Afresh: Why We Invested

By Elizabeth Coston McCluskey and Tasha Seitz

Global grocery spend is approximately $7.5 trillion annually, and sales of fresh products (produce, meat, seafood, bakery) are rising as a percentage of that spend. Just under half of a shopper’s cart consists of fresh products. However, existing technology solutions focus on “middle of the store” non-perishable items. Because fresh food is perishable, non-uniform, and merchandised in an extremely dynamic fashion it is difficult for stores to predict and manage their inventory. This leads to 10+% “shrink”, or waste, in fresh categories. Produce waste alone is estimated to cost $10B a year in the US and close to $100B / year globally. In addition, significant (harder to quantify) waste occurs in consumer households due to food spending excessive time in the supply chain — losing precious days of shelf life that could be given to consumers. With supermarkets’ thin net margins of 2–4%, they are looking for solutions to help them reduce waste and improve profits.

Solution

Afresh’s AI-powered software enables department managers to generate waste-minimizing and profit-maximizing order quantities for items in fresh departments. The company’s machine learning model takes into account factors that drive demand such as weather, day of the week, mix of items in store, promotions, and competitive activity. It also accounts for supply considerations such as shelf capacity, shipment frequency, and existing inventory. Afresh’s tablet-based app guides the manager through an ordering workflow for each item, whereas they had previously ordered based on the produce department manager’s best guesses recorded using pen & paper. Afresh is currently serving produce departments, with plans to support meat and food service in the near term, and distribution centers in the future.

Why We Invested

Afresh has demonstrated the ability to sell to large, regional chains including Fresh Thyme, headquartered in Chicago. Early customers are committing to chainwide rollouts, with expansion from produce departments into meat and bakery products. Leaders in the industry have validated Afresh’s solution, and are demonstrating their support by investing in this round. In addition to a sizable market opportunity estimated at over $10B per year, we believe there is substantial impact potential, and the team has a strong commitment to impact.

In these challenging times, we are critically examining the potential impact of the COVID crisis on both our portfolio companies as well as new investments, and we believe that Afresh will continue to be a valued solution in the event of a protracted recession. We expect grocery retailing to see steady demand through difficult economic times. Because Afresh enables grocers to reduce waste and thereby increase profitability, we believe the company has the potential to improve the financial health of grocers during a downturn in the economy. Current customers are pushing to accelerate their deployment of Afresh’s solution, which is a positive indication of the company’s value and potential.

Impact

Food waste in the US consumes 21% of all freshwater, 19% of all fertilizer, 18% of cropland and 21% of landfill volume. Retailers throw away 40+ billion pounds of food annually, equivalent to 10% of the total food supply at the retail level. This problem is most pronounced in fresh produce, which consistently sees 12% losses. Afresh has been able to demonstrate 25% food waste reduction with initial customers, which at scale could have massive environmental impacts. Additionally, if the Afresh solution can enable retailers to make better margins on fresh food, it should become more available and affordable to consumers.

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Insight+Regroup: Why We Invested

By Catherine Lien and Priya Parrish

In the United States, 51% of counties do not have a psychiatrist and 37% do not have a psychologist. Meanwhile, ~20% of the U.S. population suffers from a mental health condition at any single time (Association of American Medical Colleges). With similar rates of mental health illnesses and substance abuse across urban and rural populations, there is a need for mental health care nationwide.

Solution

As a combined company, Insight+Regroup is the largest and most comprehensive telepsychiatry service provider in the U.S., connecting behavioral health providers to patients and eliminating barriers of geography by providing virtual telehealth services. Insight+Regroup has the unique capability of providing services both on an on-demand basis for emergency cases or scheduled basis for more chronic issues. The combined company serves over 250 different facilities across 35 states and employs a provider base with hundreds of clinicians including Psychiatrists, Psychologists, Licensed Clinical Social Workers, and Advance Practice Nurses.

Why We Invested

In December 2019, we invested in InSight+Regroup at it represents a compelling opportunity to (i) improve outcomes for patients with mental/behavioral health issues, (ii) reduce the cost of care for patients with comorbidity (chronic disease + mental or behavioral health condition), and (iii) decrease the negative effects of mental/behavioral health issues such as homelessness and violence. Due to its breadth of telepsychiatry solutions, Insight+Regroup is well-positioned to capitalize on a large and growing market ($40bn global market size, with 25% CAGR since 2014) with favorable industry tailwinds due to rising mental health awareness, increasing government support, and advances in communications technology.

