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ProducePay raises $38 million to combat waste in the produce supply chain.

Food waste is serious.

About 30% to 40% of the U.S. supply ends up in landfills. A UN survey indicated that one-third of the world’s food—1.3 billion tons—is wasted annually, costing approximately $1 trillion.

Food waste has a huge impact on society; therefore, it’s no surprise that many entrepreneurs are trying to solve it.

Yume helps manufacturers monetize food waste. Divert algorithmically reduces grocery store waste. Ida is using AI to reduce supermarket excess. Choco promotes sustainable food systems for restaurants and suppliers.

ProducePay, established in Los Angeles, aims to provide fresh produce producers and purchasers with more transparency and flexibility in the retail supply chain to reduce food waste.

ProducePay CEO Pat McCullough stated in an email exchange with Eltrys that the business wants to eliminate food and economic waste brought on by the brittle and disjointed global fresh produce supply chain. Our platform gives producers and buyers unparalleled access to financing, a global trade network, information, and supply chain visibility.

Pablo Borquez Schwarzbeck launched ProducePay in 2015 after earning his MBA from Cornell.

Schwarzbeck initially encountered food supply concerns on his family’s Mexican asparagus and grape farms. Schwarzbeck, ProducePay’s executive director, worked for the Giumarra Companies as a fruit and vegetable farmer as a young adult and realized the challenges growers confront.

Schwarzbeck said a single produce shipment goes 1,600 kilometers and has four to eight intermediates. Unpredictable weather, shifting markets, crop disease, and pests cause instability that disrupts the supply chain. This volatility and unpredictability, along with the fragmented, speculative supply chain, cause massive inefficiencies and waste.”

Schwarzbeck said that producers endure several challenges, but buyer-contract competition is the most severe. In a feedback analysis on worldwide food supply networks, six out of 10 farmers acknowledged overproducing to avoid losing contracts, resulting in food waste.

ProducePay provides food farmers and suppliers with supply chain monitoring and financing.

ProducePay provides working finance for producers and distributors’ operating costs, tech improvements, and land purchases. ProducePay also provides liquidity to producers and distributors post-harvest, helping growers build cash reserves for their next growing cycle and entice top growers with faster, higher payouts.

Are loan terms good? Some consumers believe so—McCullough claims ProducePay has supported over $4.5 billion in harvests for over 60 crops in 20 countries.

“This success is built entirely on trust,” he said. “Growers trust that we will help them grow. We have a strong network of producers and buyers that can deliver.”

Beyond standalone services, ProducePay mixes financial products with supply chain visibility capabilities to build “predictable commerce programs.” Retailers agree to predetermined prices and volumes before the growing season for fruit from approved producers. Agronomists at ProducePay monitor and communicate order quality from the field to transportation and delivery.

ProducePay’s initiative for Four Star Fruit connects producers, advertising, and merchants in its ~1,000-client network, skipping “non-value-added intermediaries,” according to McCullough. “We’re addressing volatility with capital, technology, and our agronomists to more efficiently capture all the value lost to intermediaries and other inefficiencies,” he said.

ProducePay, which takes a percentage of every transaction on its network, saw revenue rise by 76% last year compared to 2022. McCullough says platform trade volume has grown roughly 3x and is on course to reach $2 billion by late 2023.

Schwarzbeck’s investors are investing more, apparently delighted with the numbers.

Syngenta Group Ventures led a $38 million Series D round for ProducePay, which also included Commonfund and Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels. ProducePay’s $136 million in funding will support the expansion of its 300 full-time employees as well as its expansion throughout Europe, Asia, Africa, and Australia.

“Even though many industries have slowed, fresh produce will always be indispensable and continues to grow as consumers demand healthier food choices,” McCullough added. “We saw it through the pandemic and continued that progression.”

Eltrys Team
Author: Eltrys Team

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