Accelerators match big players with promising food startups
Global food companies and investors looking for the next big food phenomenon are increasingly turning to business accelerators where they can mentor and support agile startups.
Investment firms and companies like Nestle, PepsiCo and Chipotle Mexican Grill are making investments of cash, time and expertise in smaller-but-promising ventures, sometimes in exchange for equity and other times merely as a way to learn what the hot startups are doing right.
While the models are different, many newer accelerators are focused on startups with features in common, including a focus on sustainability, plant-based innovation or food technology.
One of the most diverse and ambitious is Food-X, a New York City-based accelerator backed by international venture capital firm SOSV that selects a different group of companies each spring and fall. The group is typically about half food makers and half tech-driven startups that operate, or plan to operate, in the food space.
Food-X is currently taking applications for the ninth cohort and it has mentored about 70 startups thus far, Program Director Peter Bodenheimer said. SOSV takes an 8% equity interest in each participating startup, in turn for providing an initial cash investment, shared office space, collaboration and mentorship in New York City. There's also the likelihood of follow-on investment through SOSV.
One day last fall, many of the founders of Cohort 8 companies were gathered in the Food-X space in Manhattan, sharing details of what they do. All the Food-X startups are early stage companies, some with products on the market and others still in development.
About half of the companies chosen each season are actual food makers and the others are tech-centered startups with a focus on food, like MISK.
MISK is a platform that aims to help users find the best area restaurants based on recommendations from friends and social media contacts, instead of relying on online reviews written by strangers. It’s three founders launched in Europe in 2017 and applied to Food-X with a plan to grow in New York City.
Another Food-X startup that was part of last fall’s group is Houston-based Naughty Noah’s Vietnamese Pho Noodles, an instant noodle soup product that grew quickly after landing a national deal with retailer Cost Plus World Market, said co-founder and CEO Jimmy Tay Trinh.
Trinh trained at the Culinary Institute of America and he developed the vegan, sustainably sourced soups as part of his own efforts to eat less processed food and lose weight.
His background as a chef and restaurateur gave Trinh the tools he needed to create and launch a product line, but he lacks the expertise in the CPG area needed to scale it rapidly. That’s where Food-X comes in.
“We wanted to have mentors and support,” he said.
Big food meets big new ideas
PepsiCo’s Nutrition Greenhouse is cultivating sustainable food startups with an accelerator model that launched in Europe in 2017 and expanded to the US last year. The first 10 companies chosen for the US cohort were named last November. Each entity received $20,000 at the outset of the six-month program and the one judged to have accomplished the most at the end will win $100,000.
But the money’s not the main thing. Like other accelerators, the Greenhouse offers participating startups business support and mentorship from experienced food business executives who can help them get to the next level.
The first companies selected include functional beverage maker Remedy Organics, co-founded by nutritional health counselor Cindy Kasindorf to commercialize the superfood-packed drinks and other remedies she had been making to promote health among her clients.
She launched the brand in small batches to sell at local bagel shops and, in partnership with her serial entrepreneur husband, Henry, Remedy Organics has grown into more than 1,000 retailers in the Northeast, including Walmart, Wegmans and Whole Foods Market.
“We’re using this as a vessel for our mission to bring better food to the world, through mainstream channels,” Cindy Kasindorf said. “Our goal is to find efficiencies that make this product more scalable and create a platform to bring better-for-you products to the food and beverage industry, and we feel that the support from the Nutrition Greenhouse can help us accelerate that mission.”
Brands participating in the PepsiCo program typically have products that are already on the market or poised to, and they’re looking for help to scale and expand their reach further into retail and/or foodservice.
Nestle’s accelerator model is a bit different. Rather than launching its own program from scratch, Nestle has partnered with the Terra Accelerator, an existing program created through a partnership between global firms RocketSpace and Rabobank.
Like PepsiCo, Nestle has chosen relatively young brands that already have products on the market and are innovating in industry segments that are growing fast, and it sees the accelerator as a two-way street. In its most recent cohort, Nestle chose three plant-based food companies to partner with, including Miyoko’s Kitchen.
Miyoko’s has had products on the market for several years and has enjoyed rapid growth that allowed it to expand to a new facility and focus on developing new products, but it was also looking for the expertise it needs to scale and expand into foodservice, founder and CEO Miyoko Schinner said last year.
Unlike Food-X, PepsiCo and Nestle don’t take an equity interest in the companies they select to mentor. Instead, the big food companies are offering their help to sustainable startups and early stage companies that have gained traction with products that appeal to today’s consumers. Many of the small ventures chosen are booking much faster rates of growth than the bigger players.
“A lot can be said for creating something together, for testing and learning together and it’s something that both companies can learn from,” Ashlee Adams, Nestle’s head of open innovation, said.
Chipotle backs sustainability startups
Last August, Chipotle’s nonprofit Chipotle Cultivate Foundation announced the launch of the Chipotle Aluminaries project, an accelerator aimed at helping grow startups in the sustainable food space.
High-profile restaurant-world mentors including Kimball Musk signed onto the project and, last month, the foundation unveiled the first group of eight participating startups.
They include: Asarasi, a sustainable water sourced from maple tree byproducts; GrubTubs, which gives restaurants and foodservice operators a way to turn food waste into animal feed; and Sophie’s Kitchen, a creator of plant-based seafood.
- Startups make plant-based meals more convenient
- The growing business of growing meat from animal cells
- Vegan cheese brands improve with age, innovate new products
- Promoting ugly produce to help the planet
If you enjoyed this article, sign up for Restaurant Smartbrief to get news like this in your inbox, or check out all of SmartBrief’s food and travel newsletters as we offer more than 30 newsletters covering the food and travel industries from restaurants, food retail and food manufacturing to business travel, the airline and hotel industries and gaming.