Do you eat three nutritious meals a day? While not everyone can fill their plate, it has become even more challenging for many to access fresh produce, including fruits and vegetables.
According to the UN Food and Agriculture Organization (FAO), upward of 2.3 billion people worldwide lack access to adequate food in 2020.
Food insecurity is one of the biggest challenges of our times and startups working with technology are trying to find interesting solutions to this challenge.
One such startup is Amsterdam-based AgStacked, founded in late 2022 by Emily Harayda and Jonathan Mitnik.
The Dutch startup helps bring quality transparency to fresh produce supply chains and the idea has already won backers with the startup raising an undisclosed amount in pre-seed funding last month.
“The agriculture industry, in particular fresh produce supply chains, are a hugely important aspect of how every person is able to consume nutritious, fresh fruit and vegetables,” says Harayda.
Lack of proactive quality data transparency
In order to bring access to fresh produce to more people, it is important to eliminate frictions in the fresh produce supply chain.
The team at AgStacked is doing that by improving the efficiency by which produce moves from farm to table, which Harayda says is “incredibly important when working with short shelf-life constraints.”
In order to better visualise this challenge, we must look at how fresh produce is currently moved.
The co-founder of AgStacked uses an example of a container of blueberries being shipped from Peru to the Netherlands.
She says a quality check is conducted by the supplier before shipment and certain quality dimensions such as size, weight, colour, defects, et cetera, are recorded.
However, this quality information is currently not proactively shared by the supplier with the buyer of aforementioned blueberries.
Once the fresh produce is packed and shipped, it is estimated to be in transport for a total of around 20 days.
“During transit time, the blueberries are packed within a container with a controlled temperature and atmosphere,” explains Harayda.
She adds that any fluctuation in temperature and climate or delay in shipping has a direct impact on quality issues of the blueberries.
Once the blueberries arrive in the Netherlands, a quality intake check is conducted and the buyer records any issues.
If issues are present over a certain predetermined threshold, the buyer will trigger a quality dispute process with the supplier.
Harayda calls this a costly process since each delay reduces the shelf-life of blueberries.
“Depending on the severity of the quality issues recorded, the affected blueberries will be thrown away and additional time is spent re-packing blueberries that are still able to be sold in retail,” she adds.
This is followed by renegotiation of price, leading to financial impact and workflow disruption on both the supplier and buyer’s operations.
AgStacked has tasked itself with the goal of transforming this costly and manual process into a seamless, transparent experience.
Transparency of quality data
One of the biggest reasons behind this complex nature of the fresh produce supply chain is the sheer number of players involved as well as a lack of standardisation and end-to-end quality specification alignment.
Harayda observes, “If a supplier sends produce which does not meet the quality specifications of a buyer, both parties have spent time and resources conducting quality control processes only to either reject, throw away, or renegotiate on the price of produce.”
She says this cycle of rejections, renegotiations, and waste end up costing the fresh produce industry billions each year.
It should thus not come as a surprise that fresh produce buyers seek greater consistency of quality reporting from suppliers.
AgStacked helps by aggregating internal and external data streams, integrating supplier quality reports so buyers can view quality data ahead of transport.
It also tracks quality during transit to understand quality risks such vessel tracking, delays, temperature, and climate controls and notifies buyers about at-risk produce.
The platform also alerts buyers and suppliers when certain conditions are likely to produce quality issues using unique machine learning models per produce type.
With this streamlined data, buyers can refocus quality control intake and repacking activities specifically on at-risk produce while analysing superior quality performance and identifying trusted suppliers for a ‘light touch’ quality control process.
Transformative action
Speaking to Harayda about fresh produce supply chains make it evident that the industry is bottled into processes that are costly and manual.
AgStacked is transforming this process by decreasing quality claims by open communication of quality data prior to shipment between supplier and buyer.
The startup is also helping reduce overall time spent by QC and warehouse employees on quality checks and repacking, improving identification of suppliers where QC processes can be minimised or where QC needs to be more intensified.
Another way AgStacked is transforming fresh produce supply is by increasing data collection and analysis on supplier quality performance over time.
“Developing targeted approach to QC and repacking activities, based on quality data and enhancing end-to-end quality spec alignment and standardisation across the supply chain,” further notes Harayda.
The result of these actions is that AgStacked provides fresh produce suppliers with actionable insights on their performance and how they may compare against other suppliers in similar regions.
Harayda clarifies that these insights are provided on an ongoing basis throughout the season instead of being shared at the end.
“Suppliers have the opportunity to redirect produce through channels where the quality specs are a more appropriate fit,” she says, before adding, “preventing quality disputes and loss of potential revenue.”
For consumers, the quality transparency solution from AgStacked will lead to accessible fresh produce with increased shelf-life and better quality.
An experienced investor
AgStacked raised its pre-seed funding from German VC Heartfelt Capital, an early stage startup investor based in Berlin.
Before finalising its pre-seed funding, Harayda says they were focused on developing relationships with both agnostic B2B SaaS investors and those with experience investing in various agriculture and supply chain related spaces.
“We chose to partner with a great venture capital firm based out of Germany, who we felt provided the right level of support for our current stage and had a network of professionals with skill sets to complement our own,” she says.
As a young startup, AgStacked aimed to address a number of areas related to quality management in fresh produce supply chains with the goal of reducing food waste and cost of quality disputes.
Harayda says they learned early from the market to narrow down their focus and provide “a high-value solution to tackle a very specific problem.”
She adds, “We took a pause and went in-depth with our market research to better understand where our technology could make the most impact.”
The decision to offer a high-value solution, according to Harayda, aided their traction in the market and helped them deliver a clear problem-solution to investors.
With the pre-seed funding, AgStacked plans to further expand its operations by tapping into the German and Dutch retail markets.
Delivering value
The pre-seed funding comes at a time when capital has become increasingly difficult to come and startups are seeing their valuations drop sharply.
Harayda does not refrain from calling the current environment “tougher than in previous ones.”
She says the fresh produce space in agtech has also been a new space for many investors.
To overcome these challenges, she says they had to double down on presenting their traction in the market and developing financial plans that focused on a “lean workforce, limiting expenses, and focus on sustainable revenue growth.”
After onboarding its customer base and their supplier network, Harayda sees an opportunity for AgStacked to go for a seed funding round.
She repeatedly argues that it is vital for AgStacked to focus on delivering value to its customers and building traction to succeed in this market.
“Spend a lot of time validating the problem you are solving and researching who are the other players in the space,” she says when asked for her advice to other startup founders.
She adds, “Don’t be afraid to pivot towards what the market is telling you in this early phase.”
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