Originally published in Crain’s Chicago Business

July 3, 2014

Rajesh Karmani always was a spare-time do-gooder. Now it’s his job.

Mr. Karmani had planned on earning a doctorate in computer science from the University of Illinois at Urbana-Champaign and jetting off to Silicon Valley to join Google Inc. But on his way to campus each morning, he would stop by an Einstein Bros. Bagels for breakfast. One day, the franchisee shared his frustration over throwing away fresh food every day when nearby soup kitchens would be thrilled to serve it to their patrons.

So in 2012, a year before completing his Ph.D. studies, he launched a for-profit business called Zero Percent. Its product is an app that permits restaurants to list their leftover food and sends text alerts to food pantries about what’s available. The cloud-based program tracks donations so restaurants can record them as tax deductions.

The Einstein Bros. franchise logged $1,000 in charitable donations in less than a year and expects to hit $3,000 this year, says Mr. Karmani, Zero Percent’s CEO.

An estimated 40 percent of all food produced in the U.S. is wasted, according to the U.S. Department of Agriculture. “Our goal is to take 40 percent food waste and bring it down to zero percent by feeding hungry people,” says Mr. Karmani, 31, who was born in a region of Pakistan where food shortages are commonplace.

WASTE NOT
Feeding America, a national nonprofit based in Chicago, licensed the platform last year and rolled it out in 10 cities. (The deal has since ended.) In Chicago, more than 30 businesses have become food donors, including Eataly, Hannah’s Bretzel, Sopraffina Marketcaffe and Olivia’s Market. Nationally, food-service giant Sodexo USA Inc. signed up in June. Food partners pay $30 monthly, but eventually the fee structure will shift to a percentage of net tax savings, he says.

More than 25 nonprofits in Chicago receive donations through Zero Percent, including Franciscan Outreach in Wicker Park and the Pacific Garden Mission in the South Loop. About 1,000 pounds of food is donated each day in Chicago; that’s expected to rise to 10,000 pounds daily by year-end, Mr. Karmani projects.

The Goddess & Grocer gives away mostly prepared foods, such as salads and desserts, says Meghan Shank, marketing and product development manager at Bucktown-based Goddess Restaurant Group. “We’ve also been enjoying the perks of the partnership by marketing our green initiatives to customers,” she says.

Mr. Karmani started the business with $15,000 in savings. He moved the company to Chicago last fall when it was accepted into Impact Engine’s 16-week accelerator program. In exchange for a 7 percent ownership of the startup, Impact Engine gave Zero Percent $25,000 and guidance. In June, he received $220,000 from angel investors.

“I love Raj’s passion,” says Chuck Templeton, Impact Engine’s chairman. “He’s trying to tackle a massive problem that’s daunting to anyone, but he’s got the audacity to try to make it happen.”

– Judith Nemes

Originally published in Crain’s Chicago Business

July 1, 2014

Can Clean Energy Trust raise $2.3 million in matching funds for a new Illinois clean tech investment fund announced last week? No problem, says Nicholas Pritzker, co-founder of the nonprofit group and a member of its board.

The four-year-old Chicago organization, which mentors early stage companies in the renewable energy sector across nine Midwestern states, will manage a new $2.3 million revolving equity fund established by the Illinois Department of Commerce and Economic Opportunity. One condition of the funding is the trust’s agreement to match the government support, for a combined total of $4.6 million.

“There’s been a sea change in awareness of the necessity of these (renewable energy) technologies, and that’s why I’m confident we’ll raise the matching funds we need,” asserts Mr. Pritzker. “People understand this is about national security, climate change, pollution and health issues.”

Mr. Pritzker won’t name expected donors, except to say that he plans to give to the fund, as do family members through the Pritzker Foundation.

In addition, Clean Energy Trust raises money throughout the year and already has earmarked some of those dollars to the new fund, says Amy Francetic, the trust’s executive director.

The new fund will support an Illinois-only business challenge on Oct. 28, Ms. Francetic says. An independent panel of judges will decide which of the finalists will walk away with convertible notes ranging from $100,000 to $500,000. The entire $4.6 million fund will be distributed to startups by the end of 2015, she says.

The organization has boosted its visibility primarily with the Clean Energy Challenge it hosts every spring showcasing early stage clean tech startups and student-led finalists. The trust, which grooms these teams for the showdown with the help of outside advisers, intends to run the upcoming challenge in a similar fashion for the Illinois-designated fund.

What’s different about this upcoming challenge is the criteria for applicants.The state requires that startups be located in Illinois and be further along in their business formation than the typical early stage firms that compose the lineup of the trust’s annual spring challenge. These participants must have a demonstrated revenue stream or established funding source and products or services already commercially available, Ms. Francetic explains.

Clean Energy Challenge winners have received $1.2 million over the years, and some 60 companies the organization is tracking have so far raised a combined total of $42 million, she says.

For example, NuMat Technologies Inc., a 2012 winner, has raised over $2 million and now has an office in Skokie with a handful of employees.

“We’re patient, too,” Ms. Francetic says. “Part of the reason we’re structured as a nonprofit is that these aren’t tech companies that grow quickly. This is a sector that includes deep science and strong engineering. We’re hopeful that in the next two to five years we’ll see some good exits.”

Mr. Pritzker concedes that it took a couple of years to understand what direction Clean Energy Trust should take. “Now it has crystallized and we have a good strategy” with the challenges and ongoing mentoring and financing advice and connections.

– Judith Nemes

Originally published in Crain’s Chicago Business

June 11, 2014

Chicago’s Green City Market, the popular organic and natural foods farmers market in Lincoln Park, is planning an outpost in the Fulton Market area, a spokesman for the City of Chicago’s Department of Planning and Development confirmed.

