Food Venture Financing News - Weekly Issue No. 36
In This Issue:
- IRS Confirms That PPP Expenses Are Not Deductible
- Main Street Lending Program Will Expire on December 31
- Food Venture Financing Trends
- Corporate Venture and Private Equity Funds
- Links to Relevant Content and Events
IRS Confirms That PPP Expenses Are Not Deductible
- The IRS released a ruling last week confirming its prior position that otherwise deductible expenses paid with PPP loans are not deductible, so long as forgiveness of the loan was "reasonably expected to occur."
- The new "reasonably expected" language would prevent a borrower from claiming the expense deduction on its 2020 taxes by delaying submission of its forgiveness application until 2021.
- The IRS ruling does not provide a standard to explain how a borrower would have a "reasonable expectation" that the PPP loan will be forgiven.
- In a rare show of bipartisan unity, both the Republican chair and the ranking Democratic member of the Senate Finance Committee criticized the ruling, but it is unclear given Congress's lame duck status and general gridlock whether there is a Congressional solution to this issue.
Main Street Lending Program Will Expire on December 31
- Treasury Secretary Mnuchin announced last week that several programs the Federal Reserve established this year, including the Main Street Program, will not be extended and instead will expire on December 31.
- The Federal Reserve criticized the decision, noting that it preferred the "the full suite of emergency facilities established during the coronavirus pandemic" to remain in place.
Food Venture Financing Trends
- Investments in foodtech this year have already outpaced total investments in 2019. According to a report by Finestere Ventures, foodtech companies raised $8.37B in investments during the first three quarters of 2020.
- Investments totaling $11.6B in the ag-tech industry for the first three quarters of 2020 have also outpaced 2019's record-breaking year of investments for the sector.
- Astanor Ventures, a venture fund focusing on foodtech and ag-tech companies, raised $325M for its new Impact Fund that will focus its investments on foodtech and ag-tech companies in Europe and the US.
- Unilever sets target sales of $1 billion euros from its alternative proteins brands for the next five to seven years, emphasizing the belief in and commitment to the alternative protein industry.
- International organizations such as the World Economic Forum and UN World Food Programme highlighted their commitment and goals for established Food Innovation Hubs to implement innovative foodtech and ag-tech solutions in smaller communities. Stakeholders plan to deliver updates and plans at the 2021 UN Food Systems Summit.
Corporate Venture and Private Equity Funds
Our featured CPG private equity firm this week is VMG Partners.
- VMG Partners is a private equity investment firm with an exclusive focus on acquiring highly branded consumer product companies in the lower middle market.
- Target industries include lifestyle, wellness, food/beverage, personal care, pet and leisure.
- The firm currently has $325 million in committed equity capital.
- VMG Partners is headquartered in San Francisco and Los Angeles, CA
- Representative current investments include:
- Ancient Nutrition
- Daily Harvest
- Hello Bello
- Humm Kombucha
- Nature's Bakery
Links to Relevant Content and Events
- Functional Beverage Maker Secures $14.5M Investment
- Natural Order Acquisition Corp. Raises US$230M IPO to Fund Plant-Based Buyouts
- Report: $8.37B Invested in Food Tech During First Three Quarters of 2020
- Afresh Raises $13M for Fresh Food Management Technology
- Investment Firm to Acquire WellPet
- Terra Kaffe Raises $4M for Pod-Free Grind and Brew Coffee Maker
- AppHarvest Plants First Tomato Crop With Harvest Expected in Grocery Stores Early Next Year
- Why We Must Scale Up Climate-Smart Agriculture to Feed a Hungrier World
- Agri-Food Tech Space Exceeds "Record-Breaking" Investments Hitting US$11.6B
- Astanor Ventures Launches $325M Impact Fund Aimed at Food Tech and Ag Tech Startups
- Unilever Sets $1.2B Sales Goal for Plant-Based Products
- How Food Innovation Hubs Will Scale Technology to Transform Our Food System
Naturally Bay Area Holiday Happy Hour & Mixer
Thursday, December 10, 2020, 4:00 - 5:00 p.m. PT
Holiday Toast & Virtual Mixer Hosted by Don Buder, Board Chair & Partner at Davis Wright Tremaine.
Pour yourself a holiday cocktail, and let's raise our glasses together before spending some time meeting, mingling, and spreading holiday cheer!
Naturally Bay Area's 3rd Annual Pitch Slam
Thursday, February 11, 2021
Here's your chance to show what you've got — get in front of top industry investors and your peers (virtually)! Naturally Bay Area's 3rd annual Pitch Slam competition celebrating the Bay Area's brightest brands, and giving the spotlight to a handful of local, emerging companies who will go head to head for a chance to win prizes worth thousands of dollars.
Apply to pitch here (Applications due Thursday, January 7th)
Please check out DWT's newly re-launched Startup Law Blog
At 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.