The vital work of incubators and accelerators for plant-based businesses
The plant-based food industry cooks with gas. According to SPINS data released by the Good Food Institute and the Plant Based Foods Association, retail sales of plant-based foods were $ 7 billion in 2020, showing an overall growth rate of 27% for products which specifically replace products of animal origin.
Incubators and accelerators, both of which provide good opportunities for entrepreneurs from the start, have long been part of the business ecosystem, but their influence within the plant industry could help propel the sector much further.
There are many challenges for any start-up business, but this is especially true for plant-based businesses.
“Some start-ups need help determining the flavor or texture of a product, shelf life testing or understanding food regulatory or supply chain laws,” says Rusty Schwartz, Founder and CEO of San Mateo-based KitchenTown accelerator. “Others need help with consumer testing or go-to-market strategy. Many need help obtaining funding.
KitchenTown conducts design research, consumer insights and ethnography, as well as the ideation of new product concepts for start-ups, and gives them access to a product development lab in exchange for a Monthly subscription.
“New combinations of ingredients often require new processing methods. Specialized protein food science, combined with process engineering expertise, are special needs of young alternative protein companies, ”he said.
Many face technological challenges, such as formulating for taste and texture or finding packaging or processes with the right technical characteristics for their product. This is a particular concern for fermented foods, explains Clément Galbois, business developer at ToasterLab, an accelerator managed by the innovation hub of French agri-food companies Vitagora.
“The biggest challenge is the need to have a holistic view of the impact of their product – the sustainability of their supply chains, the formulation of their products (to stay as ‘clean label’ as possible) and their materials. packaging, ”explains Galbois. “These are a series of interconnected challenges to reconcile their own values with the constraints of running a business, but also to meet the demands of consumers who are reluctant to compromise on a range of criteria. “
But as herbal businesses become mainstream, they are caught in the crosshairs of the old industry, says Daniel Scharff, founder of the free Startup CPG accelerator, whose Pitch program sends sample boxes. herbal to buyers and the media with a live tasting. Winners benefit from media coverage and investment.
“Even though you can afford all the costs of doing business and getting a grocery distribution, Dinosaur Consumer Packaged Products (CPGs), running at a fraction of your cost, have teams of people who will bury your product on. the shelves, ”said Scharff. .
Incubators and accelerators can help address many of the challenges unique to plant-based start-ups. Accelerators typically help grow an existing business, while incubators focus more on innovation.
This is largely achieved by the networking opportunities that accelerators can bring. ToasterLab’s 12-month program, for example, promises access to professional experts (in areas such as legal issues, food regulation, finance, marketing or industrialization), food companies and banks. interested in promoting the growth of innovative businesses along the agrifood value chain.
“Every startup founder knows that new product development cannot be done in isolation,” says Schwartz. “You have to think about who it is for, where it comes from, how scalable it is, and a million other considerations, each affecting the other. Thinking about all of these aspects in conjunction makes the whole process much smoother. There are so many huge unknowns and things to learn when starting a food business. And there are many people who have taken this path before. An incubator combines much of this expertise under one roof, so that startups not only have access to physical infrastructure and shared equipment, but also to the shared knowledge of the founders who came before them.
Start-ups registered with KitchenTown, for example, can work with its culinary director to perfect the formulation, and with its process engineers to ensure the product can be sourced and produced on a large scale.
“It makes more sense to create a national platform to help all emerging brands rather than focusing organizational resources on just a few,” says Scharff. “The issues and challenges that brands face overlap a lot and we can work on them together. “
Businesses can sell the food they produce at KitchenTown to consumers, either at farmers’ markets, local retail, online, or at pop-up events at KitchenTown Cafe.
“It’s really difficult to have that range and that depth of expertise in-house, especially for an early stage founder who is also trying to raise capital and produce and market a product,” said Schwartz.
Incubators and accelerators also provide businesses with the right environment to take risks, allowing them to try iterations of their product or service until they find the right one, he adds.
“Big food companies look to them for inspiration precisely because they can go so much faster and challenge existing assumptions about how food should work,” he says.
Incubators and accelerators provide the extra boost, through expertise, equipment and funding, adds Scharff, that small businesses need to be able to create successful new brands.
Incubators can offer valuable information that they would not otherwise have. Ithaca Hummus, for example, got to take a look behind the scenes at leading yogurt brand Chobani. Chris Kirby, CEO and founder of Ithaca, said it was a “dream come true” for the start-up.
“Chobani knows what we face as an emerging brand competing with ‘big foods’ in a highly competitive category because they’ve been in our shoes,” he says. “We met everyone from executives to the company’s first employees, learning lessons that have saved us immeasurable amounts of resources as we accelerated our growth. But the real magic of their incubator was the inspiring feeling that we might one day be in their shoes.
Incubators and accelerators can make a huge contribution to start-ups by leveraging their accumulated experience to avoid making crucial mistakes at an early stage.
“Especially in food technology, where the regulations are strict and relatively complicated, the production infrastructure is an obstacle, the margins are quite low,” says Noga Sela Shalev, vice president of business development at the Fresh Start Foodtech incubator. .
Fresh Start is part of the Israel Innovation Authority’s incubator program and is designed to promote start-up investments by providing an 85% government refund to incubator partners, who provide support.
The incubator is also part of a $ 100 million investment by the Ministry of Economy for Israeli entrepreneurship, with the aim of creating a food technology cluster in northern Israel. During their two years in the incubator, companies have access to laboratory facilities, mentorship and advice, as well as exposure to future investors and strategic partners.
These programs are increasingly popular among start-ups. Since 2017, the global network of food and agricultural startups FoodBytes !, for example, has seen the representation of plant-based (as well as fermentation and cell-farming) companies double.
For 2021, FoodBytes! Showcase targeted startups that work specifically to increase supply chain sustainability, improve resource management, or pave the way for the next frontier in nutrition.
Bytes of food! Pitch is an annual, multi-week program that helps 45 start-ups grow their businesses through industry exposure, one-on-one relationships with companies and investors that are relevant to their own innovation goals, explains Anne Greven, Manager world of food and agrifood innovation at Rabobank.
And incubators and accelerators don’t just help start-ups; they can also be mutually beneficial.
For example, SnackFutures, the innovation and venture capital hub of Mondelez International, has launched a start-up engagement program called CoLab. The inaugural class this year consisted of nine start-ups with revenues of at least $ 500,000 who have proven themselves in the market with a strong cast. The 12-week program focused on accelerating growth and was tailored to the specific needs and challenges of these start-ups.
“The most common challenge is knowing how to evolve and how to build their stories to be clear and competitive in the wellness snacking space. This is where we excel, says Brigette Wolf, Global Head of SnackFutures. “We are working with start-ups to fuel our larger mission of creating a world of snacking that is good for people and the environment. We know that we can’t do it alone and that these entrepreneurs have seen and done things developing their products that we wouldn’t have thought of, and conversely they don’t know what they don’t know.
As the herbal industry continues to grow, there is plenty of support available for start-ups that need resources and expertise for their much-needed innovations. And while these programs are so mutually beneficial, it looks like accelerators and incubators will really help shape the future of the industry and our food.