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Food funders Rutgers program helps startup companies get needed capital to grow

Lou Cooperhouse is the director of the Rutgers Food Innovation Center.-(PHOTO BY AARON HOUSTON)

When he founded the Rutgers Food Innovation Center in 2001, Lou Cooperhouse was hoping to incubate young, startup food companies and foster innovation in the industry.

But as time went on, he noticed something was missing: a way for these companies to get access to capital.

Let’s meet our contestants
RutgersX, a business accelerator focusing on food innovation, offered nine of its companies a chance to present to a room of entrepreneurs, industry insiders and investors at Rutgers University’s College Avenue campus last week.
For the bonus round, consider the common theme of healthy, clean eating among these companies and consider the ways in which millennial consumers have already changed the landscape of the food industry.
Here’s a closer look at the nine presenting companies:

  • Brewla: Founded by brother and sister duo Rebecca and Daniel Dengrove in 2012, Brewla is a modern take on the classic ice pop. Based on brewed teas or botanicals, each flavor is all natural and contains only 20 to 50 calories a pop (pun intended). This is achieved by using little to no added sugars. It also is a source of vitamins and minerals. Co-founder Rebecca Dengrove, the creator of the pops, has helped develop several well-known food brands, including Vitamin Water and Pepsi Max.
    The company won Sam Adams’ “Brewing the American Dream” pitch contest in 2012, just one year after forming.
  • Megas Yeeros: Launched in Greece in 2007, the company opened its first U.S. production facility in 2014. Megas Yeeros has national food service distribution in the U.S. as well as a footprint in Europe, including France, Germany, Sweden and others. With its roots in Greece, the company boasts the authenticity of its product, as well as its vision to expand the brand through its research and development department.
    The company is currently looking to enter the retail market with a line of seasoned and stuffed kebabs.
  • First Field: It seems like a no-brainer: A New Jersey ketchup company sourcing its tomatoes locally. The company makes its tomato products, including an original and a roasted tomato ketchup. The company also has begun bottling the base of its ketchups, a pure strained tomato sauce that is a versatile base that can be used for sauces, curries, soups and bloody marys. Continuing its New Jersey roots, the company also offers jarred cranberry sauce made from locally sourced cranberries.
    While not entirely organic, its products emphasize clean eating: The two ketchup varieties contain half the sugar and 66 percent of leading brands.
  • Jalma Farms: Hailing from Cape May County, the family farm — which has been operating for 300 years — has expanded through its growing of beach plums. But that was just the beginning: The farm is looking to put its efforts into growing the levels of its black aronia berry crops. Alma George, who is co-owner along with her husband John George, boasted the berry’s growing reputation as a super food as the result of studies indicating it is particularly rich in antioxidants.
    The company takes the berries and beach plums and processes them into all natural jams, jellies and syrups made with minimal amounts of pure cane sugar.
  • Hot Sauce 4 Good: Bob Ferretti started making hot sauce with his family using the peppers they had been growing in their garden. He then realized there was something to their hobby and decided they could monetize the hot sauce to fund another one of his passions: helping others. The company donates a minimum of one dollar of every sale to charity and has raised more than $65,000 for the organizations it supports.
    With locally sourced, clean ingredients and strong brand consciousness, and as a part of the growing hot sauce market, Hot Sauce 4 Good is the kind of brand millennials fall over themselves for.
  • DouxMatok: Illustrative of the New Jersey-Israel Healthy, Functional and Medical Foods Alliance forged between Rutgers University and Israel’s Tel-Hai Academic College, DouxMatok has developed, tested and in the process of optimizing technologies to produce sugars with enhanced sweetness. The concentration of sweetness will allow food products to ultimately contain less sugar.
    The company raised seed investment in February 2014 and is making the push toward commercialization.
  • Jin Ja: As soft drink companies struggle to stay relevant, functional beverages, which are loaded with amino acids, vitamins and herbs, have taken off in popularity. In this market, Jin Ja has already gotten attention of national television outlets for its health benefits: A blend of fresh ginger, green tea, cayenne pepper, mint and lemon, the drink aids in energy and digestion as well as being full of antioxidants.
    And if that’s not your thing, it apparently makes a good cocktail.
    In 2013, the company received the Specialty Food Association Sofi Award for Outstanding Cold Beverage, where it tied for first place with Fever Tree.
  • Nutrasorb: While each presenting company is based in the RutgersX food accelerator, Nutrasorb is truly a homegrown product for the university in the sense that the research behind the company’s plant-based health products was done in conjunction with scientists from Rutgers and North Carolina State University. The products are insoluble powers that concentrate beneficial compounds from fruits and vegetables, including protein, and can be added to a variety of foods.
    The team has developed Rutgers Scarlet lettuce, a red lettuce with more beneficial antioxidants than blueberries. Hey, Gatorade was developed at the University of Florida.
  • Chia Star: Founded by serial entrepreneur Sara Erb, who has started and sold three business in the last 20 years, Chia Star is a line of beverages made from fruits, berries and, of course, chia seeds. The brand is riding the wave that is the rising awareness of the chia seed. That is due to the seed’s high amounts of calcium, antioxidants, potassium, protein, fiber and manganese. While the benefits are high, the sugar profile of the chia seed is low. The company is also expanding its offerings with new flavors including a coconut milk and coffee flavors.
    While promoting healthy and clean eating, Chia Star is also brand-conscious: The company is a supporter of Food Corps, a nonprofit that sends field representatives to at-risk school districts to educate students on nutrition and build organic gardens.
    – Andrew Sheldon

