Investors at Milken Focus on Food as the Public’s Eating Habits Change
(Bloomberg) -- Food is becoming an increasing focus for institutional investors and family offices, executives said Monday at the Milken Institute Global Conference in Beverly Hills, California.
Jeffrey Housenbold, managing partner at SoftBank Vision Fund, which counts Brandless, Plenty and DoorDash among its food-related investments:
- SoftBank’s minimum investment size is $100 million and the firm is looking for companies that need capital for R&D and to create infrastructure to distribute globally, among other things.
- The firm seeks to provide “patient capital” and isn’t worried about near-term profitability.
- SoftBank is interested in “use of data” across all investments, such as how it informs a company’s go-to-market or customer-acquisition strategies.
- Fizzy flavored water, despite being consumed by the case per day in some families, wouldn’t meet firm’s thesis because there is no technology angle.
Jordan Gaspar, managing partner at AccelFoods, which invests in companies producing up to $50 million in revenue. AccelFoods targets companies with a profile of 100 percent year-over-year growth and has 36 in the portfolio currently:
- Portfolio companies include Four Sigmatic, maker of mushroom- and powder-based beverages. Gaspar says it’s an acquisition target, on the forefront of innovation in the space as mushrooms are an alternative to traditional medicine and nutritionists start to advocate for their inclusion.
- AccelFoods is “very open” to co-investing with strategic buyers, many which have their own venture capital arms today, especially if distribution support is offered. It’s increasingly seeing “call” options included in structures, which gives strategic buyers the option to acquire a company it has invested in early.
- Gaspar points to trust in young brands versus big food, in part through the belief in conviction of entrepreneurs, and refers to Kellogg’s $600 million purchase of RXBAR, which recalled products.
- “Five years from now, the products we grew up eating will not be on shelves.”
Jason Karp, co-founder, Hu Kitchen and Hu Products, which recently sold a stake to Mondelez International Inc.:
- There are “public heroes” like Tom Brady and LeBron James eating in a certain way. “The tide has turned -- eating healthy is something you should be proud of.”
- People have lost trust in large consumer packaged goods companies. He’s seeking to restore trust through Hu, which offers vegan, dairy-free, gluten-free products with no adulterants that add shelf-life or taste.
- “It’s a very difficult tightrope that many of the big food companies are walking” in part because smaller brands they may back don’t make a real impact on their revenues, at least initially.
Sanjeev Kirshnan, chief investment officer at S2G Ventures, an early investor in Beyond Meat:
- Poultry is the fasting-growing category in organic food. Kirshnan notes feed costs can be lowered due to supply-chain management including mechanisms like crop protection.
- “Data builds trust” -- he says food is among the least-digitized industries, which will change. Mentions firm’s investment in SafeTraces, a U.S. food traceability company that counts Bunge’s venture arm among its other investors.
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