AccelFoods looks to bring the accelerator model to the food industry
Exo, with support from AccelFoods, makes protein bars from cricket flour.
Jordan Gaspar and Lauren Jupiter, two New York women who began their careers as an corporate attorney and investment banker respectively, think that there's more expertise to be shared between the tech scene and food manufacturing than you'd think.
AccelFoods, their new food industry accelerator and $4 million investment fund, holds its first seminars on Thursday. Four companies - Exo, Jaali Bean, KOLAT and Whynatte - will take part in the first intake of what it is planned to be a revolving round of six-month programs. Gaspar and Jupiter hope that through providing an initial investment of up to $50,000 and access to a network of mentors and partners, AccelFoods can bring its participant’s products, which range from protein bars made from cricket flour to caffeine drinks, to a wider audience.
Prior to AccelFoods, fate had led both founders away from the professional services towards the food industry. Gaspar was a corporate attorney who ended up running her own catering company; Jupiter was an investment banker who through chance ended up working with a leading European food manufacturer.
As they contemplated this new endeavor, market forces were moving with them. In 2013 venture capitalists tipped money into food startups at a record rate, buoyed by shifting perceptions of margins and potential market sizes.
AccelFoods differs slightly from that scenario in backing small food companies trying to set up traditional distribution networks but it has benefitted from this same shift in the market.
“We’ve seen investors really start to identify food and beverage as a recession-proof space. Capital has started to move here,” Gaspar says, on a conference call from New York with her co-founder.
“We built AccelFoods and raised this fund in nine months. We got 110 mentors to sign on with just a landing page to show for ourselves,” Jupiter adds.
“It was the right idea at the right time.”
Adapting the accelerator model for the food business, AccelFoods has had to make key alterations.
“We’ve had to structure the investments differently to reflect the different multiples involved in investing in the food sector. With a physical product the metrics are different,” Jupiter says.
“We didn’t get into food for the money. Above anything else, all these investors are coming together to support innovation,” Gaspar continues.
AccelFoods' four companies will be in New York City initially for the launch of the program, but three of the four will be based outside of New York for the duration, remaining in their home bases of Atlanta, Chicago and Denver.
“The traditional accelerator model forces companies to relocate. With food and beverage, a lot of the operations and manufacturing are based locally and these companies are trying to build out local vendor networks. It doesn’t make sense to pull them out of that,” Gaspar says.
Participating companies will take part in seminars over Google Hangouts and teleconference with mentors each week, guided by advisers like Top Chef head judge Tom Colicchio and Mistral Equity’s Andrew Heyer.
An operations team, which Gaspar and Jupiter will head, will be on call 24-hours a day to help the companies out as they look to expand. Regardless of the core differences, AccelFoods’ two co-founders think it builds directly off the legacy of the latest wave of tech innovation.
The founders say they took their most direct influence from Techstars, the number one tech accelerator in the world, before working backwards to retrofit the model for traditional food companies. They think that the mere existence of their own version pays huge testament to the influence of tech scene.
“Engaging mentors, partners, investors and innovators, that concept in itself comes from tech. It has done a great job of bringing collective resources together. I think any company could benefit from that," Gaspar says.
Gaspar also sees a shift happening in the types of entrepreneurs who are entering into the traditional food sector.
“It has started to attract entrepreneurs who have adopted more of a tech mindset, who haven’t gone into the tech industry but a bit of it has rubbed off on them.”
Both founders agree that to them, the accelerator’s first class of companies, whether offering a “nutrient dense line of natural alternative nut butter,” “authentic easy-to-make lentil based side and soup kits,” “premium canned coffee mixer” or a “revolutionary and sustainable insect-based protein source,” all embody the front wave of innovators in the food industry.
Which in itself is another hurdle for AccelFoods to struggle against. Looking to scale niche products in an industry with traditionally lower margins increases the risks facing AccelFoods’ investments.
But its co-founders choose to bet on change. “Why can’t a product be both completely new and popular?” Gaspar says. Her partner concurs. “We’ve invested in premium brands, lifestyle brands, paleo, vegan. These are all important markets. Ethnic foods will remain a high growth category,” Jupiter says.
Gaspar says that the food market is at an inflection point. Last summer three independent organic baby food manufacturers were all purchased by larger companies. Major distributors are starting to look at the types of innovators AccelFoods is looking to support.
“There’s an entire generation growing up right now that has been raised on an entirely organic and all natural diet.”
It’s a line of thinking that would only play well in more affluent parts of America but the two founders think that even when at its most niche, food is still the most populist market sector there is.
“Everyone’s got to eat,” Jupiter says.
[Image via Exo]