Impact

Research from the Association of American Medical Colleges concludes that “The United States is suffering from a dramatic shortage of psychiatrists and other mental health providers. And the shortfall is particularly dire in rural regions, many urban neighborhoods, and community mental health centers that often treat the most severe mental illnesses”. Insight+Regroup’s platform helps address the shortage and mental health professionals by offering access regardless of location. As of 1H 2019, most of the combined company’s billable patient hours took place in provider shortage areas defined as correctional facilities, critical access hospitals, outpatient/behavioral clinics, and Native American organizations.

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TimeDoc: Why We Invested

By Elizabeth Coston McCluskey and Tasha Seitz

The number of chronically ill Medicare patients is expected to double from 40 million to 80 million by 2030. Insurers are pushing providers to manage their chronically ill populations via lower cost staff and digital health tools. Condition monitoring, care coordination and disease education for patients with multiple chronic conditions is estimated to represent a $15 billion market.

At the same time, many patients want to age in place with convenient, personalized healthcare. However, adopting new care management programs requires change. Healthcare providers need people, processes and tools to transform from episodic and reactive in-person care to continuous and proactive virtual-based care.

Solution

TimeDoc provides a virtual care management platform to Federally Qualified Health Centers (FQHCs) and provider groups with 10+ physicians. Their initial focus is on Medicare patients with chronic conditions that qualify for reimbursement for remote care, and they are piloting a behavioral health integration component for screening.

TimeDoc’s differentiation is that they offer a hybrid solution for virtual care management, meaning they have a SaaS solution that enables the provider’s staff to document the time they spend on working with and for patients and get reimbursed for that time, plus they can supplement the provider’s capabilities with TimeDoc’s own care managers. This makes it easier for providers that are cash-strapped and resource-constrained to launch virtual care programs and gradually transition their staff to take over the management of patients as they have capacity, while getting reimbursed for the work that they do with patients.

Why We Invested

We believe TimeDoc offers a very pragmatic solution with a combined software and services model, making it easy for providers to launch a virtual care program. The company has demonstrated an ability to generate strong revenue traction despite a small sales team and limited investment capital to date. We have also been very impressed by the company’s high customer win rate, patient enrollment and retention metrics.

COVID-19 has changed the landscape for the delivery of healthcare in the near term, if not the foreseeable future. We believe that TimeDoc is well-positioned to help providers increase their virtual and remote patient management practices. Additionally, the company itself is structured well for these uniquely challenging times. The company utilizes an inside sales model, and care managers are already accustomed to working remotely.

Impact

By providing consistent virtual care management for patients and building relationships over time between managers and patients, we believe that TimeDoc will improve outcomes for patients while enabling financially-strapped clinics to receive reimbursement for the time they spend managing patient care outside of office visits. TimeDoc has collected some early impact data from customers on the impact of patients enrolled in its virtual care management programs. One community health center found a 70% improvement in the number of diabetic patients coming in for testing, and a 16% improvement in the number of patients successfully managing their diabetes. Another customer more than doubled the growth in the number of patients coming in for primary care visits and tripled the number of patients completing depression screenings.

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Footprint: Why We Invested

By Catherine Lien and Priya Parrish

The Packaging sector is the largest user of plastics, producing ~150M tons of plastic packaging waste annually (Citi). In the U.S. alone, 80M tons of packaging waste is produced per year, 40% of which ends up in a landfill (EPA.gov). It is estimated that half of all packaging waste is produced by the food and beverage industry. Single-use plastics are especially problematic because most products cannot be recycled or composted. Additionally, from 2019 through 2050, CO2 emissions from plastic production and incineration could equate to 56 billion tons, or almost 50 times the annual emissions of all of the coal power plants in the U.S. (NPR.org)

Solution

Footprint International Holdco, Inc (“Footprint”) is one of the market leaders in biodegradable, fiber-based food packaging. Its packaging solutions eliminate single-use plastics in the food and beverage sector with products such as protein trays, shelf-stable cups, produce tills, straws, beverage rings and lids, and frozen food packaging. Footprint’s products are oil & water leak proof, freezer & microwave & oven safe, water resistant, and shelf-stable as well as 100% compostable, recyclable and repulpable, biodegradable, and ocean safe.To-date, Footprint has been issued 6 patents and has submitted 18 U.S. and international patents.

