Sustainable Food Company Discovers Ingredients for Success
What if you could turn byproducts left at food manufacturing facilities into nutritious products people can eat? That’s the goal of Renewal Mill, co-founded in 2015 by Claire Schlemme (FES '11).
"Much of these fiber byproducts produced at scale are really just ingredient streams we haven't found to be useful yet," Schlemme says. "Since all this energy has gone into producing food, it makes sense to capture the nutrition and make sure it stays in the food supply chain."
Renewal Mill has focused on byproducts of legume processing and the pulp left behind in the production of non-dairy milks. The company’s first two partnerships are in place, providing the ingredients for its first two products. Two months ago, the company brought okara to market: the soybean pulp left from soymilk.
Renewal Mill's model uses onsite technology located at the facilities that produce byproduct, so it can be processed, dried and dealt with in a food-safe manner. The company's optimized onsite process, Schlemme explains, eliminates the expensive and unhygienic need to transport the wet, heavy byproduct to a different location. "This adds an extra step for the food manufacturers but gives them an additional food ingredient that we purchase from them — the dried okara — which we then turn into a high-protein, high-fiber flour.
"The volume of food waste is immense, and we want to maximize the uses for these ingredients in food by selling them to food manufacturers," Schlemme says, adding that she hopes to change the traditional ingredient formulations of food manufacturers by alerting them to the functional benefits of Renewal Mill's sustainable alternatives. "In the US,” she notes, “when we process food we tend to strip away the fiber, which is the best part."
Schlemme cites some staggering US-specific statistics: 40% of the food that is produced never gets eaten, and 1 in 7 American households is considered food insecure. "That is the drive behind what we're doing," she says.
Renewal Mill began four years after Schlemme graduated from the School of Forestry and Environmental Sciences in 2011. Her co-founder, Sumit Kadakia, graduated from the School of Management and FES joint degree program in 2016. Schlemme and her co-founder started a diversity-centered speaker series at FES and welcomed Minh Tsai, who owns the nation's largest artisanal tofu factory. "That was the seed for realizing what an opportunity byproducts were," Schlemme says. After she worked on the project for a few months, Renewal Mills' progress was catalyzed by winning the Sabin Sustainable Venture Prize in 2016, awarded to student and faculty efforts to start a sustainable for-profit business. With $25,000 in initial capital and entrance into the then-Yale Entrepreneurial Institute's summer fellowship program (which brought the company an additional stipend), Schlemme and her co-founder began spending more time at the tofu factories to develop a manufacturing pipeline. "It was phenomenal, particularly because our company was brand new, and we won Sabin with just an idea rather than a venture at that point," she says. "Our summer at YEI was really about getting from the idea to a business."
Schlemme highlights the complexities of operating Renewal Mill related to the nature of working with perishable food byproducts. "We're building a bridge between manufacturers and end consumers using the byproduct, whether that's a food company or retail customer," she says. The company has two customers: the manufacturers providing the supply and individuals who purchase the food products made by Renewal Mill. "It's easy in the sense that our needs are being met on both sides, but matching the supply with demand is where it gets tricky," Schlemme explains. Food producers are excited by the innovative solution and customers are responding well to Renewal Mill's food products, but the all-or-nothing nature of working with byproducts creates challenges for the company. "It would be easier if we could scale up linearly, but with the byproduct we essentially have an on/off switch: we either have a small amount or are processing all of it," Schlemme says. "It's a gigantic approach, which is harder to match in terms of sales."
Despite citing her "big picture goal" of becoming a sustainable ingredient company, Schlemme has also tapped into the direct-to-consumer retail market. Renewal Mill released its first product, the Okara Chocolate Chip Cookie, a few months ago. The high-fiber, plant-based chocolate chip cookie, baked with Okara flour, has been available in retail locations and corporate offices in the Bay Area, and Schlemme hopes the sales of this product will inform her future manufacturing decisions. "Because Okara is an unknown ingredient to Western audiences despite being well known in East Asia, part of the job is being able to demonstrate demand and generate buzz around the product, which will help leverage the sales to food manufacturers," she says. "We're planning to always have a B2C component to the business to build a regional retail brand, but the bulk of the business will be B2B."
The company is currently working on its second byproduct from yellow pea production, and Schlemme is looking to expand the Renewal Mill team. She and her co-founder are working full time on the venture. In terms of fundraising, Schlemme explains the hybrid nature of the company as a challenge to convincing investors. "We're not a traditional CPG, but not strictly a technology company," she says, describing Renewal Mill as the food company of the future. "Sitting in between these worlds makes it harder for people to understand what we're about, since we don't fit into a traditional mold." Nevertheless, the company will soon be closing a $1 million seed round with funding from angel investors. Until now, Renewal Mill has been funded by grants from Yale as well as the Closed Loop Foundation. For Schlemme, the most important thing is to find mentors and advisors who "think about us as social entrepreneurs" and provide advice as well as financial support.
Veena McCoole is the YaleWomen Innovation Fellow at Tsai CITY.