Tuesday, March 29, 2016

'Good Food' movement grows up, ges paid

Imagine standing on a stage in front of hundreds of strangers. You need their money to help finance your dream business. You have seven minutes to make the pitch.
You'd be nervous, right?
"The trick is faking it. I was nervous as hell," said a grinning Susan Fink, founder and, for now, sole employee of Karma Kombucha.
Fink was one of a handful of entrepreneurs pitching to investors at the Good Food Festival's financing and innovation conference Thursday — the one day of the three-day trade show that's dedicated to connecting business owners with investors. From crepes to craft cider, all of the businesses seeking money were aligned with the festival's definition of "good food" — somewhere in the mix of local, healthy and sustainably produced.
That such a day even exists is a sign of how times have changed. Increasingly, consumers want food they consider to be healthy and socially responsible while also affordable and delicious. The shift has forced large-scale change throughout the food supply chain, and the dollars have followed.
"There's a lot more money in the room and the deals are far more sophisticated, in part because of the (Good Food Business Accelerator)," said Jim Slama, founder and president of FamilyFarmed, the nonprofit that organizes both the Good Food Festival, which began in 2004, and the 2-year-old accelerator program.
Housed in 1871, the buzzing tech incubator in the Merchandise Mart, the six-month food business accelerator program connects its participants to a network of mentors and resources and helps them to refine and grow their businesses.
For some, like Ryan Jones, founder of Gotta B Crepes, the program teaches how to articulate the business side of a food passion.
"We're all makers, but how do you take that passion and make it an enterprise?" said Jones, 34, who has a tattoo of his company's logo — a bumblebee making crepes — on his right hand.
The accelerator program also provides training, delivered by Second City improv professionals, on how to deliver a pitch with confidence and not freak out in front of big crowds.
Shortly before their presentations, Fink, 56, and Rachel Bernier-Green, 28, founder of Laine's Bake Shop, looked at one another in a moment of shared anxiety. Then they raised their hands in the air and frantically shook their fingers. Both women started laughing.
It was a Second City-taught method to stay loose.
"It's all about telling your own story. You know it better than anyone else," Fink said. "And it's not going to be perfect. Just be yourself."
Fink used to work for Kraft Foods, leading an innovation team in the research and development department, before being laid off in 2010. Before losing her job of 26 years, Fink tried kombucha, a fermented tea, and was impressed with how it helped her stay healthy as she trained for a triathlon.
Fink began brewing kombucha in her Mundelein home, trying to improve upon the taste. When she lost her job at Kraft, she had a decision to make.
"Do I want to go paycheck or do I want to go passion?" said Fink, a line she would later deliver perfectly to the crowd of investors.
Fink and her wife, Michele Dziaba, another former Kraft employee, spent about $500,000 of their own money, retirement savings mostly, to build a kombucha brewing facility just a few blocks from their home. Fink works seven days a week, producing about 750 gallons of certified organic Karma Kombucha per month, which is now sold in select Mariano's, Whole Foods Market and Heinen's Fine Food stores in the Chicago area.
Now, Fink's looking for about $150,000 in debt funding to hire two people to help grow the business.
From 2003 to 2014, retail sales for natural and organic food have steadily risen to represent more than $105 billion, according to SPINS, a Chicago-based market research firm that tracks data on the organic food industry.
From an investor perspective, it can pay to get in early on such companies, which have potential to be acquired by larger food companies that may not have the talent or desire internally to develop such products, said Mark Thomann, CEO of River West Brands and a member of the Good Food Festival's steering committee.
"You won't see PepsiCo try to develop a kombucha," Thomann said. "It's much easier for them to go buy one."
Victor Friedberg, managing director of S2G Ventures, a Chicago-based venture capital firm focused on food and agriculture companies, said the opportunities for investment extend beyond the finished products.
"Our fundamental thesis is the consumer has changed and that's created a ripple effect up and down the food supply chain," Friedberg said. "It's all fertile ground for investors."
And that's good news, too, for relatively small food businesses trying to grow up.
Chicago-based Kitchfix, already is on the brink of selling grain-free waffles and paleo granola in stores throughout the country. Josh Katt, Kitchfix CEO, was at the conference Thursday, asking for about $1 million in equity financing to help with national distribution.
What's the end game? Selling to a larger food company someday?
"I'm just in love with growing a company with values," Katt said. "Not to sound corny, I definitely want to make money. … But I'm just trying to keep my head to ground and make good products."

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