The Food Startups group kicked off the 2013 year with a packed house for its first event on Thursday, January 10th. I’m thrilled to share that I’ve joined Matt Wise and Andy Saebjoernsen as a Co-Organizer of the group, and that we have plans for some exciting events in 2013.
For those of you that couldn’t make it to this event, here are my highlights:
We had over 150 attendees, significantly more than we initially expected. Panelist Andy Donner articulated the spirit in the packed room at our venue, SoMa Central: “Look around this room. This is special. The amount of interest in this area is only growing.” The strong attendance validates the market need for our group and our mandate for organizing more frequent events on topics relevant to food startups.
The panel featured a range of investors with experience funding food startups:
- Angel investor: Adam Salomone, Associate Publisher at The Harvard Common Press, the most notable cookbook publisher in the US and a participant in the Series A funding round of Yummly
- Crowdfunding enabler: Ryan Caldbeck, Founder and CEO of CircleUp, an online social marketplace supporting direct equity investments from individual investors to small private consumer companies
- Venture capital investor: Andy Donner, Partner at Physic Ventures, a San Francisco-based VC firm focused on health and sustainability
- Private equity investor: Kevin Murphy, Director at Encore Consumer Capital, a consumer products-dedicated private equity firm
- Corporate venture investor: Meredith Schwarz, Manager at General Mills Ventures, a corporate VC fund focused on investing in food technology, packaged food brands, and digital media
I found all the panelists to be engaging, articulate, extremely well-informed, and entertaining. I was most excited to hear from Meredith, as the corporate perspective is underrepresented in the VC/angel-dominated funding conversation in the Bay Area. She described the long process she follows with potential acquisitions as courtship: the dating, becoming serious, moving in together and finally marriage, a la General Mills’ acquisitions Larabar and Food Should Taste Good. She talked about her proactive role in seeking out potential partners: literally scouring local Whole Foods and looking for addresses on the back of packaged snacks. She encourages companies to reach out to her, especially those in General Mills’ sweet spot: solid brands with a deep understanding of their target customer.
Our rockstar moderator, Wade Roush, Chief Correspondent and San Francisco Editor of Xconomy, asked each panelist to share the trend in the food startup world they find the most exciting. Here’s what they came up with:
- Data: The potential of tapping the exponentially-growing amount of data out there about food: food consumption, food production, etc.
- Supply chain: Andy reminded us that Amazon Fresh will probably disrupt the entire food distribution system in the US
- Food safety: This will continue to be a hot topic as salmonella and other scares make headlines (did anyone else listen to the disturbing This American Life episode about misrepresented seafood?)
- Collaborative consumption: There’s still room for changing the way we think about and share fixed assets
My favorite question of the evening was when Wade asked the panelists to each give a pithy piece of advice to food entrepreneurs. What they shared:
- Ryan: Don’t worry about valuation; get money and then execute. It’s not worth dragging the funding process on and on to get a higher valuation.
- Kevin: Be distinct, and relentlessly pursue your distinctive idea. Don’t sacrifice your edge in order to grow, or to appeal to a wider audience.
- Meredith: Know your consumer, and focus on them. Prioritize depth of knowledge with your target consumer over broad market understanding.
- Adam: Be fearless and build relationships early. Funding is courtship, as Meredith explained. Don’t be afraid to get in touch with investors early, and focus on relationship building in the long term versus nearer-term tactical goals.
- Andy: Beware of your passion and the risk that it might interfere with objectivity. Food is an area in which emotions and passion can blind the actors. Try to maintain objectivity. Be honest and be aware of your own biases.
While I believe we presented a robust panel, I did receive feedback that we were missing a crucial funding angle. Most food startups will not reach the scale relevant for any of the panelists’ investment vehicles. Even CircleUp, Ryan’s crowdfunding website, does not look at companies with less than ~$500K-1M in revenue. Instead most startups depend on credit cards, small business loans, or, increasingly, peer funding via Kickstarter or Indiegogo. Abby Sturges, founder of Culture Kitchen raised her hand at the close of the event and asked how many in the audience were founders; a huge percentage raised their hands. Then she asked, how many had received funding. Maybe 3-5 still had their hands up. Her question to the panel was, “for those of us starting out, how can we get to $500K in revenue so we become relevant to you?” The answer was disappointing, I’m sure, to Abby who recently shut down Culture Kitchen after unsuccessful funding attempts (including an unfunded Kickstarter campaign). The answer: it still comes down to friends, family, and a whole lot of hustle.
Thanks to our panelists, our moderator, and our sponsors for helping us produce a great event! Sponsors:
- The Harvard Common Press, Bruce Shaw
- Moksha Beer, Anand Chandrasekaran
- Willo Cocktails, Starielle Newman
- Champagne Devaux, Camille Zanette, U.S. Brand Ambassador
- Artisan Growers and Producers, Ananda Neil
Matt, Andy and I are in the process of planning our next events, a mix of panels/education-oriented events as well as a few more social/networking/food tasting events. If you have topics you’d like covered, or other ideas for events, please share in the comments below. Thanks!