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Food Venture Financing News - Weekly Issue No. 29

10.06.20
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In This Issue:

PPP Forgiveness

  • Last week the SBA stated it will begin processing forgiveness applications shortly.
  • Since the PPP launched its online portal in early August, it has received nearly 100,000 forgiveness applications but has not yet processed any.
  • Numerous banking and small business advocacy groups continue to argue that the forgiveness process is far too complex, particularly for smaller loans.

SBA Clarifies "Change of Control"

  • On Friday the SBA clarified what it deems to be a "change in control" (see Notice here).
  • Any sale of less than 20% of the equity or 50% of the assets of a PPP borrower may be completed without seeking lender or SBA consent.
  • A sale of more than 20% but less than 50% of a borrower's equity triggers an obligation of the borrower to obtain consent from its lender, but not the SBA.
  • However, a sale of more than 50% of a borrower's equity or assets will require the borrower's lender to seek consent from the SBA. It is unclear in what time frame borrowers can expect the SBA to respond.
  • The requirement to obtain SBA consent can be avoided if the borrower submits its forgiveness application and places an amount of money equal to the PPP loan in escrow.
  • These guidelines add yet another layer of complexity for businesses navigating a potential acquisition or sale. We strongly recommend considering these issues at the outset of a transaction to avoid unwelcome surprises later on.
  • Nielsen's Global Consumer Business released its Top 25 Breakthrough Innovation winners, which featured 17 food and beverage brands. Plant-based proteins, health and wellness, and cannabis products are among the innovative brands highlighted on the list.
  • Laird Superfood, a plant-based nutritional food company, initiated its IPO last week. The company's stock price has already doubled since it debuted on the NYSE, corroborating other market evidence of increased public demand and interest for plant-based products.
  • Scrum Ventures, a San Francisco-based VC firm, recently launched Food Tech Studio – Bites!, a program focused on creating networking and mentoring opportunities for foodtech companies.
  • Large CPG companies and food retailers have agreed to the 10x20x30 initiative to cut food loss and waste in half by 2030 and to engage at least 20 major suppliers that are committed to reducing food waste.
  • There is anecdotal evidence that food venture financing and M&A transactional activity has started to rebound since Labor Day.

CPG Corporate Venture Funds

Our featured CPG corporate venture investment fund this week is Orkla Ventures.

  • Nordic food group Orkla set up an in-house venture fund, Orkla Ventures, in March 2017 to build "a project portfolio consisting of exciting, relevant growth companies with significant potential."
  • Orkla Ventures will initially focus on businesses in the Nordic region and Baltic states.
  • In November 2019, Orkla Ventures invested in Norway-based baby-food start-up Grogro.
  • Orkla subsidiary MTR Foods in India has set up its own investment fund, investing in kids' snacks start-up FirmRoots in May 2018.

ARTICLES

EVENTS

Naturally Bay Area Annual Board Review Preparation Bootcamp

A 90-minute interactive training led by industry icons & functional experts to help you and your team prepare for your end-of-year Board Review

Thursday, October 8th (1:30 - 3:00 p.m. PT)

Schedule:

  • 60-minutes workshopping essential elements of Year-End Review
  • 30-minutes networking within functional cohorts

Attendees with receive a packet of Board Review Preparation resources to support you and your team:

  • Free insights deck
  • Meeting templates
  • Free design support
  • Consulting offers

Register here

2020 Women Entrepreneurs Boot Camp: Plant-Based Protein

October 6 & 8

DWT's Project W is pleased to announce its 2020 Women Entrepreneurs Boot Camp (WEB). This year WEB features three tracks, one of which is devoted to female-founded companies innovating plant-based protein products. The plant-based protein program will be held on October 6 and 8 for a cohort of 6 to 8 female founders of seed stage companies developing solutions in the plant-based protein sector. More information can be found here.

Plant Based Foods Association logo

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.

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