief, and food donation – particularly in supporting donation education through grants to organizations focused on corporate and nonprofit education on policy, legislation, food safety, and liability. Additionally, government grants have a role in the early stages of food rescue initiatives by funding upfront costs. The expansion of grant and loan programs by federal agencies, such as the US Department of Agriculture, can help businesses expand processing capabilities, particularly on-farm where there are large opportunities for recovery. Funders can also help drive regional or coordinated efforts for asset sharing to improve overall logistics among various food recovery organizations. Funding sources from government agriculture programs may also contribute through the sourcing of healthy, fresh, and culturally appropriate foods for donation.
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Find the highest and best use for any remaining food or food scraps in order to capture nutrients, energy, or other residual value.
Financing Opportunity
Government grants can be helpful in accelerating the adoption of organics recycling solutions – from covering upfront costs or ongoing operating costs to making the adoption of a particular solution like Centralized Anaerobic Digestion potentially more viable from an economic standpoint. Specifically, grant funding could support site development, especially working to align community composting sites with other community assets to increase non-financial benefits, such as job creation and educational opportunities. Local government grant programs can help fund enabling technologies for recycling, such as waste hauling, dehydration, and depackaging. For smaller at-home solutions such as composting, local governments can also support the funding of recycling education and the initiation and maintenance of curbside pick-up programs.
Non-Government Grants
Solutions
Needed
Non-government grants – such as those from high-net worth individuals, family offices, foundations, and donor-advised funds – are defined as concessionary, philanthropic capital used to support initiatives that lack a market-based application and may also play the role of “first capital in” for solutions perceived to have high risk. This form of capital is particularly impactful when used to fund the development of initial ideas; the scaling or pivoting of solutions that aren’t profit-driven; or funding vital operating costs for nonprofit initiatives. For example, solutions in the Strengthen Food Rescue action area are often primarily supported by this type of capital.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Avoid over-production, then harvest as much as possible. For wild-caught products, source only what is needed.
Financing Opportunity
Gleaning organizations can be financed through charitable giving and “donations” by growers due to their non-profit nature. Although generally modest, the contribution of non-government grant dollars can be impactful for Buyer Spec Expansion and Imperfect Produce Lines to either help start organizations (in the case of the former) or cover the costs of behavioral changes (research and training) for both. Additionally, non-government grants can support marketing and educational efforts to farmers and consumers to stimulate adequate supply and demand for food related to Buyer Spec Expansion and Imperfect Produce Lines.
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Leverage technology to create smart systems that help efficiently move products to maximize freshness and selling time.
Financing Opportunity
Although many solutions that enhance product distribution are internal corporate decisions, potential solution adopters such as retailers, manufacturers, and distributors can be incentivized through non-government grants, particularly smaller-to-medium sized firms. Reducing perceived risk by providing capital can help organizations to run pilot programs to make distribution efforts more efficient – thereby giving these businesses the opportunity to understand the ROI before financing themselves.
Refine Product Management
Solutions
Needed
Solutions
Overview
Align purchases with sales as closely as possible and find secondary outlets for surplus. Build out systems and processes for optimal on-site handling.
Financing Opportunity
Although many solutions that enhance product distribution are internal corporate decisions, potential solution adopters such as retailers, manufacturers, and distributors can be incentivized through non-government grants, particularly smaller-to-medium sized firms. Reducing perceived risk by providing capital can help organizations to run pilot programs to make distribution efforts more efficient - thereby giving these businesses the opportunity to understand the ROI before financing themselves. Additionally, early stage, mission-driven solutions such as Markdown Alert Applications which have a food access angle may also benefit from the assistance of non-government grants.
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Design facilities, operations and menus to make as much of each product as possible. Upcycle surplus and byproducts into food products.
