Strella Optimizes the Food Supply ChainBy Ronnie Thompson
Strella Biotech, founded by Katherine Sizov (University of Pennsylvania ’20), helps optimize the food supply chain and eliminate waste. Fresh off of winning “The Pitch” and securing a $20K investment from Dorm Room Fund, I sat down with Katherine to talk about Strella and her vision for the future.
Did you know that 40% of all fresh produce is wasted before it’s consumed? When Katherine Sizov read about this problem, she set about finding a way to fix it.
“I read somewhere that 40% of all fresh food is wasted before it’s consumed. That’s so crazy. There are already seven billion people on this planet and we’re making 1.6x the amount of food that we need to be making. That’s a huge, huge number and it obviously hasn’t been optimized. So I thought maybe I could use my technical experience to solve the problem in some way.” – Katherine Sizov, Founder & CEO, Strella Biotechnology
During her junior year at the University of Pennsylvania, she developed a sensor that monitors the ripeness of produce and, in the process, founded Strella Biotechnology. Strella’s sensors track fruits’ ripeness using a natural mechanism instead of a manmade substrate. In Katherine’s words, Strella’s technology “hacks fruit” by measuring Ethylene, a gas which fruit naturally produce as they ripen. If you’ve ever placed a ripe by banana next to an unripe one and observed that the latter then ripens more quickly, you’ve seen Ethylene at work.
Strella hopes to eliminate waste in the food supply chain – and save packers millions of dollars each year – by placing Strella’s sensors in produce storage rooms. This past season, Strella completed trials with two major packers, which together compromise about three percent of the US market. Using Strella’s sensors allowed these packers to identify which fruits were the ripest and therefore ready for distribution, eliminating waste and spoilage. At a price point of about $28K per storage room (Strella’s MSRP is $14 per storage bin), Katherine estimates that Strella’s technology saved its clients about $187K per storage room per year by preventing spoilage.
If this sounds like a significant amount of savings, imagine what it looks like on a global scale. Katherine estimates that if Strella’s technology were integrated into the food supply chain across North and South America, Europe, and Africa the total annual savings would be approximately $21B.
Although 240MM bushels of apples are produced in the US each year, most of these fruits sit in storage from anywhere between eight to 18 months before they make it to grocery store shelves. If distributors deliver overripe apples (or any other type of produce for that matter) to stores, grocers simply won’t pay for them. In order to determine which apples to distribute, packers typically pull an apple from a storage room and use it as a proxy to determine the ripeness of the lot. As you might imagine, this methodology doesn’t always deliver the most accurate results.
Recognizing that this market represents an enormous opportunity, Strella is focusing its preliminary sales efforts on the apple industry. By deploying Strella’s sensors, Strella’s clients have been able to work towards optimizing their supply chains, eliminate waste, and determine which growers produce the ripest fruit.
Moreover, Strella enables packers to carry popular, but more finicky apple varieties to better meet consumer demand. For example, Honeycrisp is one of the most popular apple varieties amongst consumers, but many packers don’t carry large quantities of these apples because they are so difficult to manage. Instead, most packers tend to carry a lot of Red Delicious apples, which are less popular, but easier to store. Strella helps alleviate some of the challenges associated with storing Honeycrisp and other varieties of apples, allowing packers to better match demand.
After completing two successful trial runs last season, Strella’s client roster will expand to bring on seven new customers. These nine packers comprise 23% of the US market. In total, Strella estimates its initial addressable market size at $621M for U.S. apples, but could expand to other fruits as well as geographically to increase its opportunity to more than $5B.
The Strella Team
To support Strella’s growth, Katherine has added three additional members to the team: Reginald Lamaute, Zuyang Liu, and Malika Shukurova. Katherine realized early on that Strella’s sensors would require a lot of IoT and network infrastructure, so she asked Zuyang, who is an electrical engineering masters student at Penn, and Reginald, who is submatriculating into a masters degree in nanotechnology, to join the team and help build out Strella’s product. Zuyang currently serves as VP of Engineering and Reginald serves as VP of Technical Strategy.
