WeWork Food Labs in New York City is a dedicated co-working space for food startups and hospitality tech startups as well as an Accelerator program for food entrepreneurs.
We talked to Menachem Katz about WeWork Food Labs and asked him to share advice with food & beverage startups that are launching new products and looking for an investor.
We offer two different programs inside of WeWork Food Labs. One is a continuous program where companies can join the co-working community to participate in the offerings that we run in the space. We are providing a dedicated program manager who identifies the needs of the startups and matches them with resources that help founders deal with their challenges.
Our program manager can introduce startups founders to investors, connect them with industry experts from the WeWork Food Labs network or offer access to different industry resources in food manufacturing and distributing or marketing and branding.
Furthermore, we have an ongoing curriculum running in the WeWork space where we organize workshops on legal and safety topics.
Besides the experts that are coming into our space and work with the companies, we are also collaborating with large food organizations, food companies, venture capital firms, universities, and R&D facilities to build up a strong network in the food space.
In our five-month Accelerator program, we are investing in a cohort of eight food and agriculture startups. We launched it in October 2019 to help startups grow with very specific KPIs. Every participant gets an investment of 125 000 USD and a great opportunity to bring innovation into the FoodTech or AgriTech sector.
No, the focus of our program will only be around food and sustainability because we see the challenges that companies have in raising investments. We believe that by supporting startups and encouraging entrepreneurs to innovate in the food industry we will motivate others to do the same.
My first advice is to be focused. My second is to learn about the market that you are entering.
Sometimes a startup founder that is about to enter the food space comes up with a dream without knowing the challenges they are going to face. I advise every founder to talk to people with relevant market experience and get a good understanding of the market.
The challenges may also vary depending on the type of business. CPG companies tend to be the most challenging businesses. There are many tasks and hurdles to consider from starting a brand, building awareness and growing a customer base to operational difficulties in manufacturing and distributing. You need an expert in all those areas, so my advice is to have someone with solid industry experience on your side.
A tech company faces different issues. They often end up with a question: Does the solution respond to a real problem? Do people in the food industry see it as a challenge at all? Another task here is to understand how to integrate new technologies in rather conservative industries. A startup should consider all these aspects when entering the food space.
To give a proper advice, I would categorize startups into four different sectors: CPG companies, FoodTech companies, urban farming, and hospitality.
For a CPG company, the main challenge is to enter a market. The cost of commercializing an idea and financing the first batch is usually quite high. Most companies raising money from an investor try to sell equity, even though the company is not worth much before the market entry.
My advice is to rather try to finance and sell the first batch than to sell equity. The moment the company has some brand recognition, investors will look at it completely differently. To sum it up, planning and setting a company up for at least one year and then raising money to improve the product or boost sales through different channels could be a better strategy to approach an investor.
For a FoodTech company, it could be helpful to partner up with a strategic investor that comes from the industry. For example, a platform that is providing a hospitality solution should look for an investor which will give them access to their client base to test and adapt the product first, as the costs of customer acquisition are very high.
Most restaurants are small operators that will find it very hard to adapt to different technologies. My advice is to find an investor that is part of a restaurant or hospitality group to utilize his network.
Urban farming is a completely new space and we see a few companies that have already received large investments. But none of them validated their business model yet. I think, in the upcoming years the investors' view at urban farming will change.
Raising money for a hospitality operation is usually the most tricky task. This is not an area that typically gets investment. Only people with a lot of industry expertise and experience in franchising will be able to attract an investor.
A great inspiration for me is the podcast My Food Jobs Rocks. The host talks to people from the food industry about their daily job and challenges. I can recommend it as a source of inspiration for food entrepreneurs.
We live in an era where so much has changed in the way we are doing things over the course of last 30 years, from the way we connect and listen to music to processing information and educating ourselves. Most things have changed for the better, but not when it comes to food.
What I mean by this are widespread health issues and a constantly growing number of people that are starving. I believe that technological solutions in the food space can help us solve these issues. In the past years, the food industry has been focused on scaling the production and optimizing growing methods to feed more people but has not put enough effort into the health aspect of food.
The task of food entrepreneurs and larger companies is to address the existing nutrition issues, so that more people could get access to healthier and better food.
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