Financing Opportunity
Although many solutions that enhance product distribution are internal corporate decisions, potential solution adopters such as retailers, manufacturers, and distributors can be incentivized through non-government grants, particularly smaller-to-medium sized firms. Reducing perceived risk by providing capital can help organizations to run pilot programs to make distribution efforts more efficient - thereby giving these businesses the opportunity to understand the ROI before financing themselves.
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Drive consumers towards better food management and less waste by creating shopping, cooking, and eating environments that promote those behaviors. Shift culture to place more value on food and reduce waste.
Financing Opportunity
This is one of the most impactful action areas to fight food waste, but the associated solutions (e.g., Consumer Education Campaigns, K-12 Lunch Improvements, etc.) can be harder to fund from more traditional sources of capital, since the return on investment is mostly derived from societal good and lacks direct financial return. Especially for those solutions that drive the most impact, but require a significant investment to work effectively at changing behaviors, non-government sources of capital may be the most appropriate capital provider. Philanthropic funders with local or regional ties can extend and supplement the reach of national campaigns to address additional customer segments. Grants covering the upfront costs of Trayless Dining systems and training can incentivize changes in smaller restaurants and medium-sized chains. Philanthropic funders can fund consumer education on new date labeling practices in partnership with manufacturers or retailers.
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Further the rescue of high-quality, nutritious food by increasing capacity, addressing bottlenecks and improving communication flow.
Financing Opportunity
Non-government grants for solutions that strengthen food rescue and hunger relief efforts (including supporting the development of new concepts and the expansion of proven solutions) can be critical sources of capital, given that many of these business models have not historically resulted in market-rate returns that would be needed to attract more traditional sources of financing. Philanthropic funders can especially help drive regional or coordinated efforts for asset sharing to improve overall logistics among various food recovery organizations.
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Find the highest and best use for any remaining food or food scraps in order to capture nutrients, energy, or other residual value.
Financing Opportunity
Non-governmental, philanthropic capital can help bridge gaps in the financing of organics recycling infrastructure (particularly for more regional operations) and reduce real or perceived risks to business adoption (including for long term off-take agreement pricing risk). These grants also have a potential role to play in areas where the infrastructure does not have a strong business case due to lack of population and/or feedstock density to incentivize more distributed options (e.g., home composting rather than community composting). Non-government grants can fund non-profits and solution providers to develop large-scale consumer education and marketing campaigns around waste disposal.
Tax Incentives
Solutions
Needed
Tax incentives – whether in the form of credits or deductions – induce farms, retailers, restaurants, and foodservice providers to undertake the behavioral and operational changes needed to donate surplus food, instead of sending it to lower destinations on the food recovery hierarchy, especially landfill. Tax incentives are a powerful tool that can be used by government and legislative stakeholders. Historically, a portion of businesses that qualify for tax incentives do not file for them, which likely reduces the actual tax burden by a significant amount. Expanded tax incentives for the transportation of rescue/donated food would unlock food that was deemed not economical by our current system. Additionally, targeted tax incentives can be impactful to support recycling projects (on a state or local level) or general corporate R&D.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Financing Opportunity
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Financing Opportunity
Refine Product Management
Solutions
Needed
Solutions
Overview
Financing Opportunity
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Financing Opportunity
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Financing Opportunity
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Further the rescue of high-quality, nutritious food by increasing capacity, addressing bottlenecks and improving communication flow.
Financing Opportunity
Tax incentives by design are intended to offset the incremental costs of donating (e.g., labor, storage, and ideally transportation) and cover some of the losses incurred by the food business. There is the potential to unlock “trapped” food in our system with an ambitious approach to tax incentives – both broadly by encouraging donations and more targeted through building out infrastructure and overcoming roadblocks such as transportation and storage.
