The Food Startup Landscape: Investing Lessons Learned

Thank you to everyone who came out to our event, “The New Food Chain: Investing in Food Startups” where we learned about world of food and technology and what kinds of investment opportunities and new startups were were in the space today. Investors like William Rosenzweig Managing Director of Physic Ventures, Ilya Fushman, Ph.D., Principal, Vinod Khosla Ventures, and Tom Cole, Former Investor, Trinity Ventures shared their expertise on the market and what to look for when investing in a food startups. We also saw demos from hot new startups like Culturekitchen, Spoondate and Foodspotting and many more.  Below are some take-aways from the evening.

The Big Picture

William Rosenzweig from Physic Ventures opened the event by providing the audience with a snapshot of innovation in the space with a slide of a food startup map. Having started Republic of Tea, and being one of the early founding executives at Odwalla, he shared best practices for growing a new product/brand in the industry. Will founded Physic Ventures to help continue to spur innovation in the food industry and partners with Unilever and Pepsico to help fund new innovators in the space.  Will laid out the primary obstacles for food startups and investors in this space:

  • Food has slow adoption rates

  • Barriers of entry for this space are low

  • There is a lack of seasoned entrepreneurs in this segment of the industry

  • Food distribution channels and systems are entrenched

Will’s advice to aspiring companies: “Be your first customer.”  Andrew Pederson, Global Sustainability Chocolate Manager at Mars and Michael Hammer, Director of Venture Capital Strategy at Pepsico both talked about how large food corporations are working toward putting out products that have healthier ingredients and sourcing from sustainable farms.

Investing in Food Startups

Later, we turned to our investor panel to better understand how technology and social media are influencing the new food market. We specifically asked our panelists for what they were looking for in today’s new food startups.

  • Tom Cole, formerly at Trinity Ventures and currently personal investor and food blogger was looking for startups who were not overcapitalized at the start of their business. He said that many food companies don’t need that much money to start out and if they overcapitalize, they then have to generate bigger milestones and a clear exit.

  • Ilya Fushman from Vinod Khosla Ventures said he was interested in startups who were providing solutions to distribution challenges. He is also interested in companies that have a technology advantage and unique IP.

  • Dave McClure from 500 Startups said he looks for startups that are capital efficient, revenue oriented, have online platforms, and have a good distribution model. He is convinced that it is not hard to find customers with food startups since food is a “highly frequency behavior that is highly social.”

  • William Rosenzweig from Physic Ventures talked about looking for teams who can work well together as food startups take more then one leader. He is also looking for entrepreneurs who can predict trends in the food market.

We also heard from companies, like Google, who have built entrepreneurial food programs as part of their corporate wellness efforts. These programs have spurred new trends in local communities.  For example, Executive Chefs: Scott Giambastiani, Quentin Topping and Olivia Wu spoke of community supported agriculture and their new community supported fishery, where they bring locally sourced food to employees to buy and take home.

In The Oven

We had over a dozen demos from startups that are changing the way we order, consume, cook and interact with food. Here are some of the highlights:

  • Culturekitchen connects immigrant women with local foodies who want to learn traditional home recipes from around the world. (Founded by Jennifer Lopez and Abby Sturges)

  • Punchfork scans social networks and the web for recipes and displays the ones that have been visited and shared the most. (Founded by Jeff Miller)

  • Spoondate lets you enter what you are craving into a comment stream and opens up the possibility of meeting someone else for a date over the same craving. (Founded by Raissa Nebie)

  • Munchery allows you to order  meals cooked by chefs for events. (Founded by Tri Tran)

  • Cookpad is the leading recipe sharing site in Japan with over 10M users. (Founded by Aki Sano)
  • Skipola allows restaurant chains to receive digital orders using an phone app. (Founded Igor Lebovic)

  • E La Carte puts tablets on tables at restaurants so you can order and pay for your food more efficiently while you play games. (Founded by Rajat Suri)

Check out other startups that also did demos: HeardAbout , Shopwell, SmartGardner, GogoMongo, Wednesdays, Grubly, Any Leaf and Yorder as well.

