AMDP Memo Final

TO: Clark Hansen, CEO, Anima Mundi Development Partners

FROM: William Scown R&D Analyst AMDP

DATE: March 10, 2023

SUBJECT: Recommendation to Invest

My job here at AMDP is to recommend Companies to invest in. These companies must not only be financially viable investments but also adhere to good social and environmental practices. After widespread research, I recommend Afresh to be a smart and prudent investment. Afresh is an AI powered produce supplier for grocery stores. Afresh’s innovative approach to supplying produce not only gives them an edge on competitors but does so sustainably. In this memo I will outline:

· The AMDP investment standards

· The background, financials, and my valuation of Afresh

· Expert evaluation of Afresh from leading industry sources

· My recommendation for why we should invest in Afresh

AMDP Investment Standards

Triple Bottom Line

The Triple Bottom Line outlines how a business should conduct themselves ethically while still being profitable. the Triple Bottom Line is made up of Three elements or “P’s”:

· Profit: a responsible strategy to ensure growth and efficiency

· People: a dedication to customers, employees, suppliers, and communities

· Planet: a respect for the environment at large and the organization’s impact on it (Slaper)

Corporate Social Responsibility

Corporate social responsibility is a business concept that suggests organizations should actively improve their social and environmental impact. Also referred to as corporate citizenship, this is a way for businesses to enhance people’s and the planet’s wellbeing through their normal course of operations (Fernando).

Social Enterprise

A social enterprise is a business that uses profit-maximizing strategies to meet an unmet need or positively impact society. The incentive to increase profits is to achieve the company’s goal rather than maximize shareholder revenue (Social).

Carbon Footprint

A carbon footprint is a calculation of the amount of environmental harm that a business or organization inflicts on its surrounding area and the greater planet. It measures emissions of carbon dioxide and greenhouse gases that contribute to global warming and habitat destruction, expressed as “carbon dioxide equivalent” (EPA).

Overview of Afresh

Background

Afresh was founded in 2016 by Matt Schwartz and Nathan Fenner with the goal of eliminating food waste in grocery stores. They have achieved this by using AI algorithms to coordinate the transportation of produce. They have reported waste reduction of 15-25% or more while simultaneously driving 3% higher sales (Afresh 2022). The company’s initial seed round was back in 2018 where it raised $1.7 million, since then in its Series B last year they raised $117 million.

Business Operations

Afresh works by collecting data from their grocery store clients to be able to perfectly forecast the amount of produce they use to minimize food waste. Then on flipside Afresh works with farms to transport produce more efficiently using AI technology. Since their launch in 2017, they have helped retail partners avoid 6.9 million pounds of food waste, save 140 million gallons of water, and reduce their GHG emissions by 6.2 thousand tons (Afresh).

Financials

Besides being socially responsible, Afresh is also extremely profitable. In 2021 it is estimated that they did $56.7 million in revenue (Growjo 2021). Comparatively a similar sized competitor Able Freight, founded in 1992, only did $34.5 million in revenue. This is extremely promising potential for Afresh to be competing with a company almost twice as old. Furthermore they transported $1.6 billion worth of produce. This demonstrates that Afresh is operating both profitably and efficiently.

Company Future/Outlook

The outlook for Afresh is bright, many retailers want to reduce their spoilage and the demand for fresh produce is only growing. According to Afresh, 93% of grocery leaders say they've seen demand for fresh food increase in the past 1-2 years. Furthermore, the majority of grocery retailers experience out-of-stocks either weekly or more than once per week (Afresh 2022). This represents a huge opportunity for Afresh to step in and partner up with even more retailers to optimize their fresh produce. Also with the latest round of funding and financials looking promising the future for Afresh is bright.

Expert Evaluations

Daren Caudill (Senior Vice President of Sales, CUB)

Caudil who works for Cub a supermarket chain in the Midwest often found his stores struggling with produce piling up in the backroom during the summer but with none on the floors in the winter. After a three month demo Caudil said Afresh was a, “Incredible tool that not only drives profitable incremental sales, but improves customer experience by providing fresher in home produce (Caudil 2022).” Here Caudil has seen first-hand how effective Afresh is in ensuring the optimal amount of produce is in stores to reduce backroom storing costs while maintaining stock shelves.

Jenna Plasterer (Writer, And now UK know)

Jenna Plasterer a writer for And Now UK Know, a publication covering the latest in produce news, has covered Afresh. After researching the company she wrote, “Afresh’s platform provides intelligent recommendations and streamlined inventory and ordering workflows to improve efficiency, a release explained. To date, the company’s customers have seen an average 3 percent increase in sales and a 25 percent reduction in shrink. That equals 31 million pounds of food waste prevented so far (Pasterer 2023).” This shows the potential of Afresh, for it to have a writer from the UK covering it despite it currently only being a very young start up.

Recommendation

Afresh currently is still a very young start up however it is clear that they are growing very quickly and are extremely promising due to their profitability and dedication to the triple bottom line. I would recommend that Anima Mundi Development Partners moves to invests in Afresh granted of course that further due diligence is completed.

Works Cited

Caudill, Daren. “Improving Product Freshness with Faster Inventory Turns at Cub.” Improving Product Freshness with Faster Inventory Turns at CUB, 2022, https://www.afresh.com/resources/improving-product-freshness-with-faster-inventory-turns-at-cub#top.

"Carbon Footprint Calculator | Climate Change | US EPA." EPA. Environmental Protection Agency, 01 June 2015. Web. 3 Mar. 2023.

Fernando, J. (2021, February 2). Corporate Social Responsibility (CSR). Investopedia. https://www.investopedia.com/terms/c/corp-social-responsibility.asp

Growjo. “Afresh Revenue and Competitors.” Afresh: Revenue, Competitors, Alternatives, https://growjo.com/company/Afresh.

“Opportunities in Fresh: 2022 Report.” Edited by Grocery Dive, Afresh, Grocery Dive, https://pages.afresh.com/hubfs/Opportunities%20in%20Fresh%20-%202022%20Report

Plasterer, Jenna. “Afresh Technologies Expands Into New Sectors; Matt Schwartz and Luke Anderson Comment.” Andnowuknow, 3 Mar. 2023, https://m.andnowuknow.com/behind-greens/afresh-technologies-expands-new-sectors-matt-schwartz-and-luke-anderson/jenna-plasterer/83047.

Slaper, Ph.D. Timothy F., and Tanya J. Hall. "The Triple Bottom Line: What Is It and How DoeIt Work?" The Triple Bottom Line: What Is It and How Does It Work? University of Indiana, n.d. Web. 10 Mar. 2017.

Social Enterprise Alliance. (2019, June 11). What Is a Social Enterprise? https://socialenterprise.us/about/social-enterprise/