COVID-19 created major, unforeseeable problems for food and agriculture startups. Foodservice and some retail sales channels disappeared overnight. Laboratories and manufacturing plants shut down. Venture funding agreements fell though. In that fast-changing environment, startups are leveraging their connections and forming innovative collaborations to get through the crisis and equip themselves to thrive in the post-pandemic world.
When COVID-19 first hit, FoodBytes! by Rabobank, a discovery and engagement platform creating connections between startups and industry leaders in the food and agriculture industry, contacted its 230 alumni startups to hear about the challenges they were facing and what it could do to help. Around 70% of the challenges identified by the startups were operational in nature. With food service channels drying up and retail becoming tricky, many startups were cut off from sources of sales critical to their viability.
Those challenges had knock-on effects on operations, for example because they necessitated budget cuts that created new marketing problems. Other startups reported different operational challenges including the cessation of business development with corporate partners and the enforced closures of facilities and laboratories. While contending with such seismic near-term issues, many startups also faced looming longer-term worries.
“There were percolating concerns about supply chains, whether from an on-farm technology company that’s anticipating labor challenges or a startup with a global supply chain that foresees import-export challenges,” Nina Meijers, Startup Relationship Manager at FoodBytes!, said.
To exacerbate the situation, some companies also faced fundraising challenges, which accounted for the other 30% of issues startups reported to FoodBytes!. As the coronavirus spread, venture capital rounds that were on the cusp of being finalized fell through, leaving startups without the money to execute the next stages of their strategies at a time when COVID-19 was putting strains on their operations and business models. In such uncertain times, startups are encouraged to have at least enough cash to get through the next 12 months, but COVID-19 is affecting their ability secure fresh capital.
Many companies do not have all the resources internally to cope with the rapid-fire flurry of challenges the pandemic threw at them in March, April, and beyond. Recognizing that, companies, small and large alike, are looking to collaborations to counter COVID-19 disruption and seize the opportunities arising in its path.
FoodBytes! is ideally placed to support those responses, having spent the past five years building a food and agriculture innovation ecosystem. The networking platform has the connections to startups, corporates, and investors to foster a joined-up response to a changing environment.
How startups are adapting to COVID-19
Even at this early stage of the crisis, the FoodBytes! ecosystem has already facilitated collaborations that are helping companies mitigate the effects of COVID-19 on their operations. For example, FoodBytes! put a startup that was shaken by a facility closure in contact with a corporate with an active co-packing plant, aiming to allow the startup’s production to continue and sales to come in.
FoodBytes! is also running a series of digital discussions to facilitate the spread of information that could help companies adapt to the new operating environment. The webinars are reversing the traditional flow of support from corporates to startups by enabling smaller, more nimbler organizations to share details of their efforts to adapt to the pandemic with more established companies.
During one webinar, participants from 50 established corporates heard how FoodBytes! Pitch alumni and winner Farmer’s Fridge, a startup that sells healthy food through vending machines, responded to the cratering of footfall at the airports, offices, and other locations that were central to its business model. When those sales channels dried up, Farmer’s Fridge pivoted quickly.
“They had a broad enough mission that they were able to pivot almost on a dime to bring food to hospital workers, and have made an extraordinary impact,” Meijers said.
By pivoting, Farmer’s Fridge gained access to a source of customers who would continue working through the pandemic and contributed to the response against COVID-19 in two notable ways. Firstly, Farmer’s Fridge gave time-pressured hospital staff ready access to healthy food. Secondly, the choice of fridge locations in hospitals reduced movement between floors of buildings, potentially helping curb the spread of the coronavirus.
The information shared by Farmer’s Fridge during the webinar is potentially valuable to other startups and corporates. Like Farmer’s Fridge, many companies have temporarily lost access to traditional sales channels, driving them to quickly step up e-commerce activities, increase online promotion, and ally with other businesses to build new mechanisms for marketing and discovery.