 

Thank you to everyone who helped make this event a success: Missy Krasner, one of our mentors and former Google Health leads who helped secure investor speakers and moderated the panels, Maria Susana Camino, our star summer intern, who organized the event logistics and outreach, and a special shout out to our food sponsors who provided delicious meals for the evening: Calafia, San Franola, Munchery, Curry Village Foods and Coupa Café.

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THE SKY IS FALLING! THE DOW IS FALLING! THE DOLLAR IS FALLING! MY PANTS ARE FALLING!

Yeah, what-EV-er dude.

In other news: the sky is blue and politicians lie.  Same Shit Different Day.

Suck it up and get back to effing work.  It ain’t fall 2008 yet, and it certainly ain’t March 2000.  So what if the EU goes belly up (again) and the US housing market tanks (again).  People are still gonna buy stuff on the interwebs. And we sure hope China, India, and Brazil are paying next month’s rent.

So while the rest of the world fiddles, 500 Startups is ON FIRE (in a good way).

After 3 months of beating the crap out of our 2nd batch of startups, they kind of don’t suck and we think they’re ready for 500 Demo Days this Tuesday & Wednesday (note: we’re sold out, but you can watch from home).  And even if they do suck, we hope you won’t throw too many tomatoes while they pitch their scrawny little startup stories before we kick them out of the 500 nest.  Sink or swim, little monsters, sink or swim…

Again we’ll have a full house of blood-sucking VCs & muck-raking paparazzi… er, i mean shrewd investors & respected press to cover the demos of our accelerator companies, with a few cameo appearances from select 500 family free of charge.  (did i mention it was free?)

Remember folks: Coffee is for Closers…. and ABC: Always Be Closing.

Tune in 1pm PDT Tue 8/16 & 6pm PDT Wed 8/17: http://LiveStream.com/500startups

(ps – be sure to follow #500strong + @500startups on the Twitters for more fun & games 🙂

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What Is a Geek?

Every time I speak with someone about ‘Geeks on a Plane‘ (our worldwide tours to meet startups + geeks in lands afar), their first response is always “I love that name”. I’m not sure if they’re huge fans of Samuel L. Jackson (who isn’t, right?) or just fans of all things geeky, but we started to wonder what actually constitutes a geek.

During the latest ‘Geeks on a Plane’ voyage to Brazil, Chile, and Argentina, we asked some pretty influential entrepreneurs – both locals and our travelers – what it really means to be a geek. Here’s what they had to say…

http://youtu.be/KB5swhpuA2g

For those of you interested in upcoming GOAP tours:

  • ASIA > October 11-25: Tour stops in Tokyo, Beijing, Shanghai, & Hong Kong
    APPLY: Sorry, we’re at capacity. You can apply HERE for next year’s tour.
  • INDIA > December 8-20: Tour stops in Delhi, Mumbai, & Bangalore
    APPLY: Deadline is Wednesday, August 17th, HERE.
  •  

    If you’d like to get involved with GOAP as a host or sponsor, ping me (christen at 500 startups dot com)…we love making new friends.

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    Why You’re Not Getting a Meeting: Part II

    500 Startups Office Manager and Executive Assistant to Dave McClure, Melissa Grody (@DMelissaG) continues with Part 2 of ” Why You’re Not Getting a Meeting,” in which she explains what you should be doing to increase your chances of getting a meeting. Catch up on Part 1 here.

    To Dos

    Do your own homework

    Not only regarding 500 Startups in general but in reference to connections and referrals. We’re particularly noticeable in this regard since a lot of our incoming requests are via referrals. When advised of this, go do your own homework. Don’t ask the EA to intro you to people, or even worse, ask to use them as the main intro in. Seriously. (Every time I think of the people who try this I shake my head. I can’t help myself.) Please don’t badger people you want to intro you though. You may lose friends. If people are reluctant, consider why. There are actually multiple mentions out there of who to approach/how to network (as in those around the person you want to meet, not them directly). Search it out. In fact, you can start with this blog post: “Raising Money for your Startup? Stop Talking to Investors!”