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Financing Opportunity
Impact-First Investments
Solutions
Needed
Impact-First Investments seek some sort of financial return but are willing to accept more risk or potentially lower returns in pursuit of measurable social and/or environmental impact. Impact-First Investors can offer lower-cost sources of financing to enable projects that may eventually be attractive to more traditional sources of capital, but that possibly need a bridge to prove out the solution’s economics or prove their value to a potential future paying customer. This type of capital provider can be particularly important when funding social enterprises, infrastructure projects, early-stage innovators, and nonprofits testing earned income models. Examples include low- or no-interest loans, loan guarantees, variable payment options, program-related investments, and more. Solutions requiring upfront capital or that have reliable cash flow to repay debt instruments lend themselves well to Impact-First Investments, which can come from foundations, family offices, high-net worth individuals, and for-profit Environmental, Social, and Governance (ESG) investors. The food waste sector’s opportunities are unique in meeting the goals of Impact-First Investors - social and financial return.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Avoid over-production, then harvest as much as possible. For wild-caught products, source only what is needed.
Financing Opportunity
Impact-First Investments can act as catalytic, risk-taking capital ahead of more traditional investors, especially in the earlier stages of product development for Imperfect Produce Lines. In cases where there is a perception that low-price solutions mean low-margins (which are generally unattractive to traditional financiers), Impact-First Investments can act as bridge financing. Gleaning initiatives can also be catalyzed through Impact-First Investments with earned revenue which can require funding for tools, transportation, and storage infrastructure. Additionally, Impact-First Investments can support marketing and educational efforts to farmers and consumers to stimulate adequate supply and demand for food related to Buyer Spec Expansion and Imperfect Produce Lines.
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Leverage technology to create smart systems that help efficiently move products to maximize freshness and selling time.
Financing Opportunity
Impact-First Investors can act as catalytic, risk-taking capital ahead of more traditional investors, especially in the earlier stages of product development and the adoption of Intelligent Routing. Opportunities for Impact-First Investments in later stages of development may be less necessary, given that proven solutions in this category will likely be able to attract other capital types seeking profit, including Corporate Finance and Spending. Solutions in this action area can present operational risks, particularly for smaller organizations, which as a result may require an additional cushion of financial support to implement and/or pilot.
Refine Product Management
Solutions
Needed
Solutions
Overview
Align purchases with sales as closely as possible and find secondary outlets for surplus. Build out systems and processes for optimal on-site handling.
Financing Opportunity
Impact-First Investors may choose to finance solutions that refine product management efforts locally or nationally by funding incentives to reduce the cost of implementation of Waste Tracking solutions. Meanwhile, grants are also needed for their role as catalytic, risk-taking capital ahead of more traditional investors, especially in the earlier stages of product development (e.g., Assisted Distressed Sales solutions).
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Design facilities, operations and menus to make as much of each product as possible. Upcycle surplus and byproducts into food products.
Financing Opportunity
Impact-First Investments have an important role to play as catalytic, risk-taking capital ahead of more traditional investors, especially in the earlier stages of product development and adoption, – most notably through pilots. Solutions in this action area can present operational risks, particularly for smaller organizations, which as a result may require an additional cushion of financial support to implement and/or pilot.
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Drive consumers towards better food management and less waste by creating shopping, cooking, and eating environments that promote those behaviors. Shift culture to place more value on food and reduce waste.
Financing Opportunity
Impact-First Investors can incentivize food waste reduction efforts in smaller restaurants, as well as medium-sized outlets and chains, by covering the upfront costs of Trayless Dining systems and training. They can also play a particularly powerful role in more hyper-localized organizations, where real impact can be measured and achieved but is not large on the whole. As a result, place-based funding for these types of solutions can be vital.
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Further the rescue of high-quality, nutritious food by increasing capacity, addressing bottlenecks and improving communication flow.
Financing Opportunity
Impact-First Investments can act as catalytic, risk-taking capital to supplement grant funding. They could be particularly useful if focused on providing capital to cover the upfront or infrastructure costs necessary for food rescue that are essential for impact. A particularly powerful area for investments is the enabling equipment for food rescue, such as trucking or cold storage infrastructure for food donations.
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Find the highest and best use for any remaining food or food scraps in order to capture nutrients, energy, or other residual value.
