Green Circle Capital Partners announced today it has raised $13 million for its first fund in a new venture capital division, Green Circle Foodtech Ventures (GCFV), with an anchor investment from Hormel Foods’ VC arm 199 Ventures.
The new investment vehicle will target early stage, innovative foodtech companies working across a number of spaces, including food safety, sustainable packaging, sugar reduction, food waste and supply chain efficiency and – to a lesser degree – “tech-enabled” food and beverage brands. According to Green Circle founder and managing director Stu Strumwasser, the firm expects to write checks between $250,000 and $5 million per investment, with an average size of about $1 million, and will primarily participate in seed and Series A rounds.
Prior to the closing of the first fund, GCFV has already invested in two startups: California-based alternative protein company The Better Meat Co. and Israeli animal-free dairy protein maker Imagindairy. The firm is now aiming to grow its fund size to around $25 million.
Who is Involved?
Founded in 2013, Green Circle Capital is a New York-based investment bank focused on the natural products industry (including food, beverage and supplements), restaurants and – appropriately – foodtech.
According to Strumwasser, Green Circle primarily provides capital advice and investment banking services for CPG brands. As GCFV marks an extension into principal investing for the firm, he said the new fund will only invest in technologies while Green Circle Capital will continue to service brands as a middleman for acquisitions and capital raises.
In addition to Strumwasser, GCFV’s partners include Graham Anderson, who brings experience in technology investing, and Green Circle Capital director Bakley Smith. Operational advisors include Green Circle associate Francesco Lorenzetti, Rao’s Specialty Foods CEO Eric Skae, Honeydrop Beverages founder David Luks and Explore Cuisine CEO Gregor Forbes.
The fund received an anchor investment from 199 Ventures, a division of global branded food company Hormel Foods. According to Strumwasser, Hormel’s involvement is a sign of the conglomerate’s dedication to plant-based innovations and sustainability.
“They see what everybody sees in terms of the trends toward flexitarian diets and greater traction for plant-based products as replacements of what used to be only made with animal product inputs,” Strumwasser said. “So Hormel is very interested in [evolving its business], and they seem to be committed both in terms of money and resources because they’ve created this 199 Ventures group that has invested with us.”
In addition to Hormel, Strumwasser said several unnamed family offices invested in the fund. He noted that while GCFV’s initial fund may be smaller in the grand scheme of venture capital, portfolio brands will also have access to connections at Hormel and 199 Ventures or the family offices may provide additional sidecar investments.
What is the opportunity?
While the foodtech sector may be past its first inning, Strumwasser said it’s “still the second or third” and that “many of the best opportunities are still early stage.”
According to a January report from Emergen Research, the global food tech market size was estimated at $220.32 billion in 2019 and is expected to reach $342.52 billion by 2027, at a CAGR of 6%. The growth is being driven by rapid adoption of new technologies within the food industry and pointed to new innovations in robotics, processing techniques and data technology as new growth opportunities.
“Food is the biggest industry in the world and it’s the least indexed for technology,” Strumwasser said. “And if that wasn’t gonna change, I thought there’s nothing I could do about it – I can’t start a revolution. But I started seeing that it looked like there was a revolution starting, and with that I thought that this is probably the biggest economic opportunity of my life, maybe, since the internet.”
In particular, Strumwasser said he is interested in fermentation technology, namely as a way to create better plant-based alternatives to meat and dairy products. That’s the tech at the heart of The Better Meat Co., in which Green Circle Capital invested in 2019, prior to the official formation of GCFV, and in October announced a partnership with 199 Ventures.
Strumwasser also pointed to shelf-life extension technology that can help reduce food waste, plant-based fat alternatives and plastic replacements as other areas of interest.
GCFV is primarily targeting companies based in North America and Israel and aims to quickly grow its portfolio to about a dozen brands with an expected rate of roughly one investment each quarter, Strumwasser said.
“We are interested in what I would call the ‘picks and shovels’ to the Gold Rush of cultured meat, meaning the suppliers to the cultured meat industry – that interests me,” Strumwasser said. “So with ‘fermentation’ and ‘cultured meat’, the valuations on those companies are outrageous right now; those are very sexy buzzwords these days. But there’s stuff that’s a little less sexy, we think actually could be very interesting.”