Strella Biotechnology, makers of technology that predicts produce ripeness, just announced its first significant round of fundraising — a $3.3 million seed round that will enable the company to break into the retail sector.
CEO Katherine Sizov told Technical.ly that Yamaha Motor Ventures & Laboratory Silicon Valley, the investment arm of the Yamaha Motor Co., and Catapult Ventures led the raise, with participation from Mark Cuban of “Shark Tank” fame, Red & Blue Ventures and others.
It’s the first raise with equity for the biotech company, although it had scooped up about half a million in funding from contests and pitch competitions since its start in 2017.
“We had kind of been self-sustainable up to this point, but we wanted to expand into the retail market, and the raise allows us to accelerate into that market,” Sizov said. “We saw an opening in the market and thought it was a good time.”
Currently, the company’s biosensor technology and IoT capabilities work to ensure quality through the supply chain. It’s being used in produce packing houses where food is stored before being sent out to markets and grocery stores. The technology’s ripeness indicator measures when a fruit is maturing, and notifies managers which pallets of fruit are reaching their peak.
A typical packer has about 100 of these produce rooms and more than 4 million pieces of fruit, so knowing when it’s time to ship produce is essential for the business’ margins, Sizov said. But that continues to grocery stores, she added, which is the retail marketplace the company plans on expanding into next.
“I’ve gotten calls from some retailers who’ve lost somewhere around 23% of their produce,” Sizov said. “A lot of waste comes from supply chain not being optimized.”
COO Jay Jordan added that much of the world’s food is on consumer level, and that Americans as a whole consume food differently than other countries, where it’s more normal to stop by the grocery store more often and only buy what you’re expected to use in the next few days.
“But a lot of that comes upstream,” he said. “You can’t expect the person stocking the shelves to know how to correctly stock each type of produce.”
Sizov and Jordan began pursuing the round of fundraising back in December, and connected with investor Cuban through a contact of his at NextFab; the company participated in the makerspace’s accelerator in 2019.
“We basically pulled our local connections, called on everyone we’d been involved in,” Sizov said.
The pair also did some traveling during early 2020, eventually meeting with Silicon Valley-based Yamaha. Jordan said while it took more effort to connect with investors that weren’t local, they realized ultimately that “traveling for the right investor was worth it.”
The spread of COVID-19 added another layer of stress, Sizov said: She remembers pacing her small studio apartment at the beginning of April, waiting for confirmation the funding had closed despite the pandemic.
Major plans for the raise include growing into the retail sector and solidifying the team, which currently is made up for Sizov, Jordan and four other full-timers. They plan to continue working out of the Pennovation Center, as the facility’s wet labs have the right setup for their research and development.
Although Strella is a tech company, Sizov and Jordan stressed that its focus is on waste-reduction. Sizov said that recent research shows that the carbon emission on food waste is larger than all types of transportation combined.
“It’s a huge contributor,” she said. “And we’re looking to address that with our tech.”-30-