By Janet Ady, President/CEO Ady Advantage
According to Pitch Book, a private financial database, close to $570 million in venture capital has been invested in the past five years in companies that produce food for consumption or prepared foods, with the number of deals involving start-up food makers growing to 36 in 2014 from 13 in 2011.
A recent article in the Wall St. Journal gives a case study of one aspiring pasta maker. A couple of observations:
- There’s opportunity for much more local foods. One expert quoted said that in most major cities, only 1-2% of what’s consumed is produced locally. Implication: supply chain opportunities for both rural and metro areas.
- California is at the head of the class on venture capital, securing more than half. But Massachusetts, New York, Utah and New Jersey also have active VC funding. Implication: There are lessons to learn from these states that can be applied in your own back yard.
- Los Angeles County is working to be business friendly to these start-ups, trying to help mitigate the food safety regulations that food entrepreneurs have to face on top of all the other regulations. Implication: Competing on business-friendliness (if that’s a word) is real. We’ve seen planning departments make big impacts on both existing and start-up businesses by being more customer focused.
- Not part of this article, but a practice I’ve seen used successfully: If you have a retail or foodservice grocery chain located in your region, why not try to hook up your local providers with them? Sometimes these key accounts can give them the volume they need to make a success of their businesses, especially during the precarious start-up phase.
AS I SEE IT: Everyone has to eat, and local foods are not going away. Carve out your region’s niche and help your local start-ups get a foothold.
Are you looking for that unique strategy that will set your region apart? Ady Advantage (formerly Ady Voltedge) is a comprehensive and integrated economic development and site selection consulting firm who works nationally with EDOs on business recruitment, retention, strategy, market differentiation and implementation.