Hans Taparia and Sohel Shikari | Desert Bloom

The co-founders of Tasty Bite, the ready-to-heat Asian food brand acquired by Mars in 2017, now invest in businesses that can make fresh and affordable food widely available

By Murielle Gonzalez

The poem that Hans Taparia recited to me the first minutes into the Zoom call we had in December set the tone of the interview. It pondered how and why the food we consume today is toxic and bland, and noted that some of today’s food fads leave consumers frustrated and in search of “an elixir”. Through the verses, Taparia conveyed that we need to build a food system entirely anew, one where companies reshape the supply chain to provide nutrition and flavour with fresh, accessible and affordable products. And that’s the mission of Desert Bloom, the US-based venture capital fund he established with Sohel Shikari in 2019.

Taparia and Shikari are food entrepreneurs. They co-founded Preferred Brands in 1995, a company that became a fully integrated manufacturer and marketer of all-natural, affordable, and ready-to-heat Indian and Asian food products sold primarily under the Tasty Bite brand. Food giant Mars acquired the business in 2017.

With Tasty Bite, the entrepreneurial duo experienced all there is to know about making food products – sourcing ingredients, dealing directly with farmers, recipe formulation, manufacturing, packaging, retailer relationships, you name it.

“Sohel and I worked together,” says Taparia, noting Shikari spearheaded the development of their factory in India. “We built what is today one of the largest scratch cooking factories in the world. We were cooking herbs, lentils and vegetables all the way through to the finished product, which is rarely done in factories across the world even today,” he adds.

Desert Bloom: A new food environment

The exit from Tasty Bite prompted a moment of reflection. “We realised that despite the growth of the industry and the food movements of today, obesity and health issues are worsening to the point that poor diets are the biggest cause of mortality. Food and animal agriculture is the biggest cause of emissions globally, and the biggest employer in the world with human rights violations. So, outcomes are worsening, not improving,” says Taparia.

While setting up Desert Bloom, Taparia and Shikari embarked on a journey that led to the investment thesis of the fund. Taparia tells me they met with hundreds of entrepreneurs over one-and-a-half years across a whole variety of industry verticals, as well as nutrition scientists and policy advocates across the entire food supply chain.

They concluded that the food environment surrounding people in their everyday lives – in universities, office buildings, highway eateries, corner shops, and even in restaurants – is toxic.

“We’re often stuck in a food environment of saturated fat, sugary beverages, and fast food,” says Taparia. “We go through food environments saturated with confectionery that is full of sugar and artificial ingredients, and little else.”

For Taparia, the issue is not that people don’t know what good health and nutrition is, but the lack of affordable and healthier food choices.

“The reason for this is that the food system evolved on the foundation of the industrial revolution,” says Taparia. “It figured out how to provide food at scale very cheaply, but with a void of nutrition,” he adds. Taparia says Desert Bloom launched to invests in and help companies to fill the void.

But Taparia and Shikari are not alone. Former Whole Foods Market executive Gabrielle Sulzberger and impact investor Jason Ingle of Close Loop Capital sit on Desert Bloom’s board of directors. Venture capitalist and food entrepreneur Julia Paino is the fund’s strategic advisor.

The fund, which began with $3 million assets under management, has invested in five US-based companies, including Gotham Greens, Everytable, Clover Food Lab, Hungry Harvest, and Beyond Good.

Shikari tells me Desert Bloom aims to close the fund in $30 million.

To the point

What’s so special about the companies in your portfolio?

Shikari: These are system-driven companies, and their products significantly change the food environment and the supply chain because they can make ubiquitous food that is fresh, nutritious, and flavoursome in an affordable and accessible way.

How can they do that?

Taparia: The key is in their business model. Everytable, for example, developed a business model that incorporates the economy of scale of McDonald’s, with the approach to quality food ingredients of Sweetgreen, the casual restaurant in the US.

Everytable operates several commissary kitchens across Los Angeles where chefs cook fresh food at scale. Meals are sold at grab-and-go storefronts at a $5 to $6 price point. Everytable also delivers to the customer’s door, including foodservice.

Clover is another example. It is a vegetarian fast-casual restaurant chain that serves a simple menu that changes every day based on what’s available from local farmers.

What do you make of the plant-based and foodtech trends?

Taparia: Many people are chasing fads, and we’re not interested in that. We’re trying to find businesses that are unlocking the longer-term truth around nutrition and health. For us, it has to do with more fresh produce, vegetables and whole grains and less processed food.

We’re not interested in the next keto diet or vegan ice cream because they don’t necessarily unlock the longer-term nutritional truth.

Does this mean you wouldn’t invest in plant-based or alternative protein start-ups?

Taparia: We’re really excited about those kinds of businesses. Plant-based makes sense; there’s no question that we need to eat more plants, and we need more produce. However, we probably wouldn’t segment the universe in that way.

What gets us excited are businesses using modern techniques, unique business models, and technology to figure out how to deliver fresh, affordable food to consumers ubiquitously.

Is it easy to find businesses in the market that match that criteria?

Shikari: It’s a competitive market, but a new generation of food entrepreneurs that didn’t exist 20 years ago is interested in creating something where the impact is very clear and measurable. And they are tapping into multimillion-dollar markets. We’re looking at entrepreneurs who believe that they’re going to be building the next-generation McDonald’s.

Taparia: We’re not looking for the next hot start-up that’s going to go out and get sold to the big food company. We’re supporting supply chain verticals that will attract more companies within those spaces. We’re building expertise for better food environments.

What must start-ups do to convince you they are a good investment?

Shikari: Motivation, passion and vision for the business are must-have, as well as the ability of the founders to attract a mission-aligned team. But they have to be in for the long haul.

The two key things to get right are the fundamental economics of the business and demonstrable consumer traction. Revenues are not as important as the ability to see the consumer response to their product.

What’s the greatest change in the food industry you’ve seen to date?

Taparia: Companies cannot become a retail or foodservice brand anymore – the delivery channel is no longer precise. Restaurants are turning into grocery stores, and grocery stores are turning into restaurants – and both deliver to your door.

Shikari: These channels are starting to blur because technology permits that to happen. We recognise that the world is shifting – it was happening before Covid-19. The pandemic has only accelerated these trends.

It’s clear to me that Taparia and Shikari know their approach is fundamentally different from most venture capital funds in the market today. Taparia tells me that Desert Bloom is building a substantial body of evidence through research that supports their vision of building better food environments, and it’s only a matter of time before they release their findings.