    Be polite

    I’m sure you were raised with manners. Utilize them. This includes in electronic communication. We’re in the tech world. You know to not use all caps/excessive bolding, etc for communications. You don’t necessarily have to be formal. That’s going to depend on your audience but politeness is always a great policy. Simple “pleases” and “thank yous” go a long way. (When you do get the meeting and see them in person – be friendly! SUPER MEGA EXTRA POINTS = thanking them for arranging the meeting. I know you’re thinking, “But isn’t that their job?!” Absolutely, it’s their job, but it’s always nice to be thanked.

    This is KEY: Expect to be asked for and have ready a deck and recent metrics and a phone number.

    It’s standard to have a deck and metrics and for them to be requested in advance. You’re going to be asked for them. If you don’t even have a deck… GET ONE. You’re not going to be taken as seriously if your response is, “I don’t have one.” Want to win extra brownie points? Send them right away, before you’re asked, in the initial communication. You’ve just saved the EA some time. It will be appreciated. Plus, you’re going to appear on top of your game and your company.

    The same goes for the phone number. It’s unfortunate but sometimes meetings need re-scheduled or delayed. The EA wants to be able to reach you and will ask for your number just in case. If you’ve already given it, again you’ve saved time. (Extra incentive to give your actual, reachable number, sometimes the exec will call you personally.)

    Don’t take this to mean you shouldn’t bring that info with you. Arrive prepared. Arrive ready to provide the deck, metrics and possibly a demo. Put your deck in both paper and electronic form.

    Be specific

    Tell the EA who you are and what the meeting is regarding. Short messages just saying little or nothing more than you want a meeting aren’t helpful and can actually be mistaken for spam or unsolicited requests for meetings. They may not receive the attention they deserve. They’ll also require more back and forth as the EA tries to discern what the meeting is all about.

    If you are in a different area, time zone or part of the world from the exec, advise of such when requesting the meeting.  Phone calls can be scheduled with more flexibility than face to face meetings and will need to be arranged based on time zones if the exec is travelling or you’re somewhere else. It’s helpful if you need less than 30 minutes to state so. Starting off with a 15 min. call and then following up with a 30 min or less face to face is great. You’re more likely to get in sooner rather than later, too.

    Follow up

    Guess what… you’re dealing with a human. Despite all best efforts, there is certainly a chance that your email fell through the cracks. Give it a reasonable amount of time and follow up to check on the status. When requesting meetings with others I give it two business days. To prevent myself from forgetting to check back I use Boomerang to bring the message back to my inbox if I don’t receive a response and I’ll often also set a calendar reminder to follow up if it’s a particularly crucial meeting request. You can also follow up with a phone call. This might even be recommended if your schedule and the exec’s have caused a lot of back and forth emails.

    🙂 Good luck!

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    Why You’re Not Getting a Meeting: Part I

    Melissa Grody (@DMelissaG) is the 500 Startups Office Manager and Executive Assistant to Dave McClure. Melissa hails from the land of snow and ice (Pennsylvania) and is a recent resident of Silicon Valley. Before this she worked virtually (or perhaps virtually worked, depending on who you ask) with various clients. In the spirit of MVP that’s all we’re going to say.

    Some may think this post is self-serving… and perhaps to a certain degree it is. As an all around person in the office and executive assistant (aka EA) I’m experiencing these things first hand every day all day long, and sometimes well into the night. It could be argued that my experience is unusual in that Dave is crazy when it comes to fitting every possible moment in and an overachiever when it comes to taking meetings. I would reply this experience gives me even more insight. However, we won’t limit this discussion to just this particular working experience, nor just my own. (Yes, EA’s talk to each other!)

    As a startup looking to obtain funding you are going to encounter a lot of dragons at the gate. Their job is to make sure their executive gets to meetings on time (to the best of their ability) and meets with everyone they want or need to. They have immense control over this. The exec may not even be aware of the details, offerings, exchanges or any of the process. They just know that meetings, events, reminders or whatever they need is in their calendar and ready to go for them.

    Here are some common mistakes:

    Circumventing the EA when you don’t get the answer you want and going straight to the source. Especially in this particular field, there are many others vying for time on the calendar. (Remember, you aren’t the only startup who needs funding.) This method will in order of likelihood: just get you routed back to the EA, who is now annoyed, ignored by the exec (either accidentally or on purpose), or get you a slot, but perhaps not as good a one and possibly a not so flattering closer look.

