Sourceful, an Index Ventures-backed supply chain transparency startup, has fast-fuelled with a $20 million Series A around half a year after it announced a $12.2 million seed round. The latest raise is once again led by Index, with Coatue and Eka Ventures also participating.
The 2020-founded startup works with brands to shrink the environmental damage associated with their product sourcing choices in areas like packing, via offering a marketplace of vetted suppliers. The startup also takes on logistics, handling the buying and shipping piece for brands (including a little warehousing if they need it) — monetizing by taking a commission on the overall price.
Sourceful has chosen to focus on packaging for its initial push to help brands reduce their supply chain emissions on account of the ubiquity of the challenge. (Decisions around packaging are also likely to require less lengthy sign-off for brands than environmentally minded design revisions of actual products.)
The startup bakes a packaging design interface into its platform so brands can experiment with design tweaks and see in real time how those choices impact the associated carbon footprint, helping them to make reductions in emissions.
Since we last spoke, it’s gained ISO (International Organization for Standardization) certification for the lifecycle assessment (LCA) methodology it applies so customers get an understanding of the carbon footprint of their product’s supply chain — a development its investors believe will help support faster global scaling.
Commenting in a statement, Danny Rimer, partner at lead investor Index Ventures, said: “Supply chains represent one of the world’s biggest sustainability roadblocks but they also contain one of our biggest opportunities to reduce global emissions.
“Sourceful is spearheading the effort to reduce the carbon footprint of supply chains, with the expertise, data and AI to give businesses the choices and the transparency they never had. Following Sourceful’s recent ISO verification, we believe the brand can go truly global and work with the world’s biggest businesses, to help build tomorrow’s sustainable world economy.”
Sourceful has around 30 customers since it launched the platform in Q1, but says it’s expecting this to step up significantly from here on in.
The Series A funding will go on fuelling the platform’s expansion into international markets, growing its presence in Europe, Asia and the U.S. — including by a plan to double the size of its 65-strong team within the next two years.
It is also planning to develop four new product categories, including integrating lifecycle assessments for plastics into the platform. (The other three packaging areas it’ll be adding are recycled plastics, with dynamic pricing and LCA calculation expected to be integrated into its platform by the end of April; as well as glass; and plastic alternatives.)
Sourceful points to an incoming plastic packaging tax in the U.K., due to start April 1, which will mean some businesses face paying penalties if they’re using plastic packaging with <30% PCR (post-consumer recycled content).
An historic UN resolution signed earlier this month also committed signatories around the world to ending plastic pollution by developing national action plans to curb plastic waste and report progress.
“As we were building the product, we increasingly realised the opportunity was in helping all parts of the supply chain, including the manufacturers, their suppliers and all partners in the network that feed into making the product. Digitising the supply flow has major benefits for a much larger set of parties than we had imagined,” CEO and co-founder Wing Chan tells TC, fleshing out why it’s dipped back into VC so quickly after what was already a chunky seed raise (albeit one commensurate with the scale of the challenge of reforming supply chains).
“We are also building a company that counters greenwashing in a space where marketing regulation and consumer protection are still limited. We’re taking no shortcuts and have decided to take the road less travelled when it comes to the investment we’re making in certification, supplier and material due diligence, and the data science required to get trusted results,” he adds.
Chan says Sourceful is seeing the most rapid uptake from e-commerce businesses that are prioritising sustainability — suggesting that trend will “only grow in urgency with mounting government regulation and consumer pressure”.
“We are also working with young businesses, because in today’s world, all new brands must put sustainability at heart of what they do,” he adds.
In an illustration of how seemingly small design choices around packaging can add up to noteworthy emissions reductions, Sourceful says its data shows that businesses can halve their carbon footprint by switching base materials and adhesives — such as the choice of gummed tape.
The choice of self-adhesive tape can also shrink environmental impact by up to 20%.
While mailer boxes can be optimized to shrink associated carbon emissions by up to 12% — such as by using custom-sized packaging to reduce void space and visualising and proofing packaging online to reduce the need to deliver samples.
Overall, Sourceful says consumer industries represent three of the top four most-polluting sectors, accounting for around 35% of global emissions — with 83% of those emissions flowing from their supply chains. So there’s no shortage of efficiencies to drive.
The startup further points out that e-commerce packaging in particular has a worsening environmental impact as online sales grow by 15% annually — arguing there’s little visibility or data available on its production and source material footprint, something Sourceful hopes its platform will be able to change.
