Creativity Is Essential To Food Entrepreneurship

Creativity In Food Entrepreneurship

Food entrepreneurs, like most entrepreneurs, are fundamentally creative people. And most people get that it takes a creative person to conceive of an idea for a food product and business, refine a business model that works out of a blank canvas, develop branding to communicate their business’ value and actually make a defensibly unique product that solves a real or perceived consumer problem.

There are many aspects of being an entrepreneur that may not seem to earn the moniker “creative” yet fundamentally demand creativity to properly address. For example, we often work with people on optimizing their capital structure to reach minimum efficient scale (the minimum amount of annual sales needed to reach breakeven status on a cash basis) as fast as possible. To the outside observer, this can seem like a “boring” numbers exercise; however, this process of matching sources and uses of capital is actually quite a creative dance, involving matching the expectations of (usually) several different sources of capital with the realistic growth path of the business.

As Henry Schwartz outlines on our podcast, he and his team at MobCraft Beer raised money from a variety of sources to finance their brewery and taproom. For example, part of MobCraft’s business model is using credit card pre-authorizations to help choose the beers they brew each moth, allowing people to pledge their money towards the best beer. They strategically sold their distribution rights to raise capital, in addition to pursuing crowdfunding and traditional bank financing.

Figuring out the best way to finance food businesses is an undervalued creative exercise, but the myriad of challenges that confront entrepreneurs, from finding the right suppliers, co-packers, distributors, brokers or even the right target customer also demand creativity. We encourage established and aspiring food entrepreneurs to never take their creative hats off when solving a problem, no matter what that problem is.


And now, our roundup of the best food and beverage finance news, events and resources from around the web…

Food and Beverage Business Models

Business Model Insights

Raising Capital

Raising Capital

  • What’s My Valuation? Pt. 3: Should We Just Agree To Disagree? (Project Nosh) – “When a business is too early stage (or not yet generating consistent positive cashflow), relying on traditional financial metrics (starting with multiples to EBITDA adjusted for growth rate, size of margins, etc.) is not possible. In such scenarios, one must rely heavily on comps, artistry, a vague assessment of risk/reward and the utilization of empathy. Using convertible notes, as opposed to equity with a specific share price and corresponding valuation, allows the company and investors to avoid agreeing on price, when doing so is tricky and uncertain. But, ultimately, a few points either way on your valuation is immaterial. A valuation slightly below what you might have otherwise gotten won’t kill you; but a great, value-added capital partner is often transformative to helping a business succeed and scale. So make a fair deal. Get the money, because cash is still king.”
  • What investors can bring to the table beyond capital (New Hope Media)
  • Stay Independent or Take the Money? Reflections from BevNET Live 2017 (BevNET)

Grocery Store Shopping

CPG/National Brands

Grocery Store Produce Section

Market Trends

  • Looking back on 2017: The culture of food and beverage (Smart Brief) – “Looking back on yet another year of dynamic change in the food and beverage industry, one constant we see is that consumers are still the major disruptive force. Yes, technology is making its impact felt (we can’t ignore the importance of Amazon’s purchase of Whole Foods Market or Albertson’s acquisition of Plated.com, or the rise of always connected, wired generations), but the impact of changing consumer tastes is perhaps most noticeable in the ongoing headwinds faced by iconic CPG food and beverage brands and the effects on retailers and restaurant operators arising from evolving consumer shopping and eating habits.”
  • Report: Majority of consumers visit multiple stores for their groceries (FoodDive)
  • 5 food trends that should end in 2018 (New Hope Media)

 Regenerative Agriculture

Farming and AgTech

  • Ag Tech Heats Up: 5 Trends Shaping The Future Of Farming & Agribusiness (CB Insights) – “Ag tech started gaining significant attention after the acquisition of The Climate Corporation by Monsanto for $1B+ in 2013. Since then, the ag tech category has risen fast. 2017 has already seeing new funding highs, and media coverage on the topic continues to increase. Unpredictable and extreme weather, produce shortages, and the possibility of reduced immigration (which threatens to drive up the cost of farm labor) have brought ag tech into the spotlight more recently. As a result, new startups are receiving investment to increase efficiency across all different parts of the farm, from farm management software to robotics.”
  • Episode 813: The Produce Show (Planet Money/NPR)
  • The Top 10 Farm Tech Deals of 2017 (AgFunder News)

Mergers and Acquisitions

Deals/M&A

Events

Industry Events

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