STOCKHOLM, Sweden — Karma, a Swedish startup that enables restaurants and grocery stores to reduce food waste by selling unsold food at a discount direct to consumers, has raised $12 million in Series A funding.
Led by Swedish investment firm Kinnevik, which has previously backed digital health service Babylon Health, the round also included participation from Bessemer Venture Partners, the oldest venture capital firm in the US, and existing investors including the global VC firm e.ventures. This round brings Karma’s total funding to $18m.
Founded just two years ago by Hjalmar Ståhlberg Nordegren, Ludvig Berling, Mattis Larsson and Elsa Bernadotte, since launching Karma has partnered with over 1,500 restaurants, grocery stores, hotels and cafes, in a bid to reduce food waste by selling their surplus to 350,000 Karma users.
Launched in London earlier this year, the startup already works with more than 400 restaurants including Detox Kitchen and Aubaine, which according to the company, are able to generate revenue from food that would otherwise go to waste, reach new customers and reduce their environmental impact, meanwhile, users get access to food at half-price or lower.
“Karma turns a would-be wasted product into bargains for customers and profit for merchants — this makes way too much sense not to exist in this world,” commented Bessemer Venture Partners’ Kent Bennett. “Beyond the product today, we think owning the communication links between customers and their favourite local merchants could have enormous long-term value.”
As part of a growing movement in which businesses are starting to address the devastating effects food waste is having on the planet, Karma is in good company. In the UK, tech startups Olia and Too Good To Go are also tackling food waste produced by restaurants and grocers, supermarkets such as Tesco and Lidl have removed ‘best before’ dates from their food and vegetables, while high street chain Pret donates unsold food to local homeless shelters.
However “to have a lasting and meaningful impact, companies around sustainability need to be for profit and have an attractive business model,” noted Jonathan Becker, Partner at e.ventures — a fundamental belief he shares with Karma’s founders.
Working with that philosophy in mind, Karma plans to use its new funding to continue developing its product range within supermarkets, and expand to over 150 by mid-2020, Europe being its first stop.