As Strella’s product development progressed, Katherine realized she needed to bring on new talent to help run additional experiments to refine Strella’s tech while she turned her focus to market research. As a bioengineer and fellow Penn undergrad, Malika was a great fit; she currently serves as VP of R&D.
Now as Strella’s focus shifts to customer development, Katherine and her team have enlisted the help of Jacob Jordan, who has previous experience at major agricultural companies like Dupont, to help develop and support their sales strategy.
Strella’s Growth Story
Katherine first started developing the technology behind Strella in the Penn Bioengineering lab. Although all of her previous lab experience focused on human genetics she began to develop an interest in plant physiology after reading about the enormous amount of waste in the food industry.
“Plants are so alien! Everything about them is so different from mammals.” – Katherine Sizov, Founder & CEO, Strella Biotechnology
Developing Strella’s sensors took Katherine and her team about two years, during which they faced their fair share of challenges. Katherine notes that her first prototypes “didn’t even look like a sensor.” But, after several iterations and “a lot of conversations with people who are a lot smarter than me,” she developed a viable product.
Now, Strella’s differentiated sensing technology sets it apart from the competition in the space. Chemicals that slow the ripening of apples can’t be used on organics, which are also the more profitable (and therefore valuable) type of apple for packers. Other sensors, like those developed by MIT’s C2Sense, use carbon nanotubes to detect ripeness, but can prove more costly and less scaleable than Strella’s solution. To maintain their competitive advantage, Strella has filed for provisional patents and is in the process of finishing up the experimentation necessary for utility applications.
However, Strella’s first sensors weren’t perfect. They contained lithium-ion batteries, so in order to transport them for trials, Katherine and her team had to pack them in their carry-ons. As you might expect, bringing large amounts of unfamiliar tech products on an airplane invariably caused the TSA to stop and question Katherine and her team. Describing this scenario to me, she laughs and sums it up with, “It’s been a journey.”
Looking to the Future
While Strella’s past has seen some challenges, the company’s future looks bright. Katherine and her team have received approximately $260K in equity-free capital after winning pitch competitions such as ASU’s Innovation Open, the Wharton Startup Challenge, and Gimlet Media’s traveling podcast, “The Pitch,” which StartU covered in December. Strella also recently finalized its first equity investment, with the company receiving $20K in funding from Dorm Room Fund.
In addition to all the capital that Katherine and her team have won and raised, Strella’s expanding client roster should help provide some of the funds necessary to support the company’s growth. Katherine estimates that serving nine packers this coming season should bring in about $300K in revenues for Strella next year. With about 30 packers making up about 75% of the entire US apple distribution market, Strella is steadily picking up market share.
Katherine doesn’t plan to just stop at apples either. Strella’s tech can be used for other produce such as pears, bananas, and avocados, so Katherine is starting to explore these markets.
“Basically anything that you seen in a grocery store and you go ‘Oh my god this is too mushy.’ or “It’s too hard.” is probably something that we can fix.” – Katherine Sizov, Founder & CEO, Strella Biotechnology
Another high-value potential use case for Strella’s tech is in shipping produce. As such, Katherine and her team are experimenting with how to make sensors that are both durable enough and last long enough to monitor produce from port to port.
When Katherine, Zuyang, and Malika graduate from Penn this spring, they plan to work on Strella full-time. While they are currently focused on developing Strella’s client base and supporting the company’s rapid volume growth, Katherine is considering raising another round after they graduate to support Strella’s forays into new markets.
Strella’s name comes from the Russian word for arrow. Katherine says she chose it as an homage to her Russian heritage, and also because she liked its forward, feminine vibe. After Strella’s recent successes and rapid growth, it will be exciting to see where this arrow lands next.