List: Sources of Equity Financing for Food Startups

equity financing

As someone who loves food, wants to change the world, and believes that start-ups and early stage financiers can help drive much-needed change in our food industry, I keep tabs on investors working in the food and agriculture spaces. Here’s a quick list of groups working in the industry — and for startups, potential sources of equity financing.

Note: Originally published on April 28, 2015. The current publication date reflects the last time the list was updated.

Accelerators

What: Time-bound programs that typically offer mentorship, co-working space, and usually funding, often in the form of equity. Check out my list of accelerators and incubators here. The cash you’ll receive from these programs is usually not very substantial. If you’re truly fundraising, keep reading.

Angel Investors

What: Angels are individual investors who choose to invest their personal money. They often invest at the seed round. Note: Some angel investors prefer debt-financing to equity financing. (And as a start-up, you might prefer that, too.) More on convertible notes later.

Equity Crowdfunding

Cash-for-perks: Crowdfunding is a way to take your fundraising efforts to the crowd. In exchange for some kind of perk (a shout out, early access to a new product, etc.), startups get cash from the crowd.  See the list of crowdfunding platforms dedicated to food & beverage, consumer goods, and agriculture here.

Cash-for-equity: The other model for crowdfunding, which became a legal reality after the Title IV of the JOBS Act Jobs Act got the green light, is cash-for-equity.  Investors may be angels or funds, which puts CrowdFunding (for equity) nicely between Accelerators & Venture Capital in terms of sources of equity. The platforms listed below curate deal flow for their investors, so you’ll have an additional round of selling to do just to get listed. From there, each investor makes their own decision on whether or not they’re interested in investing.

  • AgFunder — AgTech – San Francisco
  • CircleUp — Consumer Goods, including food & beverage – San Francisco
  • Venture.co – Early stage investment bank packaging and selling raises from $400k-$15M; features some consumer-facing companies including food & bev

Venture Capital

What: VCs are institutional investors (i.e., individuals investing from a fund). Venture Capital firms usually invest at a slightly later stage than angels and at larger amounts, but these things are usually functions of their fund size and investment themes. Venture Capital funding is hard to get.

Other VC Groups Making Occasional Food Investments: Accel Partners, Andreessen Horowitz, Hospitality Capital (NYC), Maveron LLC, SV Angel, True Ventures, Obvious Collection, Revolution (Steve Case: Sweetgreen), Yellowstone Capital

Corporate Venture Capital 

What: Corporate VCs are institutional investors in the sense that they’re investing out of a fund, but their investments are usually bankrolled by a parent corporation who wants to fund innovations in their industry (often because it gives them a line-of-sight into emerging trends and opportunities). Depending on the size of the fund and its strategy, these groups may have been formed as part of the firm’s M&A strategy. Note that CPGs launching an internal fund is a strong and growing trend.

Growth Equity

What: Growth Equity shops are institutional investors (i.e., individuals investing from a fund). Growth Equity firms invest at much later stages, and at much greater amounts, than VC firms. Conceptually, you might think of them as sitting between venture capital and private equity (see below), but growth equity is ultimately a segment of private equity.  These investors prefer de-risked investments, invest when companies have tens of millions of dollars in revenues and/or EBITDA, and create value through profitable revenue growth. Hence, growth equity.

Private Equity

What: Private Equity shops are institutional investors (i.e., individuals investing from a fund) using a combination of equity and debt (also known as leverage).  In the eighties, private equity transactions were known as leveraged buyouts, or LBOs. Like other investors, the size of private equity investments are typically a function of fund size and strategy, but these are late-stage buyouts.  Turnarounds may or may not be involved.

Think this list is missing a group or someone important? Email me.



2 Comments on "List: Sources of Equity Financing for Food Startups"

  1. Interest in promoting a food building that helps natioons create a self sustainable arm of General Welfare…globally. With some models based on trade, workforce, and product variety. Can you help?

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