The cohort of 12 startups from six different countries announced last week offer much-needed solutions to stubborn challenges plaguing the food, beverage and agriculture industries, including around sustainability, labor, supply chain, human and animal health and new alternatives.
In this episode of FoodNavigator-USA’s Soup-To-Nuts podcast, Techstars Managing Director Sarah Bain describes the current challenges facing the food, beverage and agriculture industries and how disruptive technology and companies like those participating in the Farm to Fork Accelerator can help. She also shares lessons learned from previous Farm to Fork Accelerators, the key themes the program hopes to address and strategies for navigating the current investment environment and the impact of tech layoffs on the accelerator scene as well as the overall industry. Finally, she shares how Techstars is helping entrepreneurs with innovative solutions and the kinds of people and businesses it wants to support through its various investment and mentoring programs.
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Food, beverage and agri-tech investments are undergoing a correction
Despite the significant need for agri- and food-tech solutions to help ensure sufficient high-quality nutrition for the growing population, investors and entrepreneurs are more hesitant and thoughtful about how they scale businesses now than even just three years ago – reflecting the dramatic shift in investors mentality since the pandemic began and since some high-profile, big bets busted.
“Valuations were bananas a few years ago, and so we are at a point in the market where I think investors are seeing that it needs to be corrected” because it wasn’t sustainable and was either going to cause the market to explode or implode, Bain said.
As such, she explained, “investors are a little more shy to help value a company or set the terms at what they were once because … there just isn’t as much demand in the market.”
But, she added, there is still interest and funds for food, beverage and agri-tech companies. The difference now is the expectations are higher.
“In terms of capital being deployed, it really depends upon who the founders are, what the company metrics look like, what their big vision is, where they’re going and where they are in the market – you know, who their customers are,” Bain said.
Networking is fundamental to growing a company’s networth
As investment checks shrink and become fewer and farther between, networking – while always important – is gaining prominence, which is where Bain says organizations like TechStars can help.
“TechStars is a mentorship driven accelerator. So, one of the main offerings that we have is the mentorship, but also the network. TechStars network is incredibly extensive, and the willingness to connect founders with other founders, with mentors, with investors, with partners, with everybody within the network is incredible,” Bain said.
But she added, the program operators won’t make the connections until the participating companies are ready, which Bain says is in the best interest and benefit of the companies.
TechStars sees massive potential in food, beverage and agriculture
Bain explains that TechStars still sees massive potential in the food and agri-tech sectors, even as an investment “correction” is taking place, which is why it has teamed with Ecolab to support the companies in its sixth Farm to Fork Accelerator program.
“There are incredible opportunities across the food value chain, and specifically, the pandemic showed that there are huge opportunities across the supply chain, and what we call the messy middle. So, as the world’s population continues to grow and we deal with waning resources and climate change, solutions are more important than ever,” she said.
As such, she said, TechStars is focused on solutions for supply chain, labor, sustainability, human and animal health and new alternatives.
Lessons learned from earlier cohorts
In evaluating potential participating companies or investments, Bain says the TechStars team has evolved its model and criteria over the years to adapt to the changing landscape and it now expects the entrepreneurs it supports to be more careful with capital and do more with less.
She explained TechStars thinks about how likely an entrepreneur is to build a billion-dollar company, the American consumers’ appetite for what the company offers and how a founder or team will efficiently use fewer funds to achieve better results. This includes how companies might cuts costs, stretch capital, diversify their funding sources to include grants, and otherwise adapt to the changing economic environment.
‘Just do it’
While the current environment may be more daunting compared to a few years ago and entrepreneurs who already run a tight ship may be asked to manage even leaner operations, Bain still encourages those who want to enter the space to “just do it.”
“One o the biggest things that I always tell founders is to do it. Get your products out there, start testing, start iterating, have conversations with your customers to see exactly what they want, see exactly what they like, what they don’t like,” Bain said. “Remember that things don’t have to be perfect before you put it in front of people.”
For those who want to take Bain up on her advice but who also want a helping hand, TechStars operates more than 50 programs, including its Farm to Fork Accelerator, and is constantly looking for companies and entrepreneurs to participate. For more information, visit techstars.com.