Startup accelerator program graduates first cohort
Grand Rapids-based 86 Repairs among five food industry startups to receive funding, resources.
A local food company is helping startups adapt to the ever-changing industry.
Food Foundry, a 16-week startup accelerator program created by Relish Works, a Chicago-based innovation hub, in partnership with Gordon Food Service and 1871, is offering startups that are launching foodservice businesses an opportunity to move to the next level.
The accelerator program, which focuses on early-stage startups, graduated its first cohort of entrepreneurs in May. It featured five startups from across the country, including Grand Rapids-based 86 Repairs, a subscription service that manages the repair and maintenance for restaurant groups.
According to Laura Habegger, program manager for Food Foundry, the program provides resources to entrepreneurs who are focusing on innovation in the middle of the food value chain, such as vendors, distributors and operators.
“We have established the program where it is flexible,” she said. “Some accelerator programs, you relocate, and you are in the program every day for four months straight. We have structured it to where it is one week per month of curriculum and networking (in Chicago) and three weeks of implementation. The reason why we did that is because we want to reach out to a larger footprint and open it up to people who would not have the opportunity to relocate (to Chicago) for four months straight. During that week of program … we invited people from Gordon Food Service to do a roundtable discussion. We have different business workshops, depending upon the needs of the company and the programs. (For the first cohort,) we did workshops on financial modeling and marketing. It really depends on the needs of the company. We had one-on-one mentorship.”
In addition to mentorships and workshops, there is an opportunity for entrepreneurs to have venture capital invested in their startups.
Joe Gallagher and Daniel Estrada are the founders of 86 Repairs.
Some of the common repairs Gallagher said they help their customers with include repairing deep fryers, ovens, refrigerators, walk-in freezers and HVAC systems, among other things.
Gallagher said before they were accepted into the program, they were at the pre-seed stage and doing the services manually.
While being a part of the accelerator program, 86 Repairs raised $1.5 million in venture capital funding with investments from Tamarind Hill, Invest Detroit Ventures, Relish Works, Network Ventures, MATH Venture Partners, M25 and several angel investors.
Gallagher said they are using the money to build out their sales and marketing teams to grow the company, which they were not able to market for the first year. They also are using the funds to develop software. He said they are now 100% on their own proprietary software that they have developed in-house.
“Food Foundry was a differentiator for us,” Gallagher said. “It enabled us to get connected to a broader restaurant community in the Chicagoland market. It gave us some untethered access to Gordon and how they operate and how they succeed with restaurant operators. Then they gave us a platform and a network to engage the venture capitalist network in the Midwest, which helped us land our $1.5 million venture round that was raised in the last six months. We could not have done that without the Food Foundry support.”
Food Foundry will begin recruiting for its second cohort of entrepreneurs for its 16-week accelerator program soon; the program will begin next January. In addition to being an early-stage and middle of the food value chain startup, Habegger said they are also looking for revenue-generating startups.
“Ideally, we are looking for companies that are bringing in between $5,000 to $10,000 per month in revenue, but we don’t want to close the door if there is an opportunity with a startup that hasn’t quite hit that metric yet,” she said. “(Generally) that is the spot we can help the most; they have their ideas, they have customers and it is helping them to really refine and scaling to the next level.”
The date when Food Foundry will start receiving applications has not been released, but Habegger said the selection process into the program includes narrowing down the number of applicants that are disrupting the food industry, whether it is through technology or food science, and then inviting them for an in-person interview before selecting the cohort. Food Foundry will provide startups that are selected for next year’s program with $75,000 of venture capital funding to grow their business.
Next year, for the first week of the program, the second cohort of entrepreneurs will be visiting Gordon Food Service and they also will be visiting again for the last week of the program before demo day.
Mark Schurman, manager, employee communication for Gordon Food Service, said the food market is changing both on the consumer side and the business side.
“There is more of a demand and expectation of transparency, ingredients, sustainability and (sourcing food) locally by consumers,” he said. “There are so many things that are being driven by the evolving consumer demand and then the business side of things, looking at distribution, what we do, moving products from A to B and making sure it gets to a restaurant, or a hospital or a university.”
Schurman said there is a great deal of consolidation; a lot of larger companies, like Gordon Food Service, have been steadily acquiring smaller regional distributors, which he said has been the tradition of the industry — to have localized distribution.
“We have also seen a lot of changes … the propensity to eat out has continued to grow, and you have many more options of how you satisfy that meal because now you have home delivery such as Blue Apron and all the others,” he added. “They are delivering food that is prepared or semi-prepared. There are so many more categories now when you think about restaurants and the issues of labor, identifying an available workforce to fill out the schedule is a real challenge in the tight labor market. Then you have folks like Amazon that are coming in acting as a massive disruptor with potential for far-reaching change when you consider them buying Whole Foods and their now daily, if not hourly, delivery. It is really changing, which gives Relish Works and Food Foundry the ability to seek startups that are adjusting to the changes in the industry and helping them grow.”