Why We Invested

Footprint’s IP-backed solutions demonstrate superior product performance for the most challenging food applications. We believe Footprint is poised to grow as their customer base includes the largest CPG and Food companies who are all large end users of single-use plastic food packaging. Footprint’s leadership team brings a culture of innovation — the Company’s founders Troy Swope and Yoke Chung were previously engineering managers at Intel and its Board of Directors includes leadership with backgrounds from Sproutz, Salesforce, and Intel.

Impact

We believe, based on company-provided information, that Footprint has the ability to make a tremendous positive impact on climate change and the environment by replacing single-use plastics. Since its founding in 2013 through December 31, 2018, Footprint has (i) replaced 50M pounds of plastic, (ii) saved over 38M kilograms of CO2 equivalent emissions, and (iii) saved over 1.4 billion megajoules of energy. Upstream in its supply chain, Footprint obtains its feedstock from sustainable North American fiber sources certified by the Sustainable Forestry Initiative and Forest Steward Council. At the end of life, Footprint’s products are 100% biodegradable, recyclable and repulpable in a modern landfill or water.

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Plum: Why We Invested

By Elizabeth Coston McCluskey and Tasha Seitz

The nature of work is fundamentally changing as technology starts to displace jobs and traditional, linear career paths become a thing of the past. A 2017 McKinsey study estimated that 6 out of 10 occupations had at least 30% of activities that could be automated, and that 400–800 million workers could be displaced between now and 2030. The transition is happening rapidly, which means new tools are needed to effectively hire and manage talent. While education and work experience have historically been the primary indicators of potential success within a job, it is difficult to rely upon them to identify “best fit” jobs outside of traditional career paths, and they are prone to implicit bias.

Diversity matters to performance: another McKinsey study suggests that companies with strong gender diversity are 15% more likely to outperform their peers, and those with strong racial and ethnic diversity are 35% more likely to outperform. However, most companies struggle to increase the diversity of their workforce, and artificial intelligence-based tools that use existing hiring practices and patterns may exacerbate the problem by incorporating humans’ implicit biases into algorithms.

Solution

Plum provides an affordable, scalable technology-based platform to assess the potential of candidates and employees and match them to job opportunities where there is a strong fit, thus improving their likelihood to be successful in the role and increase their potential for future advancement. Unlike alternative solutions that may embed implicit bias into algorithms, Plum’s evidence-based assessment evaluates an individual’s talents based on the Big Five personality traits. Talents are not previously demonstrated skills, but innate strengths, which enable Plum to match individuals to the environments and job roles where those strengths will be highlighted and lead to greater success and realization of that individual’s potential.

In addition, Plum’s platform also enables hiring managers and teams to assess job roles on the platform, defining the types of strengths and talents that the roles require. This is an important element of Plum’s ability to create good matches, by collecting and reflecting the expectations and priorities of the hiring team and enabling the teams to reassess their needs dynamically as roles and business environments evolve. By providing a low-cost platform that can scale to every existing employee and job candidate, Plum has the potential to improve performance and retention as well as drive increasing diversity and open up career advancement opportunities to individuals that might not otherwise be considered.

Why We Invested

The opportunity for talent management is a large one, with the market approaching $8 billion and growing at 18% per year. Plum has proven its value both through validating its assessment tool and through deployment at several dozen employer customers that can point to improvement in retention and diversity. The company has been selected by SAP.io as one of two partners in talent assessment that they will sell through their North American sales channel, and by Deloitte, which will be incorporating Plum’s platform into its emerging leaders program to identify and develop rising talent at client organizations.

In evaluating companies that seek to increase diversity, equity and inclusion in the workplace, we often struggle with the self-selection bias: those companies that care most about DEI are the most likely purchasers, therefore the incremental impact is not as great as for companies that don’t recognize or prioritize the issue. Because Plum leads with with employee performance and retention as a primary business value proposition, we’re excited about their potential to drive increasing diversity at employers that might not otherwise purchase a DEI-specific platform.

