The title is certainly impressive. Manuel Gonzalez Guzman is managing director, global head of banking for food startup innovation and Rabobank’s Banking for Food Inspiration Centre.
Rabobank after all is one of the world’s largest banks with over $750 billion in assets, all of it focused on the food, agribusiness and beverage industry.
Equally impressive, the Yale PhD Gonsalez is founder of FoodBytes, a Rabobank-sponsored food business-pitching network that started in California in 2015 as a way to help disruptive food and agricultural businesses get started and do a professional pitch to venture capitalists.
Since then, more than 1,400 companies have applied to pitch to over 2,500 attendees at events on three continents.
And now FoodBytes is coming to Canada, setting up in Montreal on May 16, 2018. And they’re looking for Canadian startup ag and food companies to apply to participate.
“We wanted to create a space for entrepreneurs to be heard and meet with the people who can help them to be successful,” says Gonzalez.
The pitches will be mostly technology-based innovations, and about one-third will be in each of three categories: products, food technology, and agricultural technology.
Successful applications need a good team behind them. And, of course, a strong business case.
Applying companies need to address their revenue model, competitors, how to scale, customer acquisition, and cost base. The team must know the company’s margins and how it can improve as it scales up. The product or service must have a competitive advantage and high barriers to entry with strong-growth market opportunity.
The team needs to be building a successful business, and they must have done research to evaluate the competitive landscape to validate the need for their idea.
They must also demonstrate that the innovation have some social impact.
Application deadline is March 11, 2018.
The concept must be a game-changing approach to solving a problem or gap in the market that could have major impact at scale. But it doesn’t have to be large already. “They don’t have to have millions of dollars worth of sales, they can be starting, just about to launch… but they have to be scalable,” Gonzalez repeats.
Pitches are presented to five or six judges from a cross-section of successful food industry entrepreneurs — from retailers and agriculture and food technology. Also, a few awards are presented at the event that are voted on by the other participants.
Not only is substantial content required but the pitch needs to be delivered with charisma and the concept needs to be clearly explained during the pitch.
Gonzalez recognizes the high risks around startup companies, and the pressing need to create better solutions to feed the world. “We wanted a place, a haven for entrepreneurs who are facing such huge risks, like leaving their high-paying jobs.”
Gonzalez knows risk. He started working for Rabobank 12 years ago in the Mexico office and after working in project finance and mergers and acquisitions, became Mexico’s head of risk and eventually Mexico country head. In 2012 he was asked to become head of the Western Region for the corporate bank, which is when he moved to San Francisco. The exposure to the entrepreneurial culture of Silicon Valley and San Francisco, and the dynamic of the food and agriculture industry (F&A), led him to create FoodBytes.
The entrepreneurs are not all techno-scientists or computer geeks. “Sometimes the best ideas start with two guys having a beer and discussing an idea,” says Gonzalez.
He has found that places like Australia and Canada tend to be where many practical ag developments start, because the issues are identified when companies are invested in production and when smart individuals literally get their hands dirty in everyday production.“Innovation comes from understanding the problem,” Gonzalez says.
This platform has allowed these startups to fundraise, and gives them a stage to launch their ideas. Nina Meijers, senior associate platform manager banking for food startup innovation at Rabobank says sustainability and innovation are critical in promoting a thriving food and farming industry that will feed growing global populations. “These events are designed to connect food industry leaders and investors with startup companies that are innovating and disrupting the food chain with groundbreaking ideas,” she says.
For startups it’s often been difficult to find the right channels and make the right connections, and in Canada in particular it’s been notoriously difficult for small- to medium-sized agricultural companies to stir up interest from Bay Street.
But that’s changing. In the last few years there’s been a shift with larger agricultural input and equipment companies (corporate venture capital) investing in smaller agtech companies, pockets bulging with funding at precision agriculture conferences, and the emergence of venture capital funding groups like AVAC Ltd.’s Verdex Capital.
Non-profit agencies are also becoming more developed. In December, Bioenterprise Corporation, a national agri-technology business accelerator based in Guelph, joined forces with the AG-Bio Centre, a business incubator-accelerator that supports Quebec companies in the agri-food, biotechnology and environmental science sectors.
Even the federal government is getting in the game with FCC Ventures, the venture capital/private equity division of Farm Credit Canada. FCC Ventures focuses on providing equity in early- to mature-stage companies. And more recently, the Canadian government has offered financing for the development of superclusters to spur research and innovation. As of the end of the year, there were more than 100 applicants for access to the five-year, $950 million Innovation Superclusters Initiative fund.
According to an AgFunders investing report, investment in innovative food and agriculture technology increased 540 per cent from 2011 to 2016. However, in 2016 that was only about 2.5 per cent of the $127 billion raised globally in venture capital, according to the group’s Venture Plus Report.
Some industry pundits are warning that food and agtech is ripe for a correction similar to the drop that hit clean technology after so much hype in the early 2000s. Others are saying it’s a structurally different industry built to withstand fluctuations of any kind.