Sourceful, an Index Ventures-backed supply chain transparency startup, has made a quick start with a $20 million Series A, about six months after announcing a $12.2 million seed round. The latest increase is again led by Index, which also includes Coatue and Eka Ventures.
Founded in 2020, the startup is working with brands to reduce the environmental damage associated with their product sourcing choices in areas such as packaging by offering a marketplace of vetted suppliers. The startup also takes care of the logistics and handles the purchasing and shipping piece for brands (including a little storage if they need it) – making money by taking a commission on the total price.
Sourceful has chosen to focus on packaging for its first effort to help brands reduce their supply chain emissions due to the ubiquity of the challenge. (Packaging decisions also likely require less lengthy sign-offs for brands than environmentally conscious design revisions of actual products.)
The startup is building a packaging design interface into its platform so brands can experiment with design tweaks and see in real time how those choices affect their associated carbon footprint, helping them reduce their emissions.
Since we last spoke, it has been awarded ISO (International Organization for Standardization) certification for the Life Cycle Assessment (LCA) methodology it employs, helping customers understand the carbon footprint of their product’s supply chain — a development that investors believe will provide faster global support scaling.
Danny Rimer, partner at lead investor Index Ventures, said in a statement: “Supply chains are one of the world’s biggest obstacles to sustainability, but they also hold one of our biggest opportunities to reduce global emissions.
“Sourceful is at the forefront of efforts to reduce the environmental footprint of supply chains, with the expertise, data and AI to give companies the choices and transparency they never had. Following Sourceful’s recent ISO verification, we believe the brand can truly go global and partner with the world’s largest companies to help build tomorrow’s sustainable global economy.”
Sourceful has about 30 customers since the platform launched in the first quarter, but expects this to grow significantly from now on.
The Series A financing will continue to drive the platform’s expansion into international markets and increase its presence in Europe, Asia and the US – including through a plan to double the size of the 65-strong team within the next two years.
It also plans to develop four new product categories, including the integration of plastics life cycle assessments into the platform. (The other three packaging areas it will add are recycled plastics, with dynamic pricing and LCA calculation expected to be integrated into the platform by the end of April, as well as glass and plastic alternatives.)
Citation points to an inbound tax on plastic packaging in the UK, starting April 1, meaning some companies will have to pay fines if they use plastic packaging with <30% PCR (post-consumer recycled content).
A landmark UN resolution signed earlier this month has also committed signatories around the world to end plastic pollution by: developing national action plans to contain plastic waste and reporting on progress.
“As we built the product, we increasingly realized that the opportunity lay in helping all parts of the supply chain, including the manufacturers, their suppliers and all partners in the network who contribute to making the product. Digitizing the supply stream has major benefits for a much larger group of parties than we had envisioned,” CEO and co-founder Wing Chan told MovieUpdates, explaining why it has plunged back into VC so quickly after what is already a hefty seed. -raise (albeit one commensurate with the magnitude of the supply chain reform challenge).
“We are also building a company that combats greenwashing in a space where marketing regulation and consumer protection are still limited. We are not taking shortcuts and have decided to take the road less traveled when it comes to the investment we make in certification, supplier and material research and the data science needed to get reliable results,” he adds.
Chan says Sourceful is seeing the fastest adoption of ecommerce companies that prioritize sustainability — suggesting the trend “will only become more urgent with increasing government regulation and consumer pressure.”
“We also work with young companies because in today’s world all new brands need to put sustainability at the heart of what they do,” he adds.
Illustrating how seemingly small design choices around packaging can lead to remarkable emissions reductions, Sourceful says the data shows companies can cut their carbon footprint in half by switching base materials and adhesives, such as choosing gummed tape.
Choosing self-adhesive tape can also reduce environmental impact by up to 20%.
While shipping cartons can be optimized to reduce associated carbon emissions by up to 12%, for example by using custom packaging to reduce void space and visualizing and proofing packaging online to reduce the need to provide samples.
Overall, Sourceful says consumer industries represent three of the four most polluting sectors, accounting for about 35% of global emissions — 83% of which come from their supply chains. So there is no lack of efficiency to drive.
The startup further points out that e-commerce packaging, in particular, is having an increasing environmental impact as online sales grow at a 15% annual rate – arguing that there is little visibility or data available on production and source material footprint, something Sourceful hopes its platform will be able to change.