Correction: This story has been updated to reflect the accurate name of GanedenBC30 probiotics.
In the last 18 months, nearly $1 billion of new capital has been earmarked for investment in the food and beverage space, Lauren Jupiter, co-founder and managing partner, AccelFoods LLC, told Food Dive. The company has investments in more than 20 high growth, early-stage national packaged food and beverage companies, and runs a $20 million fund to support startups in expansion. This week, the company’s Class IV, consisting of six startups, is participating in a boot camp in New York City to meet with AccelFoods and strategic partners.
Venture capital investments and competitions run by food-related companies are on the uptick as manufacturers look for the next great innovations. And as innovations in food and beverages shift, being driven by small, independent brands, there are more opportunities for large ingredient manufacturers to become, "and in many ways they have become, but can continue to become, more and more approachable for earlier stage companies," Jupiter says.
AccelFoods finds that the most exceptional, high-growth companies entering the food and beverage space offer natural and/or organic products. "Our expectation is that we will continue on that path going forward," Jupiter adds, in regard to investments.
Innovation is everywhere
Large corporations are increasingly becoming involved with smaller companies early on, even just to build relationships. "That is because innovation is coming from so many different directions and angles in the market right now," Jupiter says. "There are a broad range of places where we see collaboration and innovation popping up across the industry."
An example is the partnership between Ganeden and Jùs by Julie, where the juice company is infusing its cold brew coffee with vegan probiotics from Ganeden.
Ganeden’s experience with consumer products was part of the motivation behind its Probiotic Innovation Jumpstart competition, taking submissions through May 6. "One of these companies’ biggest challenges was to find the appropriate resources to get started,”"Mike Bush, senior vice president, Ganeden, told Food Dive. "It amazes us that so many of these companies, first of all, have no access to these companies; no idea how to get to them."
The jumpstart competition will be narrowed down to three finalists who will pitch their concepts to a panel of judges at the Institute of Food Technologies show in July. The winner will receive $25,000 to utilize GanedenBC30 probiotics, as well as guidance to develop and launch the product in the retail market.
Ganeden’s probiotics are used by 150 companies and are in 400 individual SKUs sold globally. Bush said the company has been pleasantly surprised by the entries submitted to the jumpstart competition thus far, ranging from baked products to frozen products geared towards children. "It is not just a bunch of people saying they would like to make kombucha in their kitchens and sell it to the masses," Bush added.
The future is now
"Not a day goes by where we don’t speak to some private equity or venture capital [investor] or angel investor who is either interested in our customers or wants to know what we see going on or who the next [great] candidate is," Bush said. The company believes the functional foods and functional ingredient space will continue to grow and gain mainstream acceptance. In regard to the probiotic industry, the companies that are conducting strong clinical work will continue to be noticed by investors.
Jupiter says the most innovative businesses, led by the most capable founders, will standout and grow more quickly, efficiently and effectively "than we have seen or imagined previously because capital and smart, sophisticated investors are coming to the space to support the growth of these companies."