Brian Frank | FTW Ventures
Brian Frank launched a $4 million fund this year to invest in early-stage foodtech companies with exponential growth. This, he says, is just the beginning
On a hot summer day in August 2015, tech entrepreneur Brian Frank met investors in Silicon Valley, and all they talked was about investing in Impossible Foods, Beyond Meat, and Hampton Creek – the liquid egg replacement company now operating as Just. They admitted to Frank they didn’t get food the way he did, and that conversation sparked an idea in him that matured into the creation of a foodtech fund through the launch of FTW Ventures.
“I grew up in a household where eating was a joy,” says Frank. “Appreciating that food is good for our health, it brought us together.” But Frank’s understanding of food was not just from his upbringing. He studied computer science in college and went to Cornell University, which is known for its food and agriculture programme. “I got inundated with both technology and good food,” he says.
Up until then, Frank’s career was about creating technology for people to use in their everyday life. He created six companies and exited three – the last was acquired by Google. After the deal was done he thought about doing something that would transform the world with a long-lasting legacy.
A man with a hands-on attitude, Frank spent three years in the food industry and became a wine director for a restaurant in the Bay Area owned by film director Francis Ford Coppola.
“I understood that wine is this beautiful amalgam of agricultural practices with science – fermentation. It’s beautiful to make these amazing products people love with so many flavours and components – I thought why isn’t the food world more like that,” he says.
Frank reached out to food corporations in the US and talking to Unilever, Campbell, Kellogg’s, and Mars, it was clear to him that they weren’t tech companies, but experts in putting consumer food products on shelves.
The input from the big food companies confirmed the conversation in Silicon Valley. Frank saw the opportunity he was looking for and took on the mission to help start-ups and advise food corporations in the use of science and technology to produce the food of the future, with a focus on profit, people’s health and the planet.
FTW Ventures: A foodtech fund
Frank turned angel investor, mentoring many companies along the way. After four years of investing in foodtech, he realised there was going to be way more companies and way more opportunities than he could personally invest in. It was time to create a platform for people to invest in foodtech. In March, FTW Ventures closed its first fund with $4 million.
“I think there’s going to be a massive transformation in the food industry led by technology and science – like every other industry has been transformed,” says Frank. “At FTW Ventures, we’re helping tech investors, food investors, and impact investors understand how to place capital into this space, and promote the best founders and the best technologies.”
FTW is structured as a high conviction fund and the capital is distributed as a $100,000 to $500,000 investment into 15 to 20 companies with the potential to transform the food system.
“We’re not investing in 100 companies hoping one outperforms,” says Frank. “We’re investing in a very small set of companies; we’re getting active in them, helping to develop their businesses through my network and knowledge. We’re focused on the US and Canada, and I hope to bring this platform worldwide.”
FTW has already invested in five companies, including Geltor, the US-based company that has created the world’s largest selection of designer proteins with unprecedented biocompatibility, functionality and benefits for consumers; and Plantible, a business-to-business foodtech company developing functional and sustainable plant-based protein using industry-leading techniques for aqua-farming and extraction.
To the point
What do you look for in a foodtech company?
I look at the market opportunity, and whether the team has ‘an unfair advantage’ – they have something unique, that only they know about it, are able to explain it in plain English, and can sell it.
Venture capital investors are looking for multimillion-dollar opportunities and the business that can reach that in an exponential curve. The question from a VC foodtech perspective is: can your business idea become another Beyond Meat phenomenon?
What are the driving forces in a foodtech company with exponential growth?
It really is a combination of the team, the market opportunity, the technology you have, and the execution. But from what I see today, consumer demand is fundamental to driving exponential growth. If people want a product, someone is going to figure out how to make it.
What kind of return on investment are you after?
We haven’t seen enough exits to give us an accurate data perspective. Tech generally deals in 10x multiples, but CPG is 1x-, 2x-, maybe 3x revenue at best. I think foodtech is going to be at 3x-to-5x multiple on average. Beyond Meat is a break-out success with 40x revenue, but is that the norm?
At FTW, we look for 5x but hope to get a 10x-plus return.
What categories have the most potential?
I think we’re going through a radical transformation in the food supply chain, recognising there’s a lot of problems – 30% to 40% of food never reaches the plate. Whether you are a food company or a farm, having a product that never yields a dollar is awful economics! So, there’s a lot of operational efficiencies that are good for the planet, and companies are coming up with technology to solve these problems.
The same is true to climate change affecting crops. We have to figure out ways to make drought or heat-resistance plants, or we have to get them to grow in new locations like indoor farming – a lot of investment is going into this now.
What do you say to consumers that think this is all science fiction?
We’re seeing the early days of a new food industry being created. This is an opportunity to educate consumers on the technologies and to engage everybody in the dialogue.
At FTW, our mission is to bring everybody together to create the products and the marketing that tells the story that matters – feeding 10 billion population in the future. There will be people that get it and people that won’t.
How attractive do you think the foodtech space is to food corporations?
Food companies have become more adept at understanding how they can integrate innovation, not only through corporate venture capital but by collaborating with start-ups. We work very closely with big brand name corporations to identify technology that’s going to transform their businesses.
The goal is to get a start-up to a prototype stage, sign up customers, and shipping first-generation products. Then, you can leverage knowledge and expertise with corporations that want to learn and integrate it. Food corporations are looking for M&A opportunities or partnerships that extend their business.
Plantible, for example, in San Diego. It took the prototype to Kellogg’s and the company’s venture arm invested in it. Small foodtech start-ups are going to run into production and go-to-market issues – and having strategic investors sitting alongside, helping mature the company to the point to be ready to supply a Kellogg’s line would not be a bad fit.
Why do most of the companies in FTW’s portfolio have a business-to-business model?
We’re heavily focused on B2B because we understand the customer and the channels related to it. We want to be in business with B2C companies because when they get it right, they do incredibly well. The challenge with B2C is not only embodying the technology and product knowledge but that those companies also have to understand marketing and getting to consumers.
The good thing with Covid-19 is that direct-to-consumer commerce is now a much bigger deal than its ever been. It’s easier to find your customers and get products to them without the retail channel – it’s becoming easier to build a B2C brand.
With Frank’s entrepreneurial mindset and technology background, is only natural to see him pushing the boundaries in the investment arena. “We’re using science and technology to solve the problems that the food system has created. My ultimate hope is to reverse these problems with technology,” he concludes.