Plant-based food and beverage private equity firm Powerplant Ventures today announced the closing of a $42 million fund. The fund is led by Mark Rampolla, founder of ZICO Coconut Water, Kevin Boylan and T.K. Pillan, co-founders of the Veggie Grill restaurant chain, and Dan Beldy, former Managing Director of Steamboat Ventures (the venture capital division of Disney).
This is the first fund for the new firm, which was founded last year, although an early close on roughly half the funding has allowed it to invest in brands and companies such as Hail Merry, Rebbl, Thrive Market, TerraVia, Juicero and Hampton Creek before the official close.
The fund will allocate its investments over several verticals. Seed investing will comprise 5 percent of investments and be primarily in “blue ocean opportunities” with proven entrepreneurs and strong co-investors. These check sizes will primary be in the $250,000 range.
Another 20 to 25 percent of the fund’s investments will be in “paradigm changers” that are disrupting existing categories. Finally, 70 to 75 percent of the fund will go towards “next wave better for you foods” that have $1 million to $10 million in revenue and are seeing 30 percent revenue growth (among other characteristics). These second two segments will see total investments across rounds in the $2-3 million range, though they may swing higher for certain opportunities.
The check sizes are substantial, but Powerplant knows there are bigger investors on the market and has plans to work with them. Brands “have their choice of investors,” Beldy told NOSH. “On the CPG side we think we can align in the best syndicates with the top tier names and maybe even complement them stage wise, be in a little earlier, and then work with [other firms] for larger follow on rounds.”
Looking at current investments, which range from beverages to e-commerce, the portfolio already is more diverse than other firms. Some may argue that this will result in a fragmented model, but Beldy begs to differ.
“The mission statement is great entrepreneurs, world changing opportunities and plant-centric business models,” Beldy noted. “So when you start with that filter, we’re making sure we’re staying true to that. The business models might be a little different but they’re all sort of smack down the middle of what we’re trying to invest in.”
Rampolla, Boylan and Pillan all have backgrounds in food and beverage, so Beldy, who has worked primarily in the tech industry, is a unique asset to the team and his addition speaks to the merging of the two sectors.
“We’ve finally reached a point where tech is pervasive, so everybody understands disruption across a whole bunch of different industries, and I think you’re starting to see that impact business models everywhere,” Beldy said.
He also noted that he has seen former tech entrepreneurs and employees wanting to use their newly acquired funds to make a difference in the world, environment, and food system by creating mission-driven, food-related companies. These founders bring a new focus on tech and data into industries, such as CPG, restaurants, and farming, that previously haven’t seen this intersection.
Because tech companies have historically had a longer relationship with investment firms, there’s been more up and down cycles of investment for Beldy to look back on. So while investing in food and beverage is certainly hot right now, he knows to look deeper.
“The venture business is cyclical. you can’t just declare food venture high growth across the board, you have to be judicious and realistic about opportunities on an individual basis,” Beldy said. “We could see a few unicorns…but you have the have the underlying high growth business model associated with it.”