Trashless is raising a convertible note at a $6 million valuation with a 20% discount. This price is a tad high, particularly given Trashless’ recent revenue decline and revamp of operations and branding. However, Trashless has built a proprietary tech platform and logistics system that bears inherent value. Investors will also receive a good-sized discount for joining Trashless’ cap table in this raise. Therefore, Trashless’ price rating is medium-high. 

Trashless’ market is — put simply — huge. Theoretically, a model of localized delivery with reusable containers has the potential to replace the supermarket system as we know it (this future is far, far away, but it is conceivable). 

The food and grocery retail market in the U.S. was benchmarked at almost $1.5 trillion in 2018, with a projected 5.0% CAGR over the next seven years in the global grocery market. Moreover, online grocery orders and grocery deliveries are booming. Experts project that online orders will comprise more than a fifth of the total U.S. grocery market by 2025 — an increase in market size from $35 billion to over $250 billion in just a few years.  

Trashless currently has a very, very tiny sliver of this market. The company operates only in Austin, TX and has generated under $500,000 in revenue thus far. However, the company seems to have a loyal customer base (several customers are investing in this round, per comments in the StartEngine forum) and is positioned to grow into more cities in Texas and beyond soon. Therefore, Trashless’ potential market is huge, and the company’s market rating is its highest. 

Trashless was founded by Yogesh Sharma and Ved Prakash, Indian-American business builders each with 20 years or more of entrepreneurial experience. Before founding Trashless, Sharma (the company’s CEO) served as the co-founder of four previous startups in the U.S. and India, including a mobile messaging company, advertising platform, and media brand. He holds a B.S. in Physics and M.A. in Philosophy from Delhi University. 

Prakash, Trashless’ VP of Engineering, collaborated as a founding engineer on many of Sharma’s past projects. He has also served as a programmer or engineer for almost 20 years. He holds a Bachelor’s of Commerce degree from an unknown university. The remainder of the team includes an operations manager, brand manager, and additional engineering and customer success staffers. 

Overall, the Trashless founding team has significant entrepreneurial experience and has worked together before on several ventures. At the same time, the team lacks deep expertise in food logistics and U.S. DTC brand-building. Therefore, Trashless’ team score is middle-of-the-road.

Trashless is proving out a fairly innovative model for grocery delivery — reviving an antiquated “milkman” model and adapting it to present-day customer needs and environmental obligations. However, Trashless is not the only company paving the way for products delivered in reusable containers. Most notably, Loop has partnered with Walgreens and Kroger to offer grocery delivery in metal, glass, and reusable plastic containers. Loop operates nationwide and has made significant headway in Trashless’ exact lane. Other, smaller brands are also offering sustainable delivery for basic products, including CleanCult and Blueland. 

There is likely room for multiple reusable grocery delivery services in the market, just as there is room for both Walmart and several other national supermarket chains. However, Trashless is not particularly differentiated from competitors (or future competitors, if a major chain expanded to offer sustainable delivery). These similarities make it vulnerable to price wars and other hurdles. Therefore, Trashless’ differentiation score is its lowest.

Trashless underwent a major transformation in 2019. The company paused all operations and revenue generation between May and October of last year to significantly rework its business model, develop a new brand, and otherwise streamline operations. Trashless reports that it undertook this pivot because the previous business model was deeply unprofitable, and the company’s focus moving forward is sustaining high margins and minimal net losses. 

Due to this pivot, it’s no surprise that Trashless’ revenue decreased between 2018 and 2019. In 2018, the company generated $568,479 in revenue, with a significant net loss of just over $700,000. In 2019, revenue decreased to $484,772, but cost of goods sold and operating expenses were nearly halved, and Trashless’ net loss was $288,972 as a result. 

This revenue decrease should be of moderate concern to investors, though Trashless is transparent about what caused the hiccup. Moreover, the business model improvements that Trashless undertook seem to have achieved their goal of reducing burn and boosting overall margin. Revenue decline aside, Trashless is still generating almost half a million in revenue per year (and perhaps more in 2020), which is significant for any early-stage company. As a result, Trashless’ performance score is moderately high.

Trashless seems to have built a loyal community of sustainable delivery lovers in Austin, TX. However, scaling Trashless’ operations to additional cities — and eventually nationwide — is a significant and arduous undertaking that the company’s founding team does not seem particularly well-suited to achieve. True scale will require an obsessive focus on the unit economics of delivery and maintaining high margins to generate the additional capital needed to launch new logistics operations in new markets. While Trashless’ recent pivot seems to have improved these fundamentals, it’s too soon to say whether Trashless has truly unlocked a sustainable formula for growth. 

At worst, it seems that Trashless will continue to build its base of customers in Austin, and perhaps expand to nearby cities like Dallas and Houston. However, the company may not be able to achieve true scale in additional states in the U.S., so upside for investors may be limited. 

Trashless is operating in a red-hot market of online grocery delivery, supplemented by the consumer buzz around sustainable living and reduction in single-use plastics. Provided that Trashless can maintain high margins and efficiently scale a very complicated logistics operation, the company has the basic potential to grow into a national grocery brand. 

The company’s recent business model shift seems to indicate that its managers are properly focused on business fundamentals like margins and net loss. The changes they implemented seemed to have borne quick results in reducing burn (with only a mild decrease in revenue). These are positive signals that Trashless has the obsessive focus on economics and logistics needed to scale. 

Trashless is a grocery delivery company offering basic ingredients, meal kits, and other household essentials in reusable containers that customers can receive, use, send back, and re-receive similar to the milkman model of earlier generations. Trashless’ model for sustainable consumption eliminates single-use plastics, benefiting the environment. The company is addressing a huge market eager for online deliveries, with high interest in sustainability. Current customers are excited about Trashless, and the company has the potential to scale nationwide. 

On the other hand, Trashless did experience a decrease in revenue last year (as expected, due to a business model shift) and is still proving whether that pivot has been successful in decreasing net losses. Trashless will have to execute extremely well to build efficient enough logistics operations to scale to additional cities and states, and the company’s team does not have a strong operations background (though founders have led several previous ventures). Therefore, Trashless has been rated a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Katy Dolan.