San Francisco-based FTW Ventures describes itself as the “secret force” behind some big changes coming to the food system. This week it announced a new $4 million agrifoodtech fund, which has already made five investments and is targeting 15 to 20 deals over the next two years.
Now that the fund is officially out in the open, AFN got in touch with general partner and founder Brian Frank to get the lowdown on what FTW is all about.
Frank has had a fairly free-range career, including as a founder and executive at six different tech startups. These include bCandid, which pioneered online discussion boards in the late 1990s; Posterous, which created an innovative micro-blogging platform that was later acquired by Twitter; and Timeful, which used advanced AI to plan your personal schedule and was sold to Google in 2015.
In between these tech roles, he moonlighted for three years in the food and beverage sector. At one point he worked for The Godfather and Apocalypse Now director Francis Ford Coppola at his restaurant and winery group, educating staff and customers on wine production.
So far at FTW, he has drawn together a lean team of four including operations director Kristen Ostro, who is also the founder of Strut Consulting; legal counsel Neil Devani, who is also founder and managing partner at Necessary Ventures; and associate Tawny Scanlan, a PhD candidate in animal biology at the University of California, Davis, with a focus on sustainable aquaculture.
AFN: What sets FTW apart from other newly launched funds in the agrifoodtech space?
Brian Frank (BF): We offer time-plus-money-plus-network for the most promising agrifoodtech startups on the market. And we actually get in and ‘work’ for our startups on everything from additive financing, through our extensive network of tech, food, and and impact investors, to product strategy and go-to-market with our connections in food manufacturing, distribution, and foodservice.
Our investor base and mentor network is also available to our startups, and they are the top scientists, technologists, business leaders, and restaurateurs — and even celebrity chefs — that can have a profound impact on helping our founders think through their business and product plans. We aspire to be the founder’s most trusted ally in their journey to create a better food system.
AFN: You’ve told us that the new fund has made five investments already. What deals can you tell us about now, and can you hint at those you’re keeping under the lid?
BF: We are very proud that all our current companies are tackling massive problems in our food system, from food waste reduction to better ways to manufacture core ingredients that require less resources.
Geltor is our farthest along company, having raised [its] Series B earlier this year, and [it’s] already supplying designer collagen and gelatin to a number of customers in the cosmetics space. [It’s] soon to be in nutraceuticals and food products.
Plantible Foods recently completed their seed round in March, and Kelloggs joined us as a key, strategic partner in that round, to deliver a high-value, ultra-sustainable protein to market over the next several years.
Spoiler Alert has been a leader in food waste reduction in the distributor and manufacturer channels, and [has] announced exciting partnerships over the last several years, including a strategic investment from Maersk.
Galley Solutions has been helping more foodservice businesses transform their operations, increasing margins and reducing waste with takeaway and delivery-focused kitchens all across [the US].
And Debut Biotech is radically transforming the process to make high-value ingredients for both food and pharma, and [it’s] working on some incredible products and partnerships that we can’t wait to announce.
On the ‘futures’ side, and as for companies we’re yet to announce, we have a number of opportunities brewing in advanced biosciences, automation for farms and food production, [and] e-commerce enablers for food and [consumer packaged goods] brands in the works. We’re also looking at a number of investments in computational biology — an emerging field for improving ag and food practices — personalized nutrition, advanced materials and packaging, and plant-based products right now.
AFN: What types of companies are you scanning the horizon for to fill the rest of your portfolio?
BF: Our thesis is broad, across the entire food system from farm to table and beyond. [It] encompasses a wide range of technologies from biotech to software, novel products, and packaging.
We obviously would like to see more in all those categories, but also to find great investments in hardware, automation, [internet of things] and sensors. The challenge we face today is there’s not enough labor to pick, process, and deliver our products as the population grows and demand for high-quality food increases. We also understand we must protect our food system from adulteration and pathogens, so we can avoid hurting people in the process of speeding products to market. [these technologies] can help us get food out of our fields, protect it in the supply chain, identify when products are going bad, and make sure every product finds a home.
We also believe in the power of software to transform many industries. As another famous investor said, ‘software is eating the world’. Well, we at FTW Ventures believe software will eat the food world as well. Better analytics and data collection on our farms, in the supply chain, and even at the consumer level will unlock better decisions and management of our products, meaning we’ll waste less and feed more people.
