Karma, a Swedish food-waste startup, has done quite a great job of convincing tens of thousands of deal-hungry consumers to utilize its hot pink program to purchase edible items that would otherwise become garbage.
Based in Stockholm, the provider’s program enables people to book and pick up excess food from restaurants, grocery stores, wholesalers, as well as even farms. The customer gets cheap meals, and the vendor must earn some cash on surplus inventory.
Like most startup ideas, the app has shifted focus because of its original iteration. It began as a generic “deal” program that offered all types of merchandise, but its lack of attention was an issue.
“It was too much at the same time in 1 platform,” co-founder and CEO Hjalmar Ståhlberg Nordegren explained.
Nordegren and Karma’s three other co-founders realized they needed to focus on one thing.
“We found that some high-end restaurants were uploading their excess food without us having to ask them to do so,” he explained.
There are many food-waste programs available. Karma’s claim to differentiation is that it shows consumers exactly what items are available, rather than a general description.
There aren’t any” mystery bags or magical boxes,” Hordegren explained.
Changing minds about secondhand food
Initially, Karma’s biggest challenges were convincing consumers and businesses that selling and purchasing surplus meals is a socially acceptable thing to do.
However, a cultural moment was on their side. People were worried about the impact of farming, food-production procedures, and how much food has been thrown away daily.
The organization has taken measures to disclose as much info as possible to reassure consumers about the products.
“[We] ensure food safety by posting allergens and food contents with the items on Karma, [and provide] clear communication on when items are best before and consume by dates,” Nordegren said.
Helping deliver meals to customers
There are currently more than 4,300 outlets selling their surplus food on Karma’s app in Sweden, 1,800 in the UK, and 1,000 in France. The US is on the company’s radar; however, the leaders wish to expand further across Europe first.
The range of outlets is remarkable, with fashionable restaurants and fast food stains all using the program to change the food.
It is easier for some companies to shift possible food waste than it is for many others. Those based in town — i.e., restaurants and shops — have access to a high number of customers. Wholesalers, on the other hand, are generally rural or suburban.
“We asked wholesalers, Is there a method that we may help you decrease your food waste since you’re sitting on one-third of the issue?'” Nordegren explained. The wholesalers responded they wanted Karma to setup dropoff points.
Karma listened and began placing hard-to-miss pink fridges across cities in Sweden. There is one in Stockholm’s Central Station, for example. The very first UK pink refrigerator landed in the past few weeks.
People can purchase items like fish and meat from them, in addition to other random food products. According to Nordegren, one person purchased 3kg of dried creme brûlée.
The organization model that assists Karma remain afloat
Karma takes 25 percent of each transition, that happens on the app. So if a person buys some sushi for $2. 00 in the sushi shop, Karma will earn 50 Cents. The model has been effective so far, though Karma is still in development mode.
Nordegren emphasized on the importance of speed. “The market waits for nobody, and the fastest players usually win.”
“We’ve thought several times should we go profitable and sort of grew from there,” Nordegren said. “We can sit on our hands for six months, go profitable, and then keep investing. But there’s really no reason for us to do so with the amount of capital available on the market.”
Karma has raised $16.7m in total, with the bulk of that coming from a funding round 18 months ago. Venture capital investors include Kinnevik AB, Bessemer Venture Partners, and e.ventures.
“We’re constantly looking to raise,” Nordegren explained. “We are in a fairly good spot; however, as a startup, sooner or later, you constantly need to go crawling for more.”
