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Food Venture Financing News - Weekly Issue No. 37

12.01.20
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In This Issue:

IRS Releases Paycheck Protection Program (PPP) Guidance on Deductibility

  • One key tax issue is how PPP borrowers should handle the deduction of allowable expenses in their PPP loan forgiveness application
  • The IRS released a ruling 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 agreement, key Republican and Democratic members of the Senate Finance Committee criticized the ruling, but it is unclear whether there will be a Congressional solution to this issue.

Potential Movement on New Stimulus

  • A bipartisan group of Democratic and Republican Senators has formed with the goal of securing new coronavirus relief spending during the lame duck session of Congress.
  • The incoming Biden administration is reportedly in favor of these renewed efforts.
  • Talks involve giving states more time to spend previously allocated funds and reopening the Paycheck Protection Program.
  • Aid would be tied to the 2021 government spending bill that must pass by December 11. 
  • McCormick & Company Inc. recently announced its acquisition of Cholula Hot Sauce, highlighting the increased demand for hot and spicy products.
  • Investors in the foodtech industry noted that the COVID-19 pandemic has altered the criteria investors use to assess potential investments. Investors evaluate how founders handle supply chain and marketing challenges as well as entrepreneurs' emotional intelligence regarding their treatment of employees and customers.
  • In response to disruptions to supply chain and production operations due to the COVID-19 pandemic, the food and agriculture industry has implemented more automating technologies–such as automated irrigation, automated guided vehicles, and vehicles–to improve efficiency and decrease production costs.

Corporate Venture and Private Equity Funds

Our featured CPG private equity firm this week is Unovis Asset Management.

  • Unovis Asset Management launched New Crop Capital Trust and The Alternative Protein Fund to invest in the alternative protein sector.
  • Those funds provide seed to growth funding to entrepreneurs developing plant, fungi, fermented and cultivated replacements to animal products.
  • Portfolio investments include the companies in the following categories:
    • Plant-Based
      • Alpha Foods
      • Good Catch
      • Miyoko's Creamery
      • Ocean Hugger Foods
      • Zero Egg
    • Cellular Ag and Novel Proteins
      • Blu Nalu
      • Memphis Meats
      • The Protein Brewery
    • Convenience & Exploration
      • Dao Foods
      • Lighter

EVENTS

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!

Register here

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.

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