RocketSpace Looks For A Piece Of The Food-Tech Pie

By Amanda Gold
San Francisco Chronicle

WWR Article Summary (tl;dr) In 2015, food-related startup investments totaled $5.7 billion, up 152 percent from 2014. While there are many incubators, accelerators, boot camps, and the like — that foster Internet startups, food-tech accelerators are a relatively new phenomenon.

San Francisco

RocketSpace, a workspace for startups in downtown San Francisco, is where businesses like Uber grew from good ideas into success stories. Now the provider of shared office space is turning its attention toward food, an area of innovation that’s seen an influx of funds in recent years.

On Thursday, CEO Duncan Logan is announcing plans to create Terra, an endeavor that he is calling “a food and agriculture tech accelerator.” Rabobank, one of the world’s largest banks for food and agribusiness, is covering some of the costs of the program and is providing staff to run workshops and offer advice.

Food-related startup investments totaled $5.7 billion in 2015, up 152 percent from 2014, according to CB Insights. And while there are many businesses — incubators, accelerators, boot camps, and the like — that foster Internet startups, food-tech accelerators are a relatively new phenomenon, said Danielle Gould, CEO and founder of Food + Tech Connect, a research and advisory firm.

Terra’s startups will also work with KitchenTown, a commercial production facility in San Mateo that provides space for smaller producers. There, companies will be able to develop and test their products before sending them to market.

Entrepreneurs might test new hardware gadgets (think Keurig-like machines that use fully formed “pods” to deliver food or beverages at the push of a button), experiment with new plant- or insect-based protein sources or test recipes to reduce salt and sugar.

“KitchenTown is our ability to be at the consumer-facing end of innovation,” said Logan. “We want to be able to cover them through the whole chain, from the mechanical end to how they grow things, even seed production and animal husbandry.”

RocketSpace is joining dozens of organizations that offer advice, office space, connections and investments to startups working on ideas in food and agriculture.

Alphabet Chairman Eric Schmidt is behind Farm2050, a Palo Alto accelerator that has backed CropX, a company developing irrigation technology. Jon Sebastiani, the founder of Krave Jerky, has an incubator called Sonoma Brands that has invested in Berkeley’s Dang Foods, a maker of flavored coconut and onion chips, and plans to start or back other food ventures.

Unlike some accelerators, RocketSpace is not taking a financial stake in the Terra startups. The program will help RocketSpace mold its startup and corporate innovation programs to bring large and smaller companies together, while Rabobank hopes to forge connections at an early stage with companies that might later need its corporate banking services or investment.

The move is the latest sign of food tech’s upward trajectory, as investors and large food corporations recognize the importance of streamlining and automating everything from growing food to delivery.

“The food and ag space is enormous,” said Logan. “It’s basically a dozen industries rolled into one.”

‘Near and dear’
For the RocketSpace CEO, the decision to open the accelerator stemmed from a very personal place.

“I’m Scottish. I studied ag and my parents are farmers, so I thought I would be a farmer, too,” he said, adding that his wife works in food and nutrition. “This subject is really near and dear to me.”

But he said the opportunity became a reality when he spoke with Rajiv Singh, CEO of Rabobank’s North American wholesale business, and discovered how focused the bank was on food and agriculture.

Rabobank started as a farmers’ cooperative in the Netherlands in the late 1800s, and brings to the venture knowledge of the sector, plus the ability to connect startups to its global network of customers and suppliers.

“Food and agriculture is in the DNA of Rabobank, and we’ve always been focused on it and at the forefront of new development,” said Singh. “We make sure that where food gets logically grown and logically consumed are connected in the most efficient manner. We think about it as a system.”

Singh said that Rabobank came on board primarily because the time is right.

“There hasn’t been a huge amount of innovation in this sector until very recently,” he said. The newfound interest from entrepreneurs and investors, he believes, stems from the realization that in the next three decades, there will be a huge strain on the food system, which will have to provide enough food for what will be 9 billion to 10 billion people by 2050.

The food industry has always been able to add resources, land and labor, but that’s no longer feasible. It’s a huge challenge, Singh said, but it also presents an opportunity.

“This population increase represents a huge new market,” he said. The upside for the industry comes from a growing middle class that has disposable income and is more discriminating in food choices.

“There’s a very attractive economic opportunity, if people can create businesses around this dual element of having constraints, but also having people who are willing to pay someone who can solve those problems.”

Thursday’s announcement comes in conjunction with Rabobank’s FoodBytes conference in San Francisco. There, young ag-tech companies like Imperfect Produce and HarvestPort, a marketplace for seasonal farming assets, will pitch their companies to an audience of investors, large food corporations, and food-tech professionals.

At the conference, Logan and Singh will call for startups to apply to the program; a team from RocketSpace and Rabobank will select the companies over the next several weeks.

The accelerator will open in August, and the first group of eight to 10 startups will participate in an eight-week program, including introductions to suppliers and distributors.

Food + Tech Connect’s Gould said it’s hard to anticipate how successful accelerators will be in the food business, since it takes years for their startup bets to play out.

‘Flows like water’
Logan is nonetheless sanguine about his effort.

“Innovation flows like water; it goes into easy spaces, like digital products, first,” he said, explaining that it’s easier to build software than to change the way we grow and distribute a physical product like food.

“Food and ag is at the beginning of that process. We’re going to see a huge explosion in the next few years.”

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