Why We Invested in Smarter Sorting
Driving towards a circular economy requires reducing unnecessary waste. Retail is a large sector that produces such waste. Currently, up to 43% of products in the “back-of-the-store” are improperly disposed of, leading to excess waste and greenhouse gas emissions. Smarter Sorting provides a solution to this problem, and the Unreasonable Collective is proud to have invested in the company’s $25 million Series A round alongside G2 Venture Partners and Regeneration.VC.
An Overview of Smarter Sorting
Smarter Sorting leverages the world’s deepest, chemistry-driven, product-level dataset to mitigate regulatory liabilities, drive circular outcomes, and generate logistical efficiencies for major retailers and brand customers. The company is modernizing regulated product management by culling waste streams through resale, recycling, donation, and other avenues. Smarter Sorting provides customers with a real-time dashboard detailing their impact footprint (e.g., waste and CO2e avoided) based on product redistribution. Through product redirection, Smarter Sorting will help drive the top-line for retailers through resale opportunities and broadened product sets.
Why we invested in Smarter Sorting
- We believe Smarter Sorting’s proprietary system upends legacy solutions, unlocking revenue and cost savings, and providing best-in-class regulatory compliance for retailers
- We believe Smarter Sorting is a real “painkiller” product which cures the regulatory headache for retailers
- We’re attracted by the company’s stable, recurring revenue supported by regulatory tailwinds, large addressable market, and potential to expand into new verticals.
- We see minimal competition due to winner-takes-all market dynamics and believe Smarter Sorting is well-positioned to succeed as demonstrated by the company’s ability to win key customer accounts from the incumbent.
- Most importantly, we are excited by Smarter Sorting’s impact to our planet through mitigating improper waste management, which causes soil and water contamination, air pollution, unnecessary greenhouse gas emissions, and ecosystem toxicity resulting in biodiversity loss and severe human health issues.
Smarter Sorting Deeper Dive
Retailers face an extraordinarily dizzying amount of product disposal regulations, which differ by product and region.As a result, retailers quickly opt for the most conservative action to avoid fines — sending waste to landfills. Deterioration of this waste and accompanying incineration releases methane gas and CO2, increasing the greenhouse effect. Municipal solid waste is the third largest source of human related methane emissions, accounting for 15% in 2019. These emissions were equivalent to 21.6 million passenger vehicles over a year. Furthermore, the waste’s chemical breakdown causes toxic compounds to seep into soil and water streams, resulting in animal death, ecosystem breakdown, and severe human health issues including cancer, endocrine disruption, various organ diseases and tissue deterioration.
Luckily, Smarter Sorting has a solution. Founded in 2016, Smarter Sorting’s algorithms identify how to best handle regulated consumer products following all safety, health, transportation, disposal, and sustainability regulations across the supply chain.
Smarter Sorting’s ‘Product Genome’ is a patented product with billions of data points that help compose product profiles based on physical and chemical properties alongside regulatory considerations. Retailers receive product information and dashboard services, and suppliers must upload their products onto Smarter Sorting to sell them at the retailer. APIs enable retailers to leverage that information to automate supply chain functions through reuse, donation, or responsible disposal. The company’s instant product-level recommendations mitigate costly regulatory liabilities and divert waste. Proper waste management saves retailers disposal costs and provides tax benefits from donation credits.
Additionally, Smarter Sorting supplies retailers with integral ESG data spanning waste diversion, meal donation, and avoided CO2e. These dynamic intelligent services expose weaknesses in the sole market incumbent’s outdated, resource-intensive, manual business model.
Smarter Sorting provides a win-win-win scenario — retailers avoid fines and save money, more products are recycled or donated, and unnecessary greenhouse gas emissions are avoided.
The market opportunity is significant as regulatory compliance is expected to grow over the coming years. An estimated 45 million consumer products are regulated, and imprecise product data can cost individual retailers up to $2 billion annually in lost sales, regulatory fines, and operational inefficiencies.
Below are impact metrics tracked by Smarter Sorting and demonstrates the impressive impact the company has already made in its early innings.
Smarter Sorting’s Management Team
The impressive management team behind the company include:
- CEO, Jacqueline “JC” Claudia, an experienced entrepreneur with a detail-oriented mindset and background spanning CPG, data analytics, retail, and aquaculture.
- CPO, Charlie Vallely, an experienced entrepreneur with a passion for translating big data into actionable information and ideas.
- CFO, Howard Greene, a finance veteran with nearly 15 years of CFO experience across numerous firms, most recently Mainstay.
- Chief Data Officer, Sheri Schneider, who brings a rich background in data systems, acquisition, and technology across automotive, media, and other industries.
Congratulations to Smarter Sorting on a successful Series A round! We could not be more excited to support the company and the positive impacts it will continue to make.
About Smarter Sorting
Based in Boulder, Colo., Austin, Texas, and Los Angeles, Smarter Sorting helps companies make, market and move consumer products better. Its customers include national discount club stores and supermarkets, as well as the brands they sell. The company’s customers use its Product Intelligence Platform to gain product insights and identify how to best handle regulated consumer products across the supply chain to remain compliant, avoid fines and reduce their environmental impact. Awards for innovation, impact and employee experience include: Fast Company Most Innovative Companies, Built In Best Place to Work, Real Leader Impact Award and SEAL Sustainable Innovation Award. Smarter Sorting is an Unreasonable Impact company.
About the Unreasonable Collective
Unreasonable Collective is a private members club for values-aligned investors looking to co-invest in highly vetted, best-in-class global technology ventures that are changing the world, profitably. Our members benefit from a highly curated portfolio of growth-stage ventures, pooled capital designed to deliver competitive terms, and intimate community experiences. Together we invest at the nexus of global impact, advanced technology and profit.
Find out more about joining this exclusive community here: www.unreasonablegroup.com/collective