"We are the spider in the web"

Alexander Piutti and his start-up SPRK have sent 31 tons of food and other goods to Mallorca, which is suffering from a lack of tourism. In an interview, he explains how his start-up works.

There are many ways to reduce food waste in Germany. Berlin-based start-up SPRK does this by starting at the very front of the supply chain, using artificial intelligence to identify surplus food, pick it up and find buyers such as NGOs or sell it to canteens. Serial founder Alexander Piutti fights against food waste with his start-up SPRK. Currently, the start-up is making headlines with its donations for the island of Mallorca.

Mr. Piutti, there are some people who have recently spent their holidays on Mallorca, at the same time the island has been hit hard by the pandemic. Poverty, for example, has risen to a record high. With your start-up SPRK, you decided to send food and collaborate with the Hope Mallorca initiative. How did this come about?

In mid-February Sebastian Konrad, a close friend of mine, contacted us. Sebastian connected us with Heimke Mansfeld's non-profit association Hope Mallorca, as he knew our work in Germany. He described to me that due to the lack of tourism more and more people were getting into a precarious situation. Without further ado, we set up a cooperation with the help of Sebastian. Then, in mid-April, we sent the first eleven tons of food as well as drugstore and cleaning products overland to the island through an existing truck logistics connection. At the end of April 2021, a further 20 tonnes of potatoes from NRW were arranged to Mallorca through SPRK. Further deliveries are being planned. In doing so, we always have to consider together with the buyers what the local people actually need.

For SPRK, identifying surplus food and redistributing it is not only a good deed, but also a business model. How exactly does it work?

There are different stages in the food supply chain from the field to production to wholesale to supermarket. And at each stage, there is typically a surplus to make up for shortages or prevent insufficient produce from being available. This surplus is usually perfectly edible and not bad. It just lacks appropriate buyers. Of the twelve million tonnes of surplus produced in Germany each year, around 60 per cent is already generated in the supply chain, much of it right at the beginning. We start at these nodes. We work together with producers and traders, identify the specific surplus food and redistribute or systematically process the food. We are increasingly doing this with the help of our technology, which, among other things. docks with existing software systems of supply chain participants and is designed to identify patterns over the long term to prevent systematic overproduction.

Where does the food go from there?

The surplus then goes, for example, to NGOs such as the Arche Kinderstiftung in Berlin or Hope Mallorca. But we also sell the food to hospitals, canteens or industrial caterers, some of which are already mission partners of SPRK. If in doubt, they take our goods first, because they also find it important to be sustainable and want to support the SPRK mission. Winning over these partners has been our work over the past two years. The thing is: Nobody likes to talk about the fact that last week, for example, 1.7 tons of food had to be thrown away. It doesn't help to be dogmatic at this point. We need to be able to build partnerships or trust with these producers. Together we drive food waste down significantly as a result.

As a business, SPRK needs to be profitable. How do you finance yourself?

So far, we have 16 private investors who are behind our idea and are happy to support the project. But we are also currently in talks for a new round of financing with family offices, relevant companies and individual venture capitalists. Early scaling is not possible without external financing. But we already produce our own products from surpluses and sell them to our partners, which requires external start-up financing. We are currently talking to investors about our Series A financing. In the long term, the business model is that the delivery partners pay a fee as platform users, which is profitable for them in any case compared to the high disposal costs. However, not all of our activities have to be profitable, because as an impact venture we deliberately use a mixed model. In the future, we also want to enable donations to SPRK. For example, to ensure that cooperation with initiatives and foundations can work, we will soon be setting up our own SPRK Foundation. Then other donors can donate, for example, a 5- or 6-digit amount, and ask us to give food to the Mallorcan population or other needy people accordingly.

SPRK itself also wants to be particularly sustainable as a business. But when you deliver food, it needs to be transported from A to B. How sustainable are your logistics?

Our platform works like a spider in a web. We access existing logisticians, both for NGOs and commercial buyers:in. We leverage existing logistics capabilities and rewire them. Here, for example, empty runs that occur in the logistics context are included and thus better used. Sometimes we have to organise the logistics ourselves when things have to move quickly - especially in Berlin, our starting point.

In the long run, your customers are likely to want to know exactly where each product comes from. How transparent do you make your own supply chain?

I personally believe that efficiency and transparency are becoming increasingly important. We are currently talking to agricultural associations, for example, about picking up apples from farmers that are too small, too big or too crooked to be sold, and want to produce apple juice from them, which can then be sold in supermarkets. The fact that the customer can then trace exactly where the apple juice comes from could also be made transparent with the help of blockchain technology.

If you or the producers optimize more and more supply chains or there is a law like in other countries that prohibits these surpluses - aren't you creating your own market again?

Right from logic, but in reality it is probably different: Our technology can be used in perpetuity by running in the background and successfully matchmaking between surplus and demand. Also, there will always be changes that we need to respond to in order to keep supply chain efficiency high. And beyond that: there are many other areas where inefficient supply chains exist: Clothing, electronics, furniture, or drugstore items, for example. Our technology can be adapted to the specific needs of these sectors.

About the person:

Alexander Piutti is a serial founder, business angel and innovation coach. He already built several technology and impact companies. These include Global Venture Partners, Overture, Game Genetics, Sir Plus, Rehago and most recently SPRK.