Impact

We see two primary drivers of impact:

• Economic empowerment: if individuals are matched with job roles that are best suited to their innate strengths and talents, this should lead to better performance, increased retention and improved career advancement, which should lead to greater earnings over time. As an initial proof point, one customer case study showed annual employee turnover decreased from 30% to 6%, which benefits both employer and employees. In this example, the Plum platform proved to be such a strong predictor that the company decided to eliminate resumes from the hiring process altogether.

• Diversity: if Plum is used at the top of the funnel to identify best-fit candidates, it should reduce the negative impact of implicit bias in the hiring process and lead to an improvement in the diversity of candidate pool. The same is true in identifying and developing emerging, high potential leaders within a company. In another customer case study, the use of Plum in a company in the traditionally male-dominated construction industry led to the percentage of women increasing to 25%, as compared to an industry average of 9%.

KickUp: Why We Invested

By Elizabeth Coston McCluskey

Schools spend 80% of their budgets on staffing and billions of dollars on professional development for teachers, who spend up to 70 hours per year on those development activities. Despite the significant time and resources dedicated to it, the Gates Foundation finds that large majorities of teachers do not believe that professional development is helping them prepare for the changing nature of their jobs. Of top concern is how to use technology and digital learning tools, how to analyze student data to differentiate instruction, and how to implement the Common Core State Standards and other standards.

Solution

KickUp provides a platform consolidating professional development opportunities, tracking usage and feedback from teachers, and providing infrastructure for teacher coaching and feedback on their classroom practices. The platform enables data collection around professional development activities and effectiveness, and over time will enable districts to correlate professional development activities with improvement in teacher growth and student outcomes.

Why We Invested

We have been interested in professional development for some time, given both the size of the opportunity and the potential for impact. We also see tailwinds from the Every Student Succeeds Act, which requires school and district accountability on professional development spend. KickUp is the most compelling company we’ve seen in the space for a number of reasons. We have been impressed by the company’s early revenue traction and their ability to sell into districts; KickUp currently serves over 100,000 teachers. The team is led by Jeremy Rogoff, a former Teach for America corps member and KIPP teacher, who has experienced the problem firsthand.

Impact

Research from The New Teacher Project concludes that high performing teachers generate 5–6 more months of student learning each year than poor performers. Engaged teachers are more likely to adopt best practice instructional strategies, which should lead to better student performance. KickUp helps engage teachers in their professional development, and enables district-wide adoption of research-backed instructional strategies. While it’s still early days, KickUp has shown increases in teacher engagement of up to 70% in some districts. And schools that work with KickUp show a 10x increase in project-based learning instruction.

Climb Credit: Why We Invested

By Elizabeth Coston McCluskey and Sarah McGraw

Robert F. Smith’s recent pledge to pay off the student debt of 2019 graduates from Morehouse College renewed the conversation about the burden of student loan debt. According to the Federal Reserve, over half of young adults who went to college in the U.S. in 2018 took out student loans and will graduate with an average debt balance of $29,800. They join the more than 44 million borrowers who collectively owe an astounding $1.5 trillion in student loans — more than two and a half times what American students owed a decade earlier.

As a result, an entire generation of student borrowers are struggling to make ends meet — and only half say that the lifetime financial benefits of their degree outweigh the cost. Lifetime earning power varies significantly by higher education institution and even by degree program. Alternative pathways, such as Associate’s degrees and certificate programs, often offer a better return on investment — but it is difficult for students to assess the quality of and access financing for programs that do not qualify for Title IV funding (federal loans and grants).

Solution

Enter Climb Credit, a financial technology start-up that offers an alternative approach to financing affordable and compelling professional training programs. This can include anything from getting a commercial truck driving license or a crane operator certification to an Associates degree in nursing from a technical college or a certificate in web development. Founded in 2014, Climb finances alternative education costs for students at hundreds of schools across the country that it has pre-qualified based on a track record of meaningfully improving graduates’ earning potential. Prior to onboarding a school onto its platform, Climb evaluates its ROI potential by analyzing graduation rates, job placement rates, and the increase in pre- vs. post-program salaries, compared to the total cost of education (including loans and lost wages while in school). By vetting schools for quality as well as their ability to deliver results and provide affordable financing for students, Climb Credit enables students to continue their education and transition into better paying jobs.