We also recognize there’s a reckoning coming for single-use plastics and chemicals in our food preservation and packaging space. [As such] we are looking forward to a world where we have either sustainable bioplastics and coatings that can degrade gracefully and cause no environmental or health damage, or we have a circular system where packaging is reused and never pollutes the environment at all. There’s also a case to be made for better recycling of used packaging as well, and the ‘any bin, we win’ idea that consumers can go about their day and the system will adequately sort and remove the packaging in the most efficient and environmentally friendly manner.
Finally, we think the dairy system, much like the meat industry, is going through a major transformation. Plant-based products are coming on faster, and more consumers are opting for the alt-dairy products produced by companies like Oatly, Califia, Kite Hill, Myoko’s, and more. There’s a better dairy system to be built as consumer demand shifts and more products are coming to the market that are built on sustainable protein and fat sources, with less sugar but still the same great taste and texture that people look for in their traditional dairy-based products.
AFN: It’s probably fair to say that 2020 has not panned out as anyone predicted. What are your predictions for our sector for the rest of the year?
BF: 2020 will be a turning point for the food and ag sectors. They face a ton of challenges, from labor issues to the impact of climate change and Covid-19 on their consumer demand, to finding homes for all the products that are ‘stuck’ in the supply chain right now.
What one of our investors said to us is, “The industry is doing things in three months they were expecting to do in three years,” due to all the crises we face right now.
That’s true in areas like e-grocery, which is experiencing significant growth in sales as customers rush to get their necessities for the home. The percentage of people buying food online in the last six months has shot up dramatically, and we don’t see that returning to pre-pandemic levels after we start to emerge from the current crisis.
It’s true for foodservice [too], as every business, almost overnight, had to move to a delivery and takeout model. This transition will cause many to rethink their business, and a good amount won’t make it through the transition. But those that do, and optimize their process from a technology and staffing prospective, will be the future of foodservice in America.
At the farm, we are looking at how we can help farmers tackle both the day-to-day challenges as well as the looming threat of climate change. There’s plenty to do from financing operations, to improving practices, to solving labor shortages and reducing waste to help them stabilize and grow their businesses. Inevitably, this system will rebuild itself on technology to drive productivity and efficiency, as well as care for the land, plants, animals and the human laborers they employ. And we hope it becomes more resilient, flexible, and sustainable in the process, speeding our transition to practices that are better for profits and the planet.
Finally, the demand for plant-based foods has been off-the-charts. People now seek out these products and want to live a more sustainable lifestyle. This has been a transition coming for quite some time, with ‘Millennial’ consumers expecting more of their food. We expect these trends to increase as health and sustainability continue to be values the consumer looks for in food.
AFN: Where do you see too much hype in foodtech – and where deserves more?
BF: Clearly, there are plenty of people rushing in to capitalize on the shifting consumer demands for things like plant-based meats, and we believe there are two clear winners already in Impossible Foods and Beyond Meat. There are probably other areas in this space still open for innovation, as well as regional brands that will thrive. [But] the valuations and investment in this category are already sky-high.
The space that is also heavily hyped, but we actually think it could be undervalued, is food and ag biosciences. We just came out of the chemical revolution in food, with Monsanto [now part of Bayer] and Syngenta leading that innovation. The technologies to produce better ag inputs as well as better food ingredients have come a long way. With things like [gene editing] and computational biology, we can design better food and solve major challenges in the food and ag worlds. That’s without even mentioning all the innovations we can unlock for human health with things like an understanding of the microbiome and how organisms in our body affect our health outcomes when we eat certain products.
We believe robotics and automation are just hitting the ‘knee of the curve’ on being applicable to food and ag. Covid-19 has accelerated the need for robots to handle dirty, back-breaking jobs and collect data that can influence yield and build more productive environments. We equate it to the car industry in the early 1900s; people were sowing carriages and putting on tires by hand, but when automation came around, it improved the factory environment and produced better, more consistent products.
Finally, there’s a lot of data latent in the system we’re not collecting and analyzing, so software will play a big role in optimizing our food system – from oncoming weather patterns, to the hydration of a farm, and into the quality of calories and macronutrients we’re ingesting. Unlocking all the insights in this data will have a profound impact on the food industry as well as the way we manage our precious resources.
We like to say all of this technology will create better outcomes for profits, people, and planet if we do our job right at FTW Ventures.