Financing Opportunity
Impact-First Investments can help bridge gaps in financing organics recycling initiatives and projects (particularly for more regional operations) and help reduce real or perceived risks to business adoption. Impact-First Investments may play a very important role in funding the purchase of enabling technologies such as grinders or depackagers that may be too small a check size for project finance.
Venture Capital
Solutions
Needed
Venture Capital can play a meaningful role in food waste solutions that are in the earlier stages of development. This funding type is uniquely capable of investing in cutting-edge innovation (including hardware- and software-driven solutions) and disruptive business models with a large potential total addressable market and those that have the potential for significant financial return given the level of risk assumed per investment. As a result, Venture Capital will be valuable in focusing its financing to for-profit organizations fighting food waste that have well-defined products and services, solid sales visibility and traction, and the ability to scale quickly.
Disclaimer: The below estimations for Venture Capital’s contribution to financing food waste solutions is likely conservative, as non-modeled solutions (not included) tend to be breakthrough innovations with limited available data.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Avoid over-production, then harvest as much as possible. For wild-caught products, source only what is needed.
Financing Opportunity
Solutions in this action area that are most appropriate for Venture Capital financing include those that have differentiated marketing, branding, and distribution, such as Imperfect Produce Lines, in which regional and direct box delivery players have been gaining traction supported by early stage venture funding.
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Leverage technology to create smart systems that help efficiently move products to maximize freshness and selling time.
Financing Opportunity
While many solutions that enhance product distribution are in the later stages of maturity, continued innovation and improvements (e.g., AI-enabled products and self-driving cars) and existing alternatives are still good targets for venture financing. Beyond providing funding, Venture Capital providers can also help play the role of strategic advisor or matchmaker among complementary solutions in this category, helping to develop complete, end-to-end solutions for food businesses to adopt.
Refine Product Management
Solutions
Needed
Solutions
Overview
Align purchases with sales as closely as possible and find secondary outlets for surplus. Build out systems and processes for optimal on-site handling.
Financing Opportunity
While many solutions that refine product management are in later states of maturity, continued innovation and improvements (ie: AI-enabled products and self-driving cars) and existing solutions are still worthwhile portfolio additions for venture financing. The recurring revenue models of Waste Tracking, Enhanced Demand Planning, Dynamic Pricing and Assisted Distressed Sales are particularly appealing to Venture Capital, depending on investment thesis and stage of development. The most powerful solutions in this action area are not only focused on providing the most effective product, but are able to integrate with existing systems. There is also a notable potential for automation in this category.
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Design facilities, operations and menus to make as much of each product as possible. Upcycle surplus and byproducts into food products.
Financing Opportunity
A meaningful level of funding for Upcycling is needed from Venture Capital, as this solution remains relatively early-stage, requiring more R&D and time to prove out business models. Although solutions such as Active & Intelligent Packaging and Manufacturing Line Optimization are in the later stages of development, continued innovation and improvements (ie: AI-enabled products) to existing solutions can also be appropriate for Venture Capital.
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Drive consumers towards better food management and less waste by creating shopping, cooking, and eating environments that promote those behaviors. Shift culture to place more value on food and reduce waste.
Financing Opportunity
While more limited than other action areas, Venture Capital can still play a role here, especially in the earlier stages of development of Package Design.
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Further the rescue of high-quality, nutritious food by increasing capacity, addressing bottlenecks and improving communication flow.
Financing Opportunity
Technology-enabled solutions may be funded by Venture Capital, especially those with the potential for revenue generation. Coordination & Matching and Donation Transportation can lend themselves to app-based solutions or business software, which are models that Venture Capital may find appealing. However, given the association between food donation and charity, many solution providers that are interested in Venture Capital will need to confront a historical lack of willingness among food donors to pay for services. Other non-traditional and innovative food rescue business models may be appropriate for Venture Capital as well.
