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Food Venture Financing News - Weekly Issue No. 22

08.18.20
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In This Issue:

Key Open Issues on Next Federal Stimulus Relief Package

  • The biggest disagreement between the House and the Senate is the total amount each is willing to spend on the next stimulus bill.
  • The House proposed a $3 trillion HEROES Act in May, while the Senate wants to keep the total cost of the bill closer to $1 trillion.
  • The House Democrats offered to decrease the total cost of their proposal to $2 trillion. The Trump administration rejected this offer.
  • The House Democrats wants to extend the weekly $600 unemployment benefit included in the CARES Act. The Senate Republicans want to reduce that amount.
  • State and local funding is another area in which the two parties strongly disagree.
  • Current thinking is that the earliest timeframe for passage of the next federal stimulus relief package is mid- to late-September.

EIDL Advance & PPP Forgiveness

  • The SBA updated its forgiveness FAQ's last week (see here) to clarify that the SBA will deduct the amount of any Economic Injury Disaster Loan Advance (which provided an emergency grant of up to $10,000) received by a PPP borrower from the amount that may be forgiven under the PPP loan. 

Main Street Lending Program

  • Under criticism for the slow acceptance of the Main Street Lending Program, the Fed announced Thursday that it saw the largest weekly increase in loans to date.
  • The total amount of loans held by the Fed under the MSLP is still just over $200 million, out of $600 billion total available funding.

Relief Programs Still Available

  • Although the PPP program has expired and Congress has stalled in its negotiations on the next round of fiscal stimulus, several loan programs remain available to businesses in need of capital during the ongoing crisis, including the MSLP and EIDL programs noted above, as well as the SBA's traditional 7(a) Loans.
  • Plant-based food companies continue to attract investments during the current environment. Impossible Foods recently announced the closing of a $200M equity investment round.
  • Venture investors have invested approximately $3.7B in food tech startups in the second quarter of 2020. Additionally, food delivery companies continue to gain traction as consumers shift to grocery deliveries and ecommerce solutions.
  • While M&A deals have generally declined since last year, there have been significant M&A deals in the food tech sector. Ecommerce channels, health and wellness, plant-based foods, and nutritional supplements will continue to be M&A target sectors in the near term.
  • Strategic buyers and investors are focusing on growth, profitability, strategic fit with buyer/investor, and market conditions in determining valuations for food and beverage companies.
  • Indoor farms and other sustainable ag tech solutions aim to reduce supply chain strains due to the pandemic as well as environmentally-friendly solutions for food supply concerns.

CPG Corporate Venture Funds

Our featured CPG corporate venture investment fund this week is Danone Manifesto Ventures, the venture capital arm of French-based CPG giant Danone.

  • Key investments include:
    • Yooji, a French baby food start-up (2017)
    • Kona Deep, a Hawaii-based water business (2017)
    • Harmless Harvest, a US-based coconut water supplier (2018)
    • Farmer's Fridge, a US vending-machine business (2018)
    • Yumble, a meal-kits delivery firm, supplying kids meals (2018)
    • Hälsa, a California-based supplier of oat-based, vegan beverages and yogurts (2018 and 2019)
    • Agricool, a French urban farming business (2018)
    • Epigamia, an Indian yogurt business (2019 and 2020)
    • Forager Project, a US plant-based organic dairy company (2019)
    • Nature's Fynd, a Chicago-based firm producing alternative meat products using protein derived from microbes discovered in the "geothermal springs of Yellowstone's ancient volcano" (2019 and 2020)
    • Phenix, a Paris-based business dedicated to reducing food waste (2020)
    • Laird Superfood, a US plant-based business making products from ingredients such as coconut water and turmeric (2020)

Articles

Events

Naturally Bay Area QUICK BITES Wednesday Lunchtime Series

Brand Building During the Pandemic

  • Aditi Dash: Partner, Circle Up Growth Partners
  • Vanessa Toy: Host, Naturally Bay Area & Founder, Nutrition Cultivate Creations

Wednesday, August 19th - 12:00 - 12:30 p.m. PT

Register here

Spark Change Sneak Peek: Uniting Stakeholders Across the Industry

  • Jessica Rubino: Senior Director of Content Marketing, New Hope Network
  • Pete Brennan: Host, Naturally Bay Area Board Member & Co-Founder of Soñar! Foods

Thursday, August 20th, 2020, 1:00 - 2:00 p.m. PT

Follow-up session with an interactive presentation covering the "What & How" to learn the principles that enabled Kevin Cleary to grow Clif Bar by 10X and that Johnny Valeriote successfully uses with several Bay Area natural products brands.

Register here

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.

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