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From Grad School Project to $115 Million Series B: Afresh’s Matt Schwartz on Building an Operating System for Fresh Food

by Michael Wolf
August 5, 2022August 5, 2022Filed under:
  • Food Waste
  • News
  • Robotics, AI & Data
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While in graduate school Matt Schwartz had an epiphany.

At the time, he was learning about the food system as part of Stanford University’s Earth Program and also participating in an internship with food tech investor Dave Friedberg, and it was this combination of advanced education with a front-row seat to food tech innovation that helped him to see the future.

“That’s when I came to believe that things were heading towards fresh,” Schwartz told me this week in a Zoom interview. “That we need to move towards a more nutrient-dense form of eating, a less calorie dense form of eating, to be able to nourish the world sustainably. And those two things converged into saying, I want to accelerate this fresh technology thing.”

The focus on fresh food soon led Schwartz and his eventual cofounder of Afresh, Nathan Fenner, to do a graduate study in which they talked to close to one hundred people involved in the food supply chain. It wasn’t long before they realized that, despite the increasing importance of fresh food for food retailers, there wasn’t any technology optimized for managing it.

Afresh’s Matt Schwartz

“We were going to Safeway, to Trader Joe’s, all these large, mega multibillion dollar chains, and they were all running this process on paper and pen,” Schwartz said. “Some retailers that had taken center store, non-fresh technology, and worked with like an IT consulting shop to customize the hell out of it and bend it into the fresh categories. And in that case, you’d still see lack of adherence and ultimately, at the end of the day, because it wasn’t a fit.”

These findings led Schwartz to create a company that built technology focused on managing fresh food in Afresh. Their first product, a software solution for managing fresh food inventory that Schwartz calls a ‘fresh operating system’, has been adopted by grocers of all sizes, ranging from small regionals to nationwide retailers such as Albertson’s (the Idaho-based grocer plans to install Afresh’s technology in 2,300 stores by end of 2023).

And it’s that growth, in which Afresh went from 200 stores using its technology at the end of 2021 to an expected 2000 installs by the end of this year, that is no doubt one reason the company was able to raise an impressive $115 million series B funding round announced this week. The round, led by Spark Capital, brings the company’s total funding to $148 million.

When I asked Schwartz why so many grocers are eager to better optimize management of fresh food inventories, he pointed to how even a company like Amazon found fresh challenging.

“So you look at Amazon, they bought Whole Foods because their pure-play Amazon Fresh was struggling to make a business out of direct delivery. And they didn’t stop there. They opened up their own grocery chain. But really, it was a play to crack into fresh, which is this huge part of the retail market that they couldn’t get a piece of otherwise.”

According to Schwartz, in a world where more consumers are buying commodity food items online, it’s the fresh department that is becoming an anchor for the physical point of presence in food retail. And, despite fairly low overall waste rates compared to other parts of the food supply chain – roughly 4-6% of fresh food is wasted at the store compared to over a third once it arrives in the home – he believes the 25% or so reduction in fresh food waste grocers experience using their system results in significant savings to the grocer’s bottom line.

While Afresh’s technology – a SaaS product running on an iPad – doesn’t have all the bells and whistles compared to some of the robotics and machine vision systems other startups have rolled out to help grocers with inventory management, Schwartz sees a future where all of the technology will work together.

“Where this is going is that there are robot companies, there are computer vision companies that are counting inventory, there are shelf life extension technologies, there are vertical farms, there are cold chain compliance technologies, and I believe that this is all an interconnected trend of fresh first technologies that are coming together to solve this growing problem that is increasingly strategic.”

And naturally, Schwartz sees his technology at the center of it all.

“We think about ourselves as the brain, that software layer that’s going to connect all of those things together,” Schwartz said. “So when the robots know an inventory position, or the computer vision can estimate the quality of the product, or we know whether that a berry was in cold chain compliance or not, all of that data can best fit into our system and drive the best outcomes and decisions for the retailers.”


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