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Find the highest and best use for any remaining food or food scraps in order to capture nutrients, energy, or other residual value.
Financing Opportunity
Venture Capital is needed to fund startups in the organics recycling sector, as they continue to develop and scale. Direct-to-consumer niche opportunities in composting equipment, waste-related software, and other unique business models may be appealing to Venture Capital.
Private Equity
Solutions
Needed
Given that Private Equity investors seek to be involved in well-established, for-profit organizations requiring capital and organizational resources for operational changes, a variety of food waste solutions could be funded either through implementation into Private Equity-owned organizations or, alternatively, by providing growth capital to later-stage solution providers. Private Equity’s focus on employing leverage means that solutions such as Enhanced Demand Planning and Manufacturing Byproduct Utilization (Upcycling) – which have significant amounts of capital assets and potential cash flow generation, and that are more mature than earlier stage organizations (at the stage of growth capital) – are appropriate funding targets.
Disclaimer: The below estimations for Venture Capital’s contribution to financing food waste solutions is likely conservative, as non-modeled solutions (not included) tend to be breakthrough innovations with limited available data.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Avoid over-production, then harvest as much as possible. For wild-caught products, source only what is needed.
Financing Opportunity
Potential models of Imperfect Produce Lines solutions may require large amounts of infrastructure, given that they are warehousing and transporting a significant volume of fresh produce, which can be appealing funding opportunities for Private Equity.
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Leverage technology to create smart systems that help efficiently move products to maximize freshness and selling time.
Financing Opportunity
Private Equity can play a role in solutions in this action area as they scale. The Intelligent Routing space is particularly interesting, but has many players. As consolidation occurs and winners emerge, Private Equity can help scale these solutions with growth capital. Additionally, optimization of the supply chain can be pursued by Private Equity, given major food supply chain actors can be acquired through this financing mechanism.
Refine Product Management
Solutions
Needed
Solutions
Overview
Align purchases with sales as closely as possible and find secondary outlets for surplus. Build out systems and processes for optimal on-site handling.
Financing Opportunity
Private Equity can finance solutions in this category as they continue to scale, but investors will likely avoid technology risk and consider businesses with hard assets that can adopt (i.e., pay for) solutions in this action area.
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Design facilities, operations and menus to make as much of each product as possible. Upcycle surplus and byproducts into food products.
Financing Opportunity
Solutions in this action area are key targets for Private Equity financing due to their asset-heavy nature. Those that have potential cash flow generation and are more mature than earlier-stage organizations (at the stage of growth capital) are appropriate funding targets.
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Drive consumers towards better food management and less waste by creating shopping, cooking, and eating environments that promote those behaviors. Shift culture to place more value on food and reduce waste.
Financing Opportunity
Innovative Package Design solutions are key targets for Private Equity due to their asset-heavy nature. Much of the innovation in this action area is occurring in established manufacturers, which would be appealing for Private Equity investors, as they can purchase existing, cash flow-generating businesses with the optionality of growth.
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Financing Opportunity
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Find the highest and best use for any remaining food or food scraps in order to capture nutrients, energy, or other residual value.
Financing Opportunity
The established nature of Livestock Feed businesses make them ideal targets for Private Equity, which can focus on driving further sustainability in operations. Additionally, new and emerging models for feeding animals using otherwise wasted food may be appropriate as well.
Corporate Finance and Spending
Solutions
Needed
Corporate adoption of food waste solutions is an indispensable part of food waste prevention and/or sustainable disposal, as corporations are frequently large sources of waste. Corporate Finance and Spending, defined as spending by for-profit corporations with the intent to return the cost of capital, may be implemented for a range of reasons, including financial benefits, societal benefits, public policy requirements, or external pressure. Corporate investment decisions largely occur because many solutions are simply good business decisions. Many food waste prevention solutions can positively impact corporate operations, thereby requiring the use of Corporate Finance and Spending.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Avoid over-production, then harvest as much as possible. For wild-caught products, source only what is needed.
