Localism is here to stay. More than half of consumers claim the pandemic has made local food more important to them, and increasing numbers are choosing to buy direct from farmers, or through local food delivery platforms like FreshSpoke or FreshCity Farms in Toronto or SPUD in Vancouver.
According to FreshCity Farms’ CEO, Ran Goel, COVID-19 created a fourfold jump in demand, with 11,000 people on their waitlist at one point.
And as the physical world begins to reopen for business, Farmers Markets are seeing strongly rebounding demand as well.
The combination of the changing patterns of consumer demand and the mainstreaming of the direct to consumer technology means that in the words of Forbes Magazine, “It is an exciting and unprecedented time to be in the food and beverage space, with smaller challenger brands…fueling disruption”.
Indeed, we are seeing significant growth of young food companies, and the disruption they are bringing to the marketplace is not just in their products, which tend to be healthier, but in their approach to sustainability.
At Provision, we have just graduated the first cohort of food start-ups from our new R-Purpose MICRO program. This 12-week accelerator focuses on embedding sustainability, purpose and circularity into the heart of these young companies to help them fast-track growth and resiliency.
Each of these graduating firms was inspiring not just for their product innovation and quality, but for their deep commitment to using their circularity as a force for good in the food system.
And yet, despite the obvious demand in the marketplace for more local food, despite the opportunity to positively disrupt and influence the food system and despite the uniqueness of each of these company’s products, they are all going to face a similar challenge: the food company glass ceiling.
To grow, all companies need access to capital, talent and resources. Without them, the future is bleak. Only half of Canadian start-ups (51%) survive to see their 5th birthday and three out of four never grow beyond ten employees.
A huge amount of work has been done over the last two decades to create Accelerators, Incubators and access to Angel and Venture Capital funding to help support young companies; however, most of this funding goes into tech, with only a tiny percentage going into food start-ups. In fact, of the 150+ accelerators and incubators in Canada today, fewer than 5% have a specific expertise in food.
I asked Bryan Watson, one of the founders of NACO, why food wasn’t attracting the big bucks and how we could remove the glass ceiling. “The first challenge is that funders are typically looking to fund Intellectual Property. Their ideal company is one that has a piece of code, or a protected technology that means they can scale really quickly and get bought out with a huge upside. Food is about making stuff, which even if it’s creative and different still means that it is higher risk for an investor.”
So, if food is inherently not as investible as tech, are there other models that we should be exploring? “Yes, there is a sweet spot emerging where intelligent farming meets local supply chains. I see more and more investors looking at small, technology-driven producers, such as vertical farms, operating in areas with strong local demand.”
It is clear, both from my conversation with Bryan and from seeing what firms like FreshSpoke, who are pushing the boundaries of what technology can do in terms of connecting people to food, are doing, that things are shifting. But I’m also convinced that we need to evolve the funding model to really help break that glass ceiling.
And that’s where Slow Money may come in. Slow Money is a growing movement that connects investors to their local food systems by providing sustainable food companies and producers with zero interest loans to fund their growth.
The brainchild of Woody Tasch, an American impact investor who has helped fund over 300 early-stage sustainable companies, Slow Money began a decade ago and has already delivered more than $70M in loans to 750 sustainable food companies. It works through a series of local groups, of which there are only two in Canada.
There is something deeply compelling about this model for me. It only funds sustainable and circular food companies. It does this by connecting local investors to their local food companies. And through these connections it helps drive not just capital but also relationships and mentorship, which alongside cash are the things that early-stage firms need most.
And because localism is truly here to stay, I have reached to Woody Tasch to see about working together to set up more groups across Canada. Watch this space or reach out to me directly to learn more - email@example.com!
Cher Mereweather, CEO of Provision Coalition Inc., is a Food Industry Sustainability Expert based in Canada
View the original Food in Canada Sustainable Change Column on Page 29 here