FoodBytes! is supporting those efforts by continuing to adapt the webinar program in response to feedback. So far, the most requested topic is stories of collaborations between corporates and startups, indicating the value the ecosystem places on cooperation in uncertain times.
FoodBytes! role in making lasting connections
The connections made by FoodBytes! during the pandemic are indicative of the sorts of relationships it has been forming for years and the long-lasting value of the platform. Having started out as a pitch competition, FoodBytes! has evolved into a broader ecosystem based on two programs: FoodBytes! Pitch and FoodBytes! Pilot.
“We've always been responding to the main challenges facing our startups and corporate partners, and identifying opportunities for advancement. Having both Pitch and Pilot ensures the continuous involvement of innovation across our ecosystem,” Sonia Shekar, Data intelligence analyst at FoodBytes!, said.
FoodBytes! Pitch connects entrepreneurs and startups with C-suite executives at leading food and ag companies and puts them in one-on-one meetings with investors. In doing so, the program leverages connections Rabobank built as a leading food and agriculture bank to put startups in a position to form relationships with potential customers, partners, and investors.
While the program culminates in a pitch competition, the real prize is the connections, with their peers, corporates, and investors, that startups form at FoodBytes! Pitch.
FoodBytes! other program, Pilot, is the successor to Rabobank’s TERRA initiative and complementary to Pitch. Across 58 Pilot projects, FoodBytes! has enabled 11 AgTech, FoodTech, and consumer packaged goods corporates to find startups that can help them address specific goals and challenges. Startups that participate benefit from industry validation, due diligence for investors, and access to corporate resources.
The interconnectivity of the two FoodBytes! programs is shown by The Better Meat Co, which participated in Pitch before collaborating with a corporate through Pilot. The company first met an investor through Pitch to grow its business, and then went on to garner new customers in a category that they weren’t initially participating in via Pilot.
That core narrative, of Pilot leading to lasting relationships, is echoed across the program. Through its Pilot with Griffith Foods, upcycled grain startup ReGrained enabled the company to discover new applications for spent grains as an ingredient, and then went on to receive venture funding from its new partner. Similarly, global ingredient company Tate & Lyle invested in its startup partner, Zymtronix, after a successful enzyme immobilization Pilot to improve ingredient functionality.
How startups can access new collaborators
FoodBytes! has primarily built up its ecosystem over the past five years by running in-person events. In 2020, that approach is temporarily impossible, leading the platform to pivot to a virtual model for its next Pitch program. Startups will participate in one month of digital workshops that will culminate in a virtual pitch to an audience and panel of judges.
While Pitch has moved from the physical to virtual realm, the goal remains the same. FoodBytes! is still looking for startups at the validation or growth stage that have robust and diverse teams, validated business models, and collaborative mindsets. As importantly, FoodBytes! wants to work with sustainable companies focused on people, profit, and the planet.
Startups that meet the criteria can apply to participate in Pitch from July 5 to August 10. FoodBytes! will disclose the 45 top applicants on September 28 and begin the program of digital workshops in mid-October. Startups can already indicate their interest in participating in both programs on the FoodBytes! website, and will be notified when applications open for Pitch. All submissions will also be considered for Pilot on a rolling basis as aligned corporates join.
The event will be the first FoodBytes! Pitch to happen since the start of the pandemic. FoodBytes! has begun to see signs of how the crisis may shift the focus of food and ag innovation through analysis of who is attending its webinars. Notably, FoodBytes! is tracking the rise of online marketplaces that could boost supply chain efficiency and indoor farming startups that may lower labor requirements.
As the post-pandemic world emerges, such startups and others could find investors, partners, and customers are more receptive to their pitches than before the coronavirus exposed vulnerabilities in pre-crisis systems. It is too early to tell exactly how those dynamics will play out, but COVID-19 has already added to evidence that collaboration will be key to success. The FoodBytes! team believes that in order to future proof F&A businesses, the pairing of the nimbleness of startups to corporate scale is the best recipe for the industry.