Food waste is a big problem amid the pandemic. Disruptions to the food supply chain and consumer purchasing changes have forced farms to destroy millions of pounds of fresh goods while grocers deal with spoilage issues.
Shelf Engine wants to help.
The Seattle startup just landed a $12 million investment round to fuel growth of its software that helps more than 1,000 grocers — including giants such as Whole Foods, Target, and Kroger — manage food orders for deli, bakery, cut produce, meat, and other categories.
The company’s AI technology aims to get the right amount of product on the shelf at the right time, said Shelf Engine CEO Stefan Kalb. More than 30% of highly perishable foods in grocery stores such as meat and vegetables expire before the sell-by date, according to Shelf Engine.
“Shelf Engine guarantees the sales for grocers since it’s set up as a scan-based trade (SBT),” Kalb explained. “That means, Shelf manages the orders, pays the vendor, and only charges the retailer for what sells.”
Shelf makes money by marking up the product from the vendor to the retailer.
Since the COVID-19 crisis began, the startup is seeing big demand from grocers that “flock to us just because managing orders became that much harder,” Kalb said.
The 46-person company, which graduated from Y Combinator in 2018, plans to add another 90 employees with the fresh funding. It recently inked a lease for new office space in downtown Seattle; the company plans to keep the office during the work-from-home phase and eventually return.
GGV Capital led the Series A round, which included participation from Initialized Capital, Foundation Capital, Correlation Ventures, 1984, Founders’ Co-op, and Liquid 2 Ventures. Total funding is $17.3 million to date.
“We see inefficiencies of the food supply chain as well as lack of agility to respond to market changes in real time as a global opportunity ripe for transformation,” Hans Tung, managing partner at GGV Capital and a new Shelf Engine board member, said in a statement.
Kalb got the idea for the company through another startup he co-founded: Molly’s, which provides healthy food to hospitals, grocery stores, coffee shops, gyms and offices. Kalb noticed the difficulty of building efficient fresh food orders and decided to build software that helped Molly’s purchase the right amount of bulk food to fulfill customer requests.
Kalb, who was born in France and graduated from Western Washington University with degrees in mathematics and economics, co-founded Shelf Engine in 2016 with Bede Jordan, a Microsoft veteran who was most recently the principal software engineering lead for the company’s HoloLens team.