Food Venture Financing News - Weekly Issue No. 17
In This Issue:
- Paycheck Protection Program
- Small Business Reorganization Act
- Food Venture Financing Trends
- CPG Venture Funds
- Links to Relevant Content and Events
Paycheck Protection Program
- The PPP has been extended until August 8, 2020. It is expected that the next round of stimulus will be completed by then.
- The SBA disclosed the names of borrowers who accessed PPP loans in excess of $150,000, and summary information for loans under $150,000.
Small Business Reorganization Act
The Small Business Reorganization Act (SBRA), which became effective in February 2020 and is intended to make reorganization cheaper, faster and more efficient, includes the following key features:
- No Creditors' Committee. Generally, a creditors' committee will not be appointed to supervise the debtor and its operations, which eliminates a substantial cost for debtors. Instead, a standing trustee will be appointed to act as a facilitator. The standing trustee will not displace management.
- Owners Retain Equity. The SBRA relaxed the "absolute-priority" rule, which otherwise prevents owners of businesses from retaining their equity unless all creditors are paid in full.
- Up to $7.5mm in Debt. The CARES Act raised non-contingent, liquidated debt limit to $7.5mm (from $2.7mm), which enables a greater number of businesses to take advantage of its terms. Note that this limit excludes contingent debts, such as most litigation claims where the debt is fairly disputed.
- Streamlined Process. A plan of reorganization may be approved without the need to prepare a disclosure statement, allowing its confirmation without the vote of any impaired consenting class or (under certain circumstances) any vote at all.
- Cheaper. Certain bankruptcy costs were reduced.
Food Venture Financing Trends
- As demand for food products continues to outpace supply, investments in the food tech and food delivery sectors are starting to accelerate.
- Soft Bank Vision Fund recently announced that food delivery will be one of its three future investment sectors.
- S2G Ventures identified digitalization, decentralized food systems, decommercialization, and food as immunity as four trends in the food tech sector that will continue to grow in the wake of the pandemic.
- Foodtech is likely to receive increasing attention from the venture community to address food insecurity issues.
- Alternative protein and agtech investments are starting to gain traction again in the COVD-19 business environment.
CPG Corporate Venture Funds
Our featured CPG corporate venture investment team this week is Kellogg's Eighteen94 Capital:
Eighteen94 Capital takes minority stakes in startups developing new packaging, ingredients, products and technology
- Founded in 2016, Eighteen94 Capital is based in Kellogg's headquarters in Battle Creek, MI
- Eighteen94 Capital’s investments include:
- UCAN (2018)
- Kuli Kuli (2017)
- Bright Greens (2017)
- Cargo (2018)
- MycoTechnology (2017, 2019 and 2020)
- Areas of expertise that Eighteen94 Capital offers to its portfolio companies include supply chain, marketing, sales, innovation, research and development, and general business advice
Links to Relevant Content and Events
- Jim Taschetta: Host, Naturally Bay Area & CMO/Head of Retail Operations, MWG Holdings
Wednesday, July 15 - 12-12:30 p.m. PT
FoodBytes! By Rabobank
Funding Future-Proof F&A Businesses
A look at the innovations driving successful startups today
Wednesday, July 15 - 11am-12pm ET / 5-6pm CEST
Building Investor Relationships in the New World
An Introduction to Brandjectory with JPG Resources
Thursday, July 16 - 2:00pm EST
Please check out DWT's newly re-launched Startup Law Blog
At Davis Wright Tremaine LLP (DWT), we are proud to have one of the largest Food & Beverage legal practices in the country, with over 40 attorneys representing food innovators, entrepreneurs, and investors at every level of the food chain, from Farm to Label.
Please contact our Food and Beverage team if we can assist you in any way in these unprecedented times.
The facts, laws, and regulations regarding COVID-19 are developing rapidly. Since the date of publication, there may be new or additional information not referenced in this advisory. Please consult with your legal counsel for guidance.
DWT will continue to provide up-to-date insights and virtual events regarding COVID-19 concerns. Our most recent insights, as well as information about recorded and upcoming virtual events, are available at www.dwt.com/COVID-19.