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The Vital Job Of Incubators And Accelerators For Plant-Based Businesses

The plant-based food industry is cooking with gas. According to SPINS data released by the Good Food Institute and the Plant Based Foods Association, plant-based food retail sales were worth $7 billion in 2020, posting a 27% growth rate overall for products that specifically replace animal products.

 

Incubators and accelerators, which both offer entrepreneurs good opportunities early on, have long been a part of the business ecosystem, but their influence within the plant-based industry could help to propel the sector much further.

There are many challenges for any business starting out, but this is especially true for plant-based companies.

“Some start-ups need help dialing in the flavor or texture of a product, shelf-life testing, or understanding food regulatory laws, or supply chain,” says Rusty Schwartz, founder and chief executive of San Mateo-based accelerator KitchenTown. “Others need help with consumer testing or go-to-market strategy. Many need help getting funding.”

KitchenTown carries out design research, consumer insights and ethnography, and new product concept ideation for start-ups, and gives them access to a product development lab in exchange for a monthly fee.

“New combinations of ingredients often demand new processing methods. Specialized food science related to proteins, combined with process engineering expertise, are particular needs that young alternative protein companies have,” he says.

Many face technological challenges, such as formulating for taste and texture or finding packaging or processes with the right technical characteristics for their product. This is a particular concern with fermented foods, says Clément Galbois, business developer at ToasterLab, an accelerator run by French agrifood business innovation cluster Vitagora.

“The biggest challenge is the need to take a holistic view of their product's impact - sustainability of their supply chains, the formulation of their products (to remain as "clean label" as possible), and their packaging materials,” says Galbois. “These are a series of interconnected challenges in reconciling their own values with the constraints of running a business, but also addressing demands of consumers who are reluctant to compromise on an array of criteria.”

But as plant-based companies become mainstream, they're caught in the old industry crosshairs, says Daniel Scharff, founder of free accelerator Startup CPG, whose program Pitch sends boxes of plant-based samples to buyers and the media with a live tasting. Winners get media coverage and investment.

“Even if you can afford all the costs of doing business and get grocery distribution, the dinosaur consumer packaged goods (CPG), operating at a fraction of your cost, have teams of people who will bury your product on the shelf,” Scharff says.

Incubators and accelerators can help with many of the challenges unique to plant-based start-ups. Accelerators generally help to grow an existing business, while incubators focus more on innovation.

This is largely achieved by the networking opportunities accelerators can bring. ToasterLab’s 12-month program, for example, promises access to professional experts (in such areas as legal matters, food regulations, finance, marketing or industrialization), agrifood businesses, and banks interested in promoting the growth of innovative companies along the agrifood value chain.

“Every startup founder knows that new product development can’t happen in isolation,” says Schwartz. “You have to think of who it’s for, how it’s sourced, whether it can scale, and a million other considerations, each one affecting the other. Thinking about all these aspects in conjunction makes the whole process a lot smoother. There are so many huge unknowns and things to learn when starting a food company. And there are plenty of people who have been down that path already. An incubator combines a lot of that expertise under one roof, so startups not only have access to shared physical infrastructure and equipment, but also to the shared knowledge from founders who came before them.”

Start-ups enrolled with KitchenTown, for example, can work with its culinary director to perfect formulation, and with its process engineers to ensure the product can be sourced and produced at scale.

“It makes more sense to build a national platform to help all emerging brands versus focusing organizational resources on helping just a few,” says Scharff. “The questions and challenges brands face have a lot of overlap, and we can work on them together.”

Companies can sell the food they produce at KitchenTown to consumers, either at farmers markets, in local retail, online, or at pop-up events at the KitchenTown cafe.

“It’s really hard to have this range and depth of expertise internally, especially for an early-stage founder who’s also trying to find capital and produce and market a product,” Schwartz says.

Incubators and accelerators also provide companies with the right environment to take risks, allowing them to try iterations of their product or service until they find the right one, he adds.

“Large food companies look to them for inspiration precisely because they can move so much faster and challenge existing assumptions about how food should work,” he says.

Incubators and accelerators provide the extra boost, through expertise, equipment and funding, Scharff adds, that small companies need to be able build successful new brands.

Incubators can offer valuable insight they wouldn’t otherwise get. Ithaca Hummus, for example, was able to go behind-the-scenes at leading yogurt brand Chobani. Chris Kirby, chief executive and founder of Ithaca, says this was a “dream come true” for the start-up. 

“Chobani knows what we’re up against as an emerging brand competing with ‘big food’ in a highly competitive category because they’ve been in our shoes,” he says. “We met everyone, from leadership to the first employees of the company, learning lessons that have saved us an immeasurable amount of resources as we’ve accelerated our growth. But the true magic of their incubator was the feeling of inspiration that we could one day be in their shoes.” 

Incubators and accelerators can contribute hugely to start-ups by leveraging their accumulated experience to avoid making crucial mistakes at an early stage.

“Especially in food tech, where regulation is strict and relatively complicated, production infrastructure is a barrier, the margins are quite low,” says Noga Sela Shalev, vice president of business development at Fresh Start Foodtech incubator.

Fresh Start is part of the Israeli Innovation Authority Incubator Program and is designed to promote early-stage investments by providing 85% government refund to the incubator partners, who provide support.

The incubator is also part of $100M investment by the Ministry of Economy for Israeli entrepreneurship, with the aim of creating a food tech cluster in the north of Israel. For their two years in the incubator, companies have access to lab facilities, mentorship and consulting, and exposure to future investors and strategic partners.

These programs are becoming increasingly popular among start-ups. Since 2017, global food and agriculture startup network FoodBytes!, for example, has seen representation from plant-based (as well as fermentation and cellular agriculture) companies double.

For 2021, FoodBytes! Pitch targeted startups specifically working to increase supply chain sustainability, improve resource management or pioneer the next frontier of nutrition.

FoodBytes! Pitch is an annual multi-week program that helps 45 start-ups grow their businesses through industry exposure, individualized connections with corporates and investors that are relevant to their own innovation goals, says Anne Greven, global head of food and agribusiness innovation at Rabobank.

And incubators and accelerators don’t just help start-ups; they can be mutually beneficial, too.

For example, SnackFutures, Mondelez International's innovation and venture hub, launched a start-up engagement program called CoLab. The inaugural class this year was nine start ups with revenues of at least $500K and are proven in the marketplace with solid distribution. The 12-week program focused on growth acceleration and was tailored to these start-ups’ particular needs and challenges.

“The most common challenge is how to scale and how to build their stories to be clear and competitive in the wellbeing snacking space. That’s where we excel, says Brigette Wolf, global head of SnackFutures. “We are working with start-ups to fuel our larger mission of creating a snacking world that is good for people and the environment. We know we can’t do that alone and that these entrepreneurs have seen and done things in developing their products that we wouldn’t have thought of, and conversely they don’t know what they don’t know.”

As the plant-based industry continues to grow, there is plenty of support available for start-ups who need resources and expertise behind their much-needed innovations. And while these programs are so mutually beneficial, it seems accelerators and incubators will really help to shape the future of the industry, and our diets.

Source: Forbes