Why We Invested

Traditional lenders tend to focus on loans for university degrees, rather than professional training, creating a significant gap in the marketplace. Climb Credit not only targets this underserved market, it offers affordable financing to students — targeting a much wider range of credit profiles — because it believes in the wage-increasing potential of the programs it finances. In January, Climb secured $50 million in lending capital from Goldman Sachs Urban Investment Group, further expanding its ability to meet student demand. As it grows, Climb will continue to drive meaningful economic empowerment for its students by helping them identify, evaluate, and finance programs that increase their earning potential.

Climb Credit’s rapid growth has been driven by a talented and dedicated team, led by CEO Angela Galardi Ceresnie. Angela is an impressive leader with a strong grasp of the business, deep industry experience, and a commitment to advancing economic outcomes for underserved students. Prior to Climb, Angela co-founded and served as COO/CFO of Orchard — an investment platform for peer-to-peer and online direct lending that was eventually acquired by Kabbage. Before her time at Orchard, Angela spent nine years running credit risk analytics teams at American Express and Citibank.

Impact

To date, Climb has originated over $100 million worth of loans to over 10,000 students across a variety of programs, including software development, UI/UX design, robotics, welding, nursing, and trucking. The typical loan size is approximately $10,000 with an interest rate of between 8.5 and 9%. On average, Climb’s programs offer a job placement rate of 80% and graduates see a median salary increase of 67%. As CEO Angela Galardi Ceresnie puts it, “By aligning school motivations with student career and salary goals, we open the door for thousands of people who want to change their lives through education.”

Press Highlight

Climb Credit Announces $50 Million in Funding From Goldman Sachs Urban Investment Group

MyVillage: Why We Invested

By Elizabeth Coston McCluskey and Sam Abbott

Working families face a number of obstacles when seeking child care, with one of the biggest barriers being supply of high-quality providers. According to the Center for American Progress, 42% of children under age 5 in the US live in child care “deserts” — places lacking adequate access to quality child care options. Due to limited availability, families can face waitlists longer than a year to place their child with a high-quality provider. Affordability is also a major factor, as the cost of child care has increased over 70% since 1985. These challenges have led to over 50% of American parents saying they are unsatisfied with their child’s current care.

Solution

MyVillage creates a community of quality home-based child care businesses benefitting both providers and families. The company is the only one of its kind with a solution proven to work across the country — even in rural, Western states. MyVillage makes it easier for providers to establish and operate high-quality child care businesses by offering access to a suite of resources: a platform to connect with local mentors who can help navigate taxes and regulations, a curated teaching curriculum, business software tools, marketing support, and professional development opportunities. Using MyVillage’s platform, families can search for child care options based on price, location, and program type. They can communicate with and pay providers on the platform, and feel assured that the providers are properly trained, insured, and subject to consistent quality standards.

Why We Invested

In addition to the compelling market opportunity, we are excited to be partnering with MyVillage because of the strength of their team, their early momentum, and their potential for impact.

MyVillage’s team has a proven commitment to making a positive social impact. Erica Mackey, co-founder and CEO, has a track record of scaling impactful solutions to challenging social problems. Before MyVillage, Erica co-founded and was the COO of Off Grid Electric — a renewable energy startup based in Tanzania. Elizabeth Szymanski, co-founder and CFO, was previously the CFO for TENA, an innovative Tanzanian recycling company.

MyVillage’s model has resonated with both existing and new in-home child care providers, and has enabled them to establish a foothold in Montana and Colorado. To date they have recruited 25 providers and have 90 children in care.

The model has the potential to reach underserved communities in both rural and urban settings, giving all children the opportunity to receive high-quality care. While access is a problem across the US, rural and Hispanic communities face a disproportionately high shortage of supply, and affordability is often a challenge for high quality care.

Impact

MyVillage seeks to increase the number of children under five receiving quality child care, to improve the accessibility and affordability of quality child care, and to provide economic empowerment for in-home child care providers. Quality early childhood education is crucial for brain development and prepares children for kindergarten. Roughly half of all low-income 5-year-olds in the US are not ready for kindergarten, putting them at a disadvantage from the very start of their formal education. MyVillage will equip more children to succeed as they enter school.

The company also empowers in-home child care providers to earn up to double their current wage, which averages $11.50 per hour, while monetizing their homes through a meaningful career that supports work-life balance. Through MyVillage, providers can also take advantage of professional development opportunities.