The group discussion held in the 48th-floor office overlooking miles of Los Angeles concrete was not about freeway traffic, the weather or about bringing professional football back to the city. It was, of all things, about farms and food.
In the elegant Haworth showroom, Larta’s CEO and Founder, Rohit Shukla, hosted a conversation with three food entrepreneurs and one investor. The conversation focused on food creation, production and “disruption” in SoCal. The event, in collaboration with LA Innovation Week, was Larta’s latest GAIN (Global Ag Innovation Network) forum, Food for Thought: New Sources, New Systems, having taken place October 20th, and was followed by networking and lunch.
What, then, is “disruption” in food? “At this GAIN event it was clear that disruption and disruptors are all around us,” says Rohit Shukla. “Innovations created by passionate, committed entrepreneurs are capable of breaking the conventional economics of a traditional supply chain, thus creating an opening for their own innovations. In the so-called “sharing economy,” we’ve seen quite a few examples of this – Uber, Airbnb, etc.”
“But food is something else again,” he continues. “Consumers are more interested, more confused, more open to new sources of food and to new ways of getting their food, and thus, potentially, less loyal to traditional sources and brands.”
Food disruption is inevitable, and is rippling across the ag industry. The production of food, vital to all, is all but invisible to the common consumer, and yet our sprawling metropolis of the Los Angeles region is home to 23,000 farms with a total ag crop value of $16B (2012). LA County’s food industry contributes over 320,000 jobs to the region. Such robust figures suggests there’s an establishment in the Los Angeles region to disrupt.
As the global ag industry works to feed a growing population in sustainable ways, expect to see the kind of creativity and disruption in ag as we have seen in tech for the last decade. “Consider Impossible Foods,” offers up Rohit. “Their burger, made entirely of plant matter, tastes and bleeds like meat. They received $100 million in funding from Bill Gates last month, and have attracted investors and anxious attention from the meat industry. Even though it currently costs $20 to produce one patty, they – and innovations like theirs – have the potential to disrupt a whole industry, whose problems are well established by now and whose familiarity is the source of their vulnerability.”
Phil Erlanger from Pontifax, an LA based investment firm. Pontifax invests in innovations that enhance efficiency, increase crop yields and reduce, reuse or eliminate waste – all of which help streamline the food system from field to fork. Phil laid out the investment context for the disruption occurring in food and agriculture using three of his portfolio companies in those areas as examples.
He introduced us to Conservis, a company that promotes efficiency in farming through their software platform; AgBiome, a company that specializes in the production and deployment of biologicals, which have the potential to enable agriculture, through the creative use of naturally-occurring microbial organisms to go beyond the use of conventional pesticides, chemicals and modifications; and Anuvia, whose slow-release fertilizer confers greater nutrition absorption by the plant, controls seepage into the ground, and uses a feedstock that is all around us: human municipal waste.
“Talking to entrepreneurs in any industry is always revealing,” says Rohit Shukla. “The three companies highlighted in our GAIN forum reinforced what we already know about startups – there is no one way to disrupt an industry, you can shake up old systems by doing new things, and passion is a key ingredient in the pursuit of an entrepreneurial venture.”
Rewriting the rules of the game
Brian Alpert, co-founder of LA Prep, is a real estate developer with one foot in the foodie world. He recognized that there was no dedicated space in LA for food startups. In 2013, California’s Homemade Food Act (also known as the Cottage Food Law) went into effect, and a wave of foodies began cooking up a storm to sell their product commercially on a small scale. Brian saw a need for industrial space (“maker space” to use another term) for startups in the sector. However, here in LA real estate does not come cheap, nor is it easy to find a space zoned for food prep, apart from the permitting and equipment that comes with setting up industrial kitchens. Brian and his partner, Mott Smith, worked with the LA County Health Department to create the county’s first wholesale kitchen complex, LA Prep – a collection of 50 wholesale kitchens under one roof that come in small, medium and large sizes. Entrepreneurs can start small, and scale up by literally moving across the hallway until they are sustainable and ready to move out on their own.
