According to Food Labs Program Manager Tessa Price, the vertically integrated Food Labs also aims to bridge the communication gap between entrepreneurs and venture capitalists entering the food and beverage space so that they share the same expectations and ultimately have a better chance for long-term success.
In this episode of FoodNavigator-USA’s Investing in the Future of Food, Price explains how WeWork developed Food Labs, the benefits and resources it offers and how it is improving connections between startups and investors. Since FoodNavigator-USA met with Price in New York before the pandemic was declared, WeWork Food Labs has watched its food and beverage community work together to overcome many of the unique challenges posed by the novel coronavirus as well offer a helping hand to first responders by coordinating much-needed donations.
Remaking the food industry for ‘small independent entrepreneurs’
As someone who worked at several food and beverage companies that failed despite raising sufficient funds, Price said she is intimately familiar with challenges entrepreneurs in the space face and is hopeful that by bringing companies together they can learn from each other and avoid common mistakes.
“The food industry was really built for scale. It wasn’t necessarily built for small independent entrepreneurs to find success,” Price said.
However, she explained, that the breakout success of a few emerging brands has “resulted in this entire new interested in investment in the space,” which can both help and hurt entrepreneurs.
Sure, the money is useful for scaling production, paying for promotions and increasing distribution, but Price said many startup founders have never worked with large companies or VCs before and may not fully understand their expectations. On the flip side, she added, big companies and investors that have never worked with startups or in the food and beverage space may have unrealistic demands about the types of results they can expect from their investment.
With this in mind, Price said, WeWork Food Labs is bringing together players from across the industry and helping them each better understand others’ needs and abilities by “becoming this platform that doesn’t just work with these early stage startups, but provides a bridge and information and communication across all stages of the industry in a way that can impact meaningful change,” she said.
From a kitchen to podcasting to networking support
To fulfill this ambitious mission, WeWork brought together stakeholders from across the food and beverage space to work side by side in buildings in New York City, Austin and San Francisco stakeholders where they could learn from each other and pool resources.
In creating Food Labs, WeWork met with more than 1,000 early stage food and beverage startups to identify their top needs and build a facility with tailored amenities to meet those requirements.
“We made a really conscious decision when we launched the space to not have commercial production capacity,” even though it was one of the biggest needs, because there was no way to provide all the nuanced equipment needed for a diverse membership, Price said.
So instead, she explained, WeWork decided to focus on what it does best, which is provide a flexible workspace that includes office space as well as an RD kitchen for fine-tuning new products and hosting investor and influencer events. It also includes podcasting and photoshoot spaces for emerging brands to better promote their products.
Beyond the physical space, WeWork Food Labs offers events and learning sessions specifically tailored for the food & beverage industry. These take the form of two tracks. The first is for all members and includes four to six events per week and can range from large conferences to smaller roundtable discussions with co-packers. The second track is more program oriented and leans heavily on mentor resources and networks.
Food Labs’ first cohort
While food and beverage companies of all sizes and maturity levels can rent space at Food Labs, WeWork also selected a group of eight “disruptive” companies to take up residency in the shared space and participate in its first accelerator cohort.
Each member company received an investment of $125,000 from WeWorks along with tailored programming, introductions to VCs and other resources to quickly scale in five months.
The group graduated just as the coronavirus was beginning to spread across the US, but Price said during the program each company was “really able to collaborate in interesting ways” and make “tremendous connections” by all sitting together and going over the same curriculum.
While Price says the accelerator’s first cohort was a success, she said Food Labs will closely analyze lessons learned from the experience before deciding whether to push forward with another cohort.
In the meantime, she added, Food Labs will focus on building out its programming and membership across its three locations to ensure those companies have the most successful experience possible, and continue to support those on the frontline of the ongoing coronavirus pandemic.