Financing Opportunity
Corporate Finance and Spending-type funding is often most appropriate for solutions in this action area, as these can be implemented internally by food organizations. Solutions such as Buyer Spec Expansion and Imperfect Produce Lines will create additional revenue opportunities. Food retailers have a significant amount of influence upstream in the supply chain and can implement these solutions alongside appropriate operational changes. Their internally generated capital will be directed towards researching customer preferences of specific types of food, sourcing off-spec food, transportation, and the implementation of new processes. Alternatively, direct-to-consumer business can enable these solutions as well.
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Leverage technology to create smart systems that help efficiently move products to maximize freshness and selling time.
Financing Opportunity
Corporate Finance and Spending can provide a majority of the capital for solutions in this action area, as they are mostly a corporate decision with financial benefit going to the implementer through reduced shipping costs, cost of goods sold, loss from spoilage, etc.
Refine Product Management
Solutions
Needed
Solutions
Overview
Align purchases with sales as closely as possible and find secondary outlets for surplus. Build out systems and processes for optimal on-site handling.
Financing Opportunity
Corporate Finance and Spending is expected to be the largest bucket of financing required for solutions in this action area, since corporations can bear the implementation costs for these solutions while also receiving a great portion of the financial benefits. While some of these solutions increase costs (e.g., transport), this may be offset by increased revenue opportunities (e.g., more options for customers) and reduced costs of food waste disposal. Additionally, food businesses are likely to assess whether it is best to internally develop these capabilities or partner with outside developers of solutions such as Markdown Alert Applications and Enhanced Demand Planning. These types of technology-enabled solutions may attract the attention of organizations who service food businesses – such as other software providers and Point-of-Sale firms – thereby gaining further scale.
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Design facilities, operations and menus to make as much of each product as possible. Upcycle surplus and byproducts into food products.
Financing Opportunity
These solutions are corporate decisions with a likelihood to result in net economic benefit; therefore investment in this action area would be most appropriate in the form of Corporate Finance and Spending. Corporations have shown recent interest in Upcycling as an opportunity to innovate product development, although uptake is not widespread yet. However, as this solution continues to develop as a category, it may attract strategic acquisitions particularly from manufacturing firms.
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Drive consumers towards better food management and less waste by creating shopping, cooking, and eating environments that promote those behaviors. Shift culture to place more value on food and reduce waste.
Financing Opportunity
A number of solutions in this action area are expected to be mostly financed through Corporate Finance and Spending, given that they are often a corporate decision with potential financial benefits. Corporate Finance and Spending has a role to play in funding Consumer Education Campaigns, because retail organizations are important distribution points for food-related information (e.g., at the point of sale). Even a national, government-funded consumer education program can benefit from support from private stakeholders such as food businesses to help increase awareness, offer strategies for food waste reduction, and promote a culture of active waste avoidance. Corporations will not necessarily be viewing this type of spending from a return on investment perspective, but rather as a broad Environmental, Social, and Governance (ESG) or CSR strategy and/or brand/reputation building.
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Further the rescue of high-quality, nutritious food by increasing capacity, addressing bottlenecks and improving communication flow.
Financing Opportunity
Although financial resources for paying for donations can come from tax incentives and charitable organizations, coordination and capital are required from food producers and retail. Coordination & Matching solutions, in the most basic sense of connecting with food organizations that have unused food, require a small amount of capital to fund associated labor and adjusting storage processes. Additionally, corporations can play an impactful role in supporting non-profit organizations in covering a portion of the transportation costs of food or lending their own transportation assets.
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Find the highest and best use for any remaining food or food scraps in order to capture nutrients, energy, or other residual value.
