Do We Need More Processed Snacks Or Can #Crowdfunders, #Accelerators & #VCs #Fund Better Deals In Food #Innovation
Chances are you are reading this because you are a ‘#foodie’. Chances are you are a health AND environmentally conscious foodie as well. Chances are you have thrown a little money at a #foodEntrepreneur or two. Does your Supermarket or Starbucks constantly put new packaged food options up? Did you try one and love or hate it only to see it disappear a couple weeks later from the shelf? Do you wonder why short lived trials keep showing up and going away? Is a lot of effort and money being wasted with these flashes in the pan? Is it bad judgement or just silly ideas? Are these ideas ‘wants’ or ‘needs’?
Most of these new ideas are fun and at least a want. Let us hope they are also a need. #Food & #Beverage like any space needs new tastes and ideas to stay interesting. However, food is the one space where solving an actual problem is not always the motivation. I blame Food TV more than anything else for this. The world has a number of food related problems that need solutions without inventing yet another snack or drink. If anything, the constant rising and falling of brands is a colossal waste of resources on all fronts. #Hunger, #obesity, #cholesterol, and things like #foodAllergies persist while food entrepreneurs design soft drink alternatives and snack bars with debatable nutrition benefits. Raising a brand high enough to scale requires a lot of production, cost cutting, marketing, distribution, sampling and … financing. Few if any of those brands are staple food requirements. So long as production, distribution and sales are separately handled, … and the food idea itself is “want rather than need”, few brands can control their destinies well enough to reach scale. There will always be the exceptions to all this, but most fail. Having personally invested in ice creams, sauces and salad dressings, I pause to question my own doings.
Why are all these food ideas getting funding? It tastes pretty good? Perceptions of scale and profit in glib pitches? Charming entrepreneurs? Egos? There have always been those that stimulate new ideas. Before there were investors, the royal and the rich were the main patrons of innovation. While there may have been egos involved there too, the ideal was a benevolent patron who stimulated innovation designed to make his/her peoples’ lives better. Venture Capitalists (VCs) perhaps have other pressures and motivations and seem to be more worried about viable investments than if the investment genuinely improves lives. They call this ROI, portfolio, … focus (ironically) etc.
Here are over 300 Food Accelerators categorized by stage. Here is a list of Food Angels and Venture Capitalists (VCs). Large food companies have internal investment and incubator departments. Kickstarter currently has 30000 calls for crowdfunding by food entrepreneurs. Less than a quarter of these actually manifests any clarity or even focus on investment goals that is not merely about profits and returns. Are they making investments to make food and related processes better or just cherry picking entrepreneurial effort for profit? While profitability and return do drive investment, a comprehensive strategy to change the food landscape to make it better for humanity as a whole is much more likely to draw in more money and cause productive steps forward. Some do declare intent to consider only double or triple bottom line ideas, but almost no one has a strategy for solving the big problems with food. Here is how investment was spread across categories:
Personally, I do not want to hear any more ideas about fizzy drinks, alcohol, snacks, bars, processed food or anything sweet! In order of importance here are the strategic bets funding and financing should be making:
- Healthier Options in Staple or Core Foods: The need to change food habits for the everyday person has become paramount. Obesity and food allergies are major problems. Finding alternative foods in such cases has unfortunately become a premium market. Is it not ironic that healthy foods are more expensive?
Food and nutrition science has matured and become more sophisticated. Regardless of profit and other dynamics like want vs need, we need to ensure staple foods are less expensive and do not contribute to either obesity or allergies or other issues. Meatless burgers are interesting protein but full of processed ingredients. Insect protein is simply unpopular. What innovations in food can lead to lower carb, higher fiber, better nutrition profile with lesser processing and cost?
- Sustainable Options: Mass production of food has a huge impact on environment as well as local labor and economics. What types of new foods or production methods can remedy these effects or at least prevent them? Importing or exporting rare spices or delicacies is charming and fascinating but it leads to high costs in packaging and transportation. Can we find other solutions that are cheaper and more environmentally friendly in packaging and transportation? How can we find and fund food ideas that are more likely to be fair to both the environment and local economies?
- Production Cost Reduction: Why does every food innovation “stimulating” organization or initiative not have a dedicated production facility and supply chain for ingredients yet? Why must every food entrepreneur source their own and then justify cost reduction based on volume as part of their projections? If the investors had a production facility and supply chain those numbers would be much easier to trust. Are there other innovations in food processing equipment or 3D printing or automation that would reduce production costs?
- Marketing, Distribution and Sales Cost Reduction: The biggest obstacles to bringing new food to market and scaling sales is first the culture change and then the complicated set of slotting, storing, returning etc. Distribution is a separate and saturated space. Are there ways to shape perception of the general consumer, increase visibility and availability at lower costs? What can investors stimulate in regards to how people eat, food distribution, and sales innovations?
This set of investors seem to be on the right track. Whether you merely participate in crowdfunding ideas or are an Angel or Accelerator or VC, declare how you are going to change food for humanity and fund that. It is ok to focus on one of the areas above but much more intriguing to allocate appropriate parts of your funding to all of those areas. What is a good mix and allocation of your funding efforts? When you make it known that you offer funding to food entrepreneurs, do you also put out any philosophies on making the food landscape in general better? Do you participate or sponsor food think tanks or discussions about how we can change everyone’s diet for the better with sustainable and efficient production? Do you just want profit or will your funding of food make our world healthier?