    Sometimes this one is accompanied by a complaint about the EA being difficult. Do you really think the executive isn’t going to ask his or her EA about this? Now, you’ve not only made yourself look like an ass but you’ve managed to make the EA and possibly the exec unhappy.

    These methods take up valuable time for the EA but MOST IMPORTANTLY valuable time of the exec with whom you wish to meet. There’s a reason he hired someone to arrange his meetings. It should be obvious but it’s because he or she doesn’t have time (and possibly the desire) TO DO IT HIS/HERSELF!

    Let’s recap… the person you want to give you money hires someone to manage his schedule. Initially you contact this person and because they aren’t giving you the slot you want you then contact the ultra busy person you want to give you money. That’s kind of like saying… “I don’t really believe you need to have this person managing your schedule.” (Thereby questioning the exec’s judgment.) Or “I’m too special to have to go the route everyone else, including billionaires who want to give you money, has to take.”

    Probably not the best method.

    It’s not quite as common as circumventing but is much more common than people realize: being a jerk. Trust me on this, if you are an asshole to the EA it’s going to be noticed. Did you know that EAs often make notes for their execs regarding the upcoming meetings?

    It may sound unbelievable but one potential startup was not only a jerk to the EA but a high ranking member of the staff. Do you think he got funded?

    If you said, yes… Yeah, you’re *that* guy.  No, he didn’t. Someone like that is going to be lucky to get a meeting at all. That particular guy did get a meeting but no one took him seriously. Unless you want one of the notes about your meeting to be how rude and pushy you are (or if you work at 500 Startups, perhaps less savory words)… have some common courtesy and be polite.

    Politeness will go a long way. It will go a long way with anyone actually. There are some other tips you can use to have the EA greet you genuinely, say nice things about you and not use their powers of discouragement on you. 😉

    Don’t exaggerate.

    That’s not to say you can’t talk up your product but you need to be able to back up what you say. Telling them you have a million users when really you have your mom and her bridge circle and the local Girl Scout troop… makes you look silly and hurts your credibility. It could be that you foresee a potential million users at X time. If that’s the case, say so. In that same vein, don’t assume/state that because your product appeals to a segment of a population that it will appeal to all in that demographic.

    Remember that cliché? If it sounds too good to be true… You don’t want that applied to you, especially when it comes to the person who is deciding if/when to put you on the calendar. Be positive but realistic.

    Persistence is good. Being overly persistent in the mistaken belief you are just being persistent is bad. It’s also annoying. (Remember, annoying the EA is bad.) I’ve had people follow up with me in under 5 minutes when they didn’t get a response. (Not an exaggeration.) We’re all busy but don’t assume that because the response isn’t instantaneous it isn’t coming.

    This should be obvious but don’t lie. You’re likely to get caught. Don’t tell the EA you already chatted with the exec and they cleared the meeting. Bare truth? Just because you caught the exec in the bathroom at The Rosewood and he said, “Yeah, contact my assistant.” doesn’t mean he/she actually wants to meet with you. It means he/she wanted to use the facilities in peace and not be pitched over the fancy soaps. Have some boundaries. Really consider what you’re doing before you approach or try to pitch someone at social events, on the street, in a restaurant wherever other than at a meeting.

    Don’t just drop by the office and say the exec said to stop by to see him/her; unless it’s true. If it’s true, then most likely the EA will know about it and you’re in the clear. (It may also be a case of the above.) Don’t just stop by without an invite either.

    Don’t name drop hoping to intimidate the EA into giving you what you want. (Actually I wouldn’t recommend name dropping in general but our focus here is on getting meetings.) He/she doesn’t care. Chances are if you know the exec’s best hang out at conferences buddy, the intro will be made by them. (And if you mention a “mutual friend” you lose credibility when the friend doesn’t know who you are.)

    Using lots of buzz words/nonsense phrases trying to sound important is also a bad sign to an EA. If what you’re pitching sounds like a bunch of jargon gobbledygook that doesn’t make sense then it’s not going to seem like you know what the hell you’re talking about and you’re going to be deemed lower priority. Saying this drivel with a confident air also doesn’t do any work, except make others admire your ability to be confident while saying nothing.

    Check out Part II where Melissa explains what you should be doing to increase your chances of getting a meeting.

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