Yume's platform helps manufacturers turn potential food waste into money | Tech Crunch

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While running a bar in Melbourne, Katy Barfield was shocked to see large amounts of material thrown away at the end of each day. After doing some research, she realized that Australia produces 7.6 million tonnes of food waste every year. Yume was created to solve that problem by working with manufacturers like Unilever to redistribute surplus packaged food to businesses and charities.

The startup today announced $2 million AUD (approximately $1.3 million USD) in seed funding from venture firm Investables Climate Tech Fund, which is focused on the Asia-Pacific region. It also includes participation from new and returning investors such as Launch VIC, Goodrich Group, Veolia and angel investor Pitzy Folk. This brings Yum's total funding to date to $7 million AUD. Yum is based in Melbourne and is recognized as a certified social enterprise by the Australian Government.

Founded in 2016, Yume works with four of Australia's largest charities, as well as manufacturers including Unilever, Kellanova (Kellogg's) and Mars Food and Nutrition, and has so far enabled the redistribution of 8 million kilograms of surplus food. Yume currently has more than 35 active buyers and has returned $22 million AUD to companies that use its platform to sell surplus food. It also helped donate over a million meals to charities. Yume monetizes through a subscription model and takes a buyer's commission.

Barfield describes owning the bar as “one of the a-ha moments of my life.” Earlier, she said, she had little awareness of food waste. While working at the bar, she realized that chefs had to deal with the unpredictability of which dishes would sell best that day. As a result, crews typically have to throw away large amounts of unused material after closing.

“At first I thought, oh my goodness, these animals are slaughtered and put in a plastic bin liner,” Barfield said. “And secondly, I thought about the multiples of it. It's a tiny little bar in the middle of Melbourne. I looked at it and there were 40,000 different hospitality establishments across Australia. If you take what we throw away on a Friday, multiply that by 40,000, I thought, that's a terrible waste of food.

As she did more research, Barfield saw other negative effects of food waste, including the amount of methane emissions it produces. She realized that food manufacturers were struggling with the same problem as retailers, but on a much larger scale. Of the 7.6 million tonnes of food waste produced in Australia each year, 40% is produced on an industrial scale before the food reaches a supermarket or restaurant.

Katy Barfield is the founder of Yum

Part of finding product-market fit is getting to the core of what manufacturers need, Barfield said. At first she thought the manufacturers had highly sophisticated inventory management systems for clearances, but they didn't.

Furthermore, excess inventory accounts for 2% to 5% of their inventory, so they usually focus on other channels, as reducing food waste takes time. As a result, Yum decided to make food waste prevention “a more pleasant experience for those manufacturers,” Barfield said. Yume's product-market fit, she adds, is that they have a 100% annual renewal rate for their annual subscriptions.

Saving surplus food from landfills

There are many reasons for food waste. The key is unpredictable supply and demand. For example, food manufacturers' R&D departments may create new products that do not perform as expected. Some have a short shelf life or are seasonal products. Sometimes items are mislabeled or in the wrong packaging.

Yum was created to alleviate these problems. The platform focuses on consumer packaged goods and helps manufacturers find resellers. Barfield gives an example of cream cheese produced for export to China, but with the wrong character on it. It could not be exported, but Yum was able to use it in a commercial kitchen. For food that cannot be sold, it is donated.

“It's a waterfall effect, because the main reason manufacturers are in business is to sell product and get it back,” Barfield said. “Then if it doesn't sell, it can go to a charity. This makes the end-to-end process truly seamless and automated so we avoid all the leakages that are currently occurring in the system.

To use Yume, manufacturers identify additional inventory and upload it to the platform, which already contains their SKU libraries with product information. Buyers then submit offers to manufacturers. If the product remains, it may go for another round of bidding. Unsold food is available for donation and given to food rescue organizations.

One of the benefits of using Yume software is that manufacturers can reach up to 30 buyers at once instead of making multiple phone calls. Orders are then placed in order of priority. Barfield explains that some suppliers want volume over value. For example, their priority might be to clear out the warehouse. Others may want to get the best price for their surplus food (producers get historical production prices to help them make decisions about realistic prices). Yume works throughout Australia, but sometimes manufacturers only want to ship in one state.

“There are many different things and the algorithm sorts based on priorities. So manufacturers are given a list of the best offers based on their preferences,” Barfield said. “They can tick, tick, tick, tick instead of going back and forth on the phones and it's done.”

Yume simplifies the donation process by removing friction for manufacturers. Barfield explained that there are usually many departments working on donations, including charities that should ask their finance department if it's okay to give away items. Then they have to call food rescue organizations to ask if they want 10 tons of cream cheese. Sometimes charities don't need much food and it goes to waste, especially if it has a short shelf life. Yum's donation process is similar to the process of selling food, as it contacts multiple organizations at once and manages the food available on its platform.

A nationwide focus on climate technology

Despite the funding winter, Australia's climate tech sector is thriving. Other food waste startups include Whole Green Foods, which turns food waste into usable materials; food waste processing provider GoTerra; Bardi, which converts food waste into protein and fertilizer; Product Vendor Good and Ugly; and reground to put coffee grounds and straw back into the soil.

Barfield says Yum is in a unique position in the food waste industry because it is the only company that works with manufacturers on packaged goods. “The reason we do that is because it's a highly processed product,” she notes. “If you put it in the ground and bury it, that's a huge loss to the planet, because all that energy is lost for making the product, packaging the product, getting the product ready for sale, all the packaging associated with it. That's it. It has the biggest environmental impact.”

Yum Investables is the newest portfolio startup in the Climate Tech Fund, which supports entrepreneurs building high-growth technology with a positive climate impact in the Asia-Pacific region. It is also the latest organization headed by a woman; Half of the Climate Tech Fund's portfolio, or 48%, are companies with a female founding member and 21% are entirely led by a woman.

The funding marks a milestone for Investable, as three of the firm's vehicles have invested together in Yum, its Early Stage Fund 2 and Club Investable Syndicate joining the Investable Climate Tech Fund. Yum will use its new funding to prepare its technology for international expansion. It plans to double its headcount by the end of this year, with 75% new hires for tech and product teams.

Charlie Ill, chief investment officer at Investable, told TechCrunch that one of the reasons the firm backed Yum was because of Barfield's experience. She previously served as CEO of Second Bite, a national food redistribution charity, and was a 2023 recipient of the Order of Australia Medal.

“Yume tried, tested and broke business models that took several iterations of product and target customers before seeing rapid uptake and traction with many large-scale customers. Yum also has a first-mover advantage in the local Australian market with an end-to-end solution for clearance food,” he said.

When asked about Yum's role in Australia's growing startup scene, Ill said, “Yum fits into a key segment that needs addressing. Food waste accounts for one-third of human-caused greenhouse gas emissions, accounting for 8% of greenhouse gas emissions annually. We are delighted to be supporting an effective and intelligent business at Yum and look forward to joining the business on its growth journey.

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