Food tech startup hopes to raise awareness of food waste in Korea
More than 820 million people still suffer from hunger due to food shortages, according to a recent United Nations report. However, developed nations produce and throw away excessive amounts of food. In South Korea, some 2,000 tons of perfectly good, untouched food is trashed every day.
Among the Korean startups tackling food waste issues is DamoGo. Incorporated in August 2018, it sells what the company calls “excess food” or “perfectly good surplus food” at discounts of at least 50 percent.
DamoGo CEO Lin Hwang(center) speaks at an event for food tech companies held together by WeWork Korea and McDonald’s in Seoul on Aug. 29. (DamoGo)
Lin Hwang, CEO of the 1-year-old startup, said the DamoGo service is not just about selling discounted food, but increasing the brand value of participating restaurants, bakeries and grocery stores by giving them a chance to reduce food waste.
“We are really a social app to reduce food waste, and our partners see the value and know that the service is not diluting their brands, but actually strengthening their brands,” CEO Hwang told The Investor in a recent interview.
Sustainability is at the root of the Korean startup’s business model, according to the CEO. The company has donated more than 1,000 food items in the last two months in partnership with small and large food businesses that otherwise might have just discarded the excess food. Since business owners have to pay for trash disposal, they tend to choose to partner with DamoGo to prevent waste.
Items available on the firm’s app include pizza slices and chicken wings that are being sold at must-visit restaurants in Itaewon, Gangnam and Hongdae, all in Seoul. DamoGo’s current 65 partners also include supermarkets and delis in the city.
The startup aims to increase the figure to 2,000 next year, and plans to expand into other Asian markets such as Indonesia, the fourth-largest Asian nation by population and the second-largest producer of food waste in the world.
The Indonesia project is currently being led by the company’s co-founder Muhammad Ferras, who was born in Indonesia and attended Korea University in Seoul. The company is in talks with local businesses to launch a pilot service in Jakarta.
As part of its scale-up plans, Hwang said, the company hopes to raise its first institutional funding of around $1 million next year. So far it has raised $120,000 from angel investors and received a government startup loan of $170,000.
“The $1 million fund, when achieved, will help us to go hard even in Korea and make noises in Indonesia,” he said.
The company takes 25 percent on every transaction on the DamoGo platform. That rate is the magic number in the industry, Hwang said, as most big profitable food tech companies in the same segment, such as Too Good To Go, charge that amount.
“Some competitors here charge a smaller fee, for example, 4 percent, to attract more partners, but it only ends up being $1,000 difference for food businesses (annually),” said the CEO, adding that DamoGo focuses on enhancing its partners’ brand image and giving them great exposure instead of going cheaper.
“We are truly trying to make an impact by reducing waste here and to create awareness about the wasted food issue because most Koreans don’t know about the issue yet,” said Hwang, who used to work for US investment firm Merrill Lynch.
He has worked in diverse areas of the food industry for the past 13 years. He decided to pursue his longtime dream of becoming an entrepreneur by joining his father’s seafood manufacturing business in Maryland in 2006. Along the way, he also consulted American food manufacturers and urged them to enter Asian markets. Later, he brought restaurant franchise Halal Guys to Korea.
By Kim Young-won (firstname.lastname@example.org)