Food Venture Financing News - Weekly Issue No. 26
In This Issue:
- Federal Stimulus Relief Status
- Small PPP Forgiveness?
- MSLP Fails to Gain Traction
- Payroll Tax Credit
- Food Venture Financing Trends
- CPG Corporate Venture Funds
- Links to Relevant Content and Events
Federal Stimulus Relief Status
- A Republican "skinny" relief plan, considered too limited by the Democrats, failed to pass the Senate last week.
- The House reconvenes this week, and House Majority Leader Nancy Pelosi has indicated that stimulus efforts are at the top of the House's agenda.
- There is concern that as Election Day approaches the chances for passage of a broad stimulus bill will decrease.
Small PPP Forgiveness?
- There is growing bipartisan support in the House and Senate for legislation to require the SBA to create a simple, one-page attestation for forgiveness of PPP loans under $150,000.
- The proposed legislation would not prevent the audit of small loans for fraud.
MSLP Fails to Gain Traction
- The Federal Reserve's Main Street Lending Program (MSLP) has disbursed only slightly more than $1 billion out of its $600 billion authorized lending capacity.
- Last week the US Senate Banking Committee heard testimony that the MSLP is too risk adverse to effectively meet its goal of supporting businesses during the COVID-19 crisis.
- One key issue is that lenders are required to retain 5% of each loan. This results in lenders applying normal underwriting standards. There is increasing support for the proposition that 100% of the loan should be held by the Federal Reserve, with lenders simply processing applications (as with the far more successful PPP).
Payroll Tax Credit
- President Trump's payroll-tax deferral plan launched two weeks ago, but few employers have adopted the policy.
- The plan would give workers a short-term interest-free loan. Participating employers could stop withholding Social Security taxes for the balance of this year, and then withhold twice as much as usual in the first four months of 2021.
- However, IRS guidance indicates that employers would be responsible for money that doesn't get repaid – for example, if employees leave before the full amount is recouped.
Food Venture Financing Trends
- Large CPG companies are investing in sustainability packaging in addition to sustainable food. Nestlé announced a $30M investment in a sustainable packaging venture fund to increase the use of recycled plastic for sustainable packaging.
- Investors in the food and beverage industry predict that the online grocery delivery sector will quadruple by 2023.
- The impact of climate change on agriculture has prompted researchers to utilize technology to develop sustainable and resistant food items. Drought-tolerant maize, fast-maturing lentils, and sustainable fish populations are three examples of the use of technology for developing resilient food solutions.
CPG Corporate Venture Funds
Our featured CPG corporate venture investment fund this week is Katjesgreenfood.
- Katjes Group, the German confectioner formed Katjesgreenfood to invest in emerging food brands focused on innovation and alternative food sources.
- Key investments include:
- Veganz, a vegan supermarket chain in Germany (2016)
- Haferkater, a German porridge business (2017)
- Caté, a coffee and cherries-based drinks company (2017)
- Seven Sundays, a US muesli manufacturer (2017)
- Foodstirs, a US organic baking start-up (2018)
- Fora, another US firm and supplier of vegan butter (2018)
- Wild Friends, a US plant-based, nut butter spreads maker (2018)
- PigOut, a US alternative bacon products start-up (2019)
Links to Relevant Content and Events
- Innovative Food Startups Raised More in H1 2020 Than They Did in the Whole of 2019
- AgEye Brings Automated 'Scientist in a Box' to Indoor Farming
- Restaurant Tech is Serving Up Funding Deals Mid-Pandemic – But Will Adoption Stick?
- Pop Up Grocer Creates Fund for Emerging Brands
- Nestlé invests USD 30 million in Closed Loop Leadership Fund
- COVID-19 Impacts Ag and Food Tech Investing
- 11 Food Tech Startups Will Join TechStars 2020 Farm-to-Fork Virtual Accelerator
- NotCo Closes $85 Million Series C Round and Announces US Expansion
Naturally Bay Area QUICK BITES Wednesday Lunchtime Series
Wednesday, September 16th, 2020 - 12:00 – 12:30 p.m. PT
What's Hot In Organic?
- • Max Goldberg: Founder, Organic Insider
- • Pete Brennan: Host, Naturally Bay Area & Co-Founder, Soñar Foods
Wells Fargo Beverage Industry Insights
Thursday, Septemer 17th, 2020 - 3:00 - 4:00 p.m. Central Time
- • Tim Quinlan: Senior Economist, Wells Fargo Bank
- • Chris Nay: Head of Food & Beverage Group, Wells Fargo Bank
- • Danelle Kosmal: Vice President, Beverage Alcohol Practice, Nielsen
- • Matthew Crompton: Client Solutions Director, Nielsen CGA
DWT's Women Entrepreneurs Boot Camp
Tuesday, October 6th, 2020 (12:00 - 3:30 p.m. EDT) and Thursday, October 8th, 2020 (12:00 - 1:30pm EDT)
DWT's Project W helps female-founded companies accelerate growth and successfully raise capital. DWT's Entrepreneurs Boot Camp faculty includes Sarah Masoni from Oregon State University's Food Innovation Center, Caroline Bushnell from Good Food Institute and members of venture capital funds such as Steve Case's Rise of the Rest, GreatPoint Ventures (an early investor in Beyond Meat), Finistere Ventures, New Crop Capital and ff Ventures.
The Plant Based Food Association is expanding its investor membership at this time. Current investor members are listed here. The application for new investor membership can be found 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.