Why did this work for the LA County Health Department when kitchen incubators traditionally receive a lot of heat from the agency? For starters, each kitchen is one company’s dedicated space. LA Prep also committed dedicated space in the complex for dry and cold food storage, multiple loading docks, and made sure the kitchen colony was a “clean space.”
LA Prep opened in March. Within 3 months 43 kitchens had been booked. LA Prep’s innovative model supports food innovation, job creation, and filled a hungry gap in the local food prep industry. The impact on our “sharing economy” in LA is likely to be profound. Stay tuned.
Cracking the code: Restaurant menus go high tech
Anita Jones-Mueller aims to change the way American consumers eat out.
A dietician with a Ph.D., she initially wrote guidebooks on how to order healthy food from a chain restaurant. She’s now taken that idea and has launched a website, HealthyDiningFinder.com that uploads the nutritional value of dishes on popular restaurants’ menus, so that the user may find healthy options on the menu. A mobile app is next.
This is not just a consumer-facing innovation. Healthy Dining works with over 250 restaurant companies operating in 60,00 locations across the country, including Darden’s, to incorporate into their menus, in a customized manner, information on origin and nutritional composition in the food being served, as well as to consult with them on how to make their food both nutritious and delicious.
For Anita, the problem was the devastating health issues of Americans. In Los Angeles County, 50.5% of children eat fast food at least once a week. Nationwide 1 out of 10 people have diabetes. Studies have shown that if we continue our current food path, that number will come as close as 1 out of 3.
Anita’s solution was to build an online platform for people with health issues ranging from obesity, diabetes, heart disease and cancer. She sees areas for growth for including allergies, gluten, and athletic performance suggestions, which would expand the site’s influence significantly. Also, by the end of 2016 the FDA will require all restaurants to include the nutritional values of their food, which makes HealthDiningFinder.com’s timing impeccable.
HealthyDiningFinder.com has great potential to change how and what consumers order at restaurants, and subsequently change what restaurants are serving.
Grinding down barriers: Milling comes full circle
If you sit down with Nan Kohler, owner of Grist & Toll, you’ll most likely hear her say, “Flour has flavor.” Nan mills specialty grains and grinds in Pasadena.
Baking with home milled flour resonated deeply with Nan. She knew that others might feel the same way, and so she decided to become LA’s first, and to date, only, urban miller.
A one-time wine rep, and a professional baker who discovered the flavor of flour in her home kitchen mill, she set out to create a space in the food industry the industrial revolution left behind a century or more ago. She began by asking questions, such as, “how is flour made? Who is making it? Where is the wheat grown? What is the quality of the wheat? Does the quality matter? Do we grow it here in California?” (Yes, we do grow wheat in California. A lot of it, and it’s great quality too). As she started getting answers to her questions she asked, “Is there equipment I can get my hands on so I can mill it at an artisan level?” And most importantly for any entrepreneur, “Is it going to matter to anyone?”
Answers in hand, and in equal parts committed and intrigued, when Nan was ready to set up a mill, she worked closely with the Health Department, which until then had no guidelines for her business, so this was pioneering work. In fact, Americans are so far removed from the process of milling wheat that Nan had to turn to Austria to buy her mill.
The experience turned her into an expert on food safety, local organic wheat and grain sources, and a robust and growing niche market which she has done much to expand.
Grist & Toll is finding a foothold in the LA food world, supplying flours to restaurant pastry chefs and bakeries, as well as retail to local food meccas such as LA’s Grand Central Market.
By milling artisan flour for a public that has been buying and eating mass produced flour – “flour that has no flavor” – for generations, this startup is teaching people, one croissant at a time, that one mass produced wheat flour does not fit all.
GAIN meets again in January, with a Farmers and Growers panel, in Palo Alto, CA. Check in to our GAIN page to see what’s happening in 2016 for GAIN.