Green City, which features fresh produce and artisanal foods from regional sources on Wednesday and Saturday mornings, will invite produce vendors to sell their goods at a new venue in the heart of one of the hippest and fastest-growing restaurant hubs in the city. That market could open as soon as mid-July, but the specific spot hasn’t been decided. Organizers are coordinating details with several city departments and local business groups.

The new venue will be a chef-focused market with only raw produce for sale, the spokesman confirmed. No prepared foods will be sold as they are at the Lincoln Park market.

Beth Eccles, co-owner of Green Acres Farm in Judson, Indiana, and a longtime vendor at Green City, said farmers have been briefed on the plans and were told the new market is expected to operate Saturday mornings. Mark Psilos, GCM’s associate director, wouldn’t confirm details about the new market.

“This is really exciting because we’ll get more exposure to many chefs and people who don’t come to the Lincoln Park market because it’s too far away or too crowded,” Ms. Eccles said.

The city of Chicago is eager to create a farmers market in the Fulton Market district to reinforce the area’s historic association with regional foods, the city spokesman notes. Last night, a pop-up farmers market closed down the 800 block of West Fulton for a few hours.

Part of Fulton Market Innovation District

The city has been moving forward with a Fulton Market Innovation District to boost economic growth in the area. Creation of a historic district is in the works, and one highlight envisioned in that location is the upcoming chef-oriented farmers market, the city spokesman confirmed. The historic district, with borders at Hubbard, Halsted, Ogden and Randolph, has been preliminarily approved by the city’s Commission on Chicago Landmarks. A public comment period is underway until the fall.

A long-term objective within the innovation district includes creation of a permanent indoor facility for regional food wholesaling and local food processing, he noted. That’s good news for regional farmers who want to sell their goods year-round in Chicago.

The 16-year-old Green City Market, at the intersection of North Clark Street and North Lincoln Avenue at the south end of Lincoln Park, has been expanding its presence in Chicago as more residents and local chefs clamor for foods grown locally in a sustainable manner that’s healthier for consumers and restorative for the land. The twice-weekly outdoor market moves indoors to the Peggy Notebaert Museum up the road after Halloween and stays there till mid-spring. Vendors are scattered in patches throughout the museum and some are only given outdoor spots because there isn’t enough room inside.

“Last season was really cold outside,” said Ms. Eccles, whose fall harvest was for sale just outside of the museum’s entrance. “One day it was 18 degrees and some of our produce was literally freezing on the table.”

– Judith Nemes

Originally published in Crain’s Chicago Business

June 3, 2014

Chuck Templeton, until recently managing director of Impact Engine, Chicago’s accelerator program for for-profit social entrepreneurs, is moving his family to Costa Rica for a year beginning in August.

The venture capitalist, who founded San Francisco-based OpenTable Inc. and has been at the helm of Impact Engine for the last two years, will continue to be engaged with the accelerator, as its chairman, and other aspects of Chicago’s socially oriented startup community.

Mr. Templeton, 46, is heading to Costa Rica’s Pacific Coast with his wife, Julie, and two daughters, who will be 8 and 10 when they move. They all plan to learn Spanish and immerse themselves in the local culture, he says.

“We live in a comfortable bubble in Chicago and we want our girls to be globally conscious that there are other places that aren’t like Chicago,” he says. “It’s also in the same time zone, so I can still be plugged in.”

Mr. Templeton will continue his role as a hands-on “super-mentor” to entrepreneurs in the accelerator program, but will work with only one or two from Costa Rica. In the last year, he was a mentor for all eight teams in the 16-week boot camp.

Impact Engine has assembled a roster of a dozen super-mentors from the Chicago business community and some of them will be matched up with new startups in the next round of the accelerator program that begins in September, according to Mr. Templeton. They each will receive between one-third and one-half of a percent of Impact Engine’s equity stake in the startups. Applications for the next crop of startups closes June 22.

Mr. Templeton picked Costa Rica for more than its balmy weather and world-class surfing. The country is well-known for its eco-mindedness. “My passion is around climate change and Costa Rica has interesting models of integrating mitigation solutions into their economy,” he says. “There’s some progressive educational institutions doing good work there and I plan to connect with them and bring back some good ideas.”

Linda Darragh, co-founder and a board member of Impact Engine, isn’t worried about Mr. Templeton’s departure from day-to-day operations. “He creates the most value working directly with the companies and that’s where his time will be spent” with the accelerator while he’s out of the country, says Ms. Darragh, who also is executive director of the Levy Institute of Entrepreneurial Practice at Northwestern University’s Kellogg School of Management.

A new leadership team has taken over this month, led by CEO Jessica Yagan Droste. Ms. Droste brings an expertise in operations from her corporate background as former director of sustainable supply for McDonald’s Corp.’s U.S. operations. Joining her as chief investment officer is Tasha Seitz, a partner at Chicago-based venture firm JK&B Capital. Ms. Seitz previously was a managing member of Impact Engine.

Mr. Templeton, who has an MBA from Northwestern University’s Kellogg School of Management, intends to meet twice a week with Ms. Droste via Google hangout, email and phone. He’ll also schedule conference calls with one or two Impact Engine entrepreneurs he’ll mentor from afar. And Mr. Templeton will return to Chicago for special events, including Demo Day when graduates present their polished business plans to an audience filled with venture capitalists.

“Costa Rica isn’t that far away,” concludes Ms. Darragh. “If he had gone to New Zealand, we’d be in big trouble.”

In addition to Mr. Templeton, Impact Engines super-mentors are Mike Evans, Chris Gladwin, Matt Speigel, Sam Yagan, Thania Panapolous, Dennis Barsema, Steve Farsht, Troy Henikoff, Brian Lernihan, Greg Lernihan, Bob Montgomery and Peggy Eastwood.

– Judith Nemes