Most entrepreneurs start out with “friends and family” funding (essentially people they know who will take a risk with them) or else they “bootstrap” their company, self-financing from the owner(s) and free cash flow. However, in food, this doesn’t get you very far – food businesses need outside capital, usually from a variety of sources, to compete.
These entrepreneurs later move on to “angel” funding, usually by people who have run successful food businesses themselves and understand the space in that specific way. After entrepreneurs have grown their business with that type of funding, typically to at least $1 million in sales, they have then demonstrated enough traction to appeal to venture capital firms who will invest for a say in how the business is run. Private Equity invests in established companies with a high proof of concept.