Investors seek startups that balance health, sustainability and broader supply chain support

By Elizabeth Crawford

- Last updated on GMT

Investors seek startups that balance health, sustainability and broader supply chain support
Startups that balance the health of consumers and the planet, as well as consider how their product impacts others up and down the supply chain are catching the attention of investors, according to industry insiders.

“Thinking about what the future of the food system looks like, we believe it will be really integrated and holistic with a focus on health and sustainability,”​ Renske Lynde, co-founder and managing director of Food System 6, told attendees at the Partnership for a Healthier America Summit in Washington, DC, this month.

In addition, she predicts, successful entrepreneurs of the future not only will need to “solve for one particular issue or problem in the food system where there are opportunities,”​ but they will have to do so “with rigor” ​while “also identifying opportunities for a broader impact.”

As an example of a startup that is hitting this high bar, Lynde pointed to Renewal Mill, which was part of Food System 6’s first investment cohort.

She explained that Renewal Mill is taking the byproduct from tofu production, which “is very wet, heavy, cumbersome product that is actually full of amazing nutrition and is high fiber,”​ and creating an alternative to white flour for baking. The end result is not only a nutritious ingredient, but a novel solution that turns an environmental problem and economic loss into an economic value and sustainable way to feed the growing population with fewer resources.

Another example of a company that blends health and sustainability in a way the benefits players up and down the supply chain is Imperfect Produce, which sells “ugly, imperfect fruit and vegetables directly to consumers in a model that gets them healthier, fresher produce at a lower cost that also is convenient,​” Lynde said.

In addition to offering a value to consumers, Imperfect Produce creates a new revenue stream for farmers who otherwise would sell the produce for less or waste it, she said.

Beyond food and beverage

“There is also a range of opportunities for the food industry to also engage in packaging alternatives, which is something we believe strongly around because there is a direct and measurable and significant impact on sustainability in terms of plastic,”​ Lynde said.

One company addressing this that Food System 6 has invested in is Full Cycle Bioplastics, “which takes all forms of food waste and turns it into a bioplastic alternative packaging that is compostable and fully biodegradable,”​ she explained.

This underscores how “sustainability is not just about reformulation and new product lines, but can be part of the bigger picture in other ways and what is happening with technological advances,”​ she added.

Full Cycle Bioplastics also “shows those in the food industry where there are some upstream and downstream types of innovation,”​ which is something “we absolutely encourage companies to start thinking about as well as where there are emerging opportunities”​ for a broader impact, Lynde said.

Selling in, not out

Recognizing that innovating products and solutions that positively impact others in the supply chain and marry consumer demand for health and sustainability is a tall order, Lynde said new companies don’t have to go it alone. There are many business models available now and rather than shunning some of them, all options are socially accessible.

“In the changing landscape of startups, it used to be viewed as you selling out if you were to sell your company to a bigger company,”​ Lynde said. But now, she noted, “that perspective has shifted and you are now considered to be selling in,”​ which throws open the doors for collaboration and advancement in a way that everyone wins.

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