“Our Rutgers Food Innovation Center has been globally recognized for the economic development impact that we’ve created since we began in 2001, in that we’re providing all these professional support services (and) physical space in which products can be manufactured for sale to public,” he said. “What was missing was the integration — not just the business incubation program that helps companies on the front end, but also a business acceleration program that helps companies on the back end.”

To address this, the university started RutgersX, the first acceleration program of its kind to connect these companies to the capital they need to grow successfully.

“Those companies with the potential with great success? Sometimes your success can be your failure because maybe you’re growing too quickly, you’re in need of working capital,” he said. “You’re dealing with this cash flow conundrum as you’re trying to grow your business, so we thought, what would make our program more holistic was this accelerator program.”

The accelerator’s first pitch event, held last week at the Rutgers’ College Avenue Campus in New Brunswick, is the fruition of these ideas.

“Foremost, for anybody to think about a food idea, your ultimate success will be how you actually pitch that product,” Cooperhouse said. “Our entrepreneurs who have already had some initial successes and are ready to go to this next level now have a chance to pitch for potential funding, strategic partners, distributors and things to really help grow their business.”

As part of the program, nine of the accelerator’s companies spent months preparing their pitches for an audience of industry insiders, investors and other entrepreneurs. It’s a process that’s enlightening for both the companies involved and those who witness the end result.

“It’s a great learning experience for anybody who wants to go into the food industry or any industry, and each of these nine companies has an amazingly distinctive idea and product,” he said.

Cooperhouse suggests investors — and even large corporations — could learn something from these pitch events.

“These incubators and accelerators are really the window on innovation, and you’ll be seeing things and learning about trends and you might actually find a company you can approach,” he said. “So, it’s really a way to exchange (business) cards.”

At the root of this new accelerator program remains the same goal behind the Food Innovation Center.

“We’re trying to create this inter-relationship among the food community, including service providers and manufacturers, and that’s what we’re all about, being a bit of an aggregator of the food industry,” he said. “We’re really trying to propel the economy, quite frankly.”

In her address at the opening of the event, Lt. Gov. Kim Guadagno highlighted just how much impact the food industry has on the state’s economy.

“You need to know that New Jersey has a $105 billion food industry,” she said. “There’s 1,900 food manufacturing companies in New Jersey; there’s 31,000 jobs.”

She added: “165 of those companies have an annual sales of upwards of $5 million. Can we say Campbell’s, Unilever and Mars? Yes. Look at the back of the (M&M’s) package. It says, ‘Hackettstown, New Jersey.’”

With such a large economic impact, Guadagno noted that Rutgers was the perfect location for such an event.

“New Jersey is the Foodie State, for those of you who don’t know already,” she said. “The conference being where it is right now is a fabulous idea: It has all the resources you need to put together the founders that are in this room with the funders that are in this room who will encourage them as they go on.”

She also noted that the state was working on incentives to bring food businesses into the state to further grow the economy.

“Would you ever have thought that Junior’s Cheesecake from New York would now be made in New Jersey?” she said. “Those are the kinds of victories we’re beginning to see here because we have a lot of offer you: We have an R&D tax credit; we have instituted a piece of legislation that makes it easier for angel investors (where) for every dollar you put in, you get 10 percent back; we streamlined and doubled the net operating loss credit.”

Finally, she left words of encouragement for the entrepreneurs in the room.

“You are the lifeblood of the economy,” she said. “If each one of the small businesses in New Jersey hires one more person, we will wipe out unemployment in the state of New Jersey.

“You are growth to the state of New Jersey.”

E-mail to: andrews@njbiz.com
On Twitter: @sheldonandrewj

Andrew Sheldon
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