Financing Opportunity
Corporate Finance and Spending is positioned to provide a meaningful amount of the capital for this action area, as corporations receive most of the financial benefits for solutions like Livestock Feed, and disposing of waste is already a cost of doing business that could be reduced through a composting program. By adopting waste-related solutions, overall increased demand can make a stronger case for the further build out of projects on the government and investor side. Additionally, food growers upstream in the supply chain are expected to be using Livestock Feed and composting as best practices to get the most out of their preventable and unpreventable food waste.
Government Project Finance
Solutions
Needed
Government Project Finance (sourced from direct municipal, state, or federal project financing, usually in the form of loans) can play a powerful role in funding infrastructure projects that require a significant amount of capital and whose funding needs are not met from commercial sources, but which meet policy goals. Typical food waste solutions that benefit all of society rather than a specific stakeholder group are Co-Digestion at Wastewater Plants and various composting initiatives. Especially since these assets may not generate a market return and require a long-term view on societal benefits, government stakeholders are the most appropriate provider of capital. Government Project Finance is a lower cost alternative to commercial finance – which allows for it to be more flexible in stimulating a larger number of projects to be built.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Financing Opportunity
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Financing Opportunity
Refine Product Management
Solutions
Needed
Solutions
Overview
Financing Opportunity
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Financing Opportunity
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Financing Opportunity
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Financing Opportunity
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Find the highest and best use for any remaining food or food scraps in order to capture nutrients, energy, or other residual value.
Financing Opportunity
Low-cost Government Project Finance is uniquely positioned to finance solutions in this action area, as they create a public good despite potentially generating low-value products such as compost, which may or may not be economically viable as a for-profit venture. In many cases, Government Project Finance can be useful for entering into a funding structure covering a portion of the asset cost, thereby helping to de-risk a project. Government investment can also act as a valuable endorsement for projects, backstop risk (as more funding is appealing from a risk perspective), and ensure the asset generates regular service fees (e.g., citizens pay directly or revenue from taxation).
Commercial Project Finance
Solutions
Needed
Long-term Commercial Project Finance is uniquely positioned to finance solutions in this Recycle Anything Remaining, as they steadily generate cash flows and provide a return on investment that is indexed to inflation. Given the hard-asset nature of these projects, low-cost debt is able to be applied to this investment. Commercial Project Finance is expected to come from for-profit financiers such as financial institutions, pension funds, and specialty infrastructure investors. Additionally, for assets that generate a public good, Commercial Project Financiers benefit from various stakeholders, such as governments, backstopping the investment and providing first-in capital whereby the project is first de-risked by government funding, with Commercial Project Finance and other investors then providing the remainder of funds. This dynamic of public-private partnerships or private investment in infrastructure fuels the development, construction, and operation of multi-million-dollar infrastructure projects which will have long-term positive effects. Smaller projects can also use targeted Commercial Project Finance, including new packaging facilities, animal feed processing, and on-site pre-processing equipment.
Optimize The Harvest
Solutions
Needed
Solutions
Overview
Financing Opportunity
Enhance Product Distribution
Solutions
Needed
Solutions
Overview
Financing Opportunity
Refine Product Management
Solutions
Needed
Solutions
Overview
Financing Opportunity
Maximize Product Utilization
Solutions
Needed
Solutions
Overview
Financing Opportunity
Reshape Consumer Environments
Solutions
Needed
Solutions
Overview
Financing Opportunity
Strengthen Food Rescue
Solutions
Needed
Solutions
Overview
Financing Opportunity
Recycle Anything Remaining
Solutions
Needed
Solutions
Overview
Find the highest and best use for any remaining food or food scraps in order to capture nutrients, energy, or other residual value.
Financing Opportunity
Commercial Project Finance is needed to fund organics recycling infrastructure projects that have the potential to be profitable by generating compost, service fees, or energy. For these solutions, Project Finance can be used to cover the upfront initial investment of facilities and larger pieces of equipment. In some cases, these projects can also be funded via a joint effort from public and private sources.
ReFED offers a range of resources to support organizations in advancing their food waste initiatives. Our interactive tools, reports, and strategic solutions can help your team get started.