How the founders leveraged their network to disrupt the grocery store supply chain

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Many entrepreneurs scratch their heads when starting a business. They have a need, which often means others have the same need, but no product on the market meets that need.

While the specialty food industry represents a $ 170.4 billion market in 2020, it’s not easy for emerging brands to find their way onto grocery store shelves. Larissa Russell and Fiona Lee knew firsthand how difficult it is to build your own food brand and get it off the ground. Their natural vegan cookies – Green Pea Cookie – had a small group of loyal customers but struggled to achieve wider distribution.

“[In 2017,] we decided to stop making our cookies and start over, ”said Russell, CEO and co-founder of Pod Foods. The couple have developed a technology-based end-to-end grocery supply chain platform for food and beverage manufacturers and retailers.

As food entrepreneurs, they lacked a network that included angel and venture capitalists and technologists. Building a network was a big challenge.

“Pod Foods is a B2B marketplace with logistics that allow food brands to reach retailers more efficiently and retailers to source the best products for their store that they would not otherwise have access to through large-scale distribution networks. that exist, ”Russell said. . Traditional distributors tend to focus on established, top-selling brands. Yet consumers are demanding access to a greater variety of rising brands.

Pod Foods provides tools and information to manage distribution, including production, marketing and inventory for food companies. It streamlines the sourcing process for retailers while enabling data-driven discovery for local, regional and national brands desired by their consumers.

As the founders of a cookie company, they had no connection with money or tech talent from the start. Russell and Lee tapped into whatever network they had. “We have grown our network by talking to more and more people about the change we are creating in the industry,” said Russell. People they knew connected both to other people who connected them to other people and so on.

There was no “playbook” to assess the B2B grocery logistics market for investors. There was no data on trends, usage patterns, revenue goals, etc. Despite being technology founders for the first time revising the grocery supply chain process, Russell and Lee began collecting the data to educate investors.

Lee, an immigrant from Singapore, has been linked by someone she knows to Unshackled Ventures, which invests in immigrant founders. He was Pod Food’s first investor, investing $ 250,000. The duo used the investment – and whatever other resources they could muster – to create an early version of the platform. “Once they demonstrate the need for the platform, we could move on to the next phase and raise more money,” Russell said.

“We didn’t have a lot of money to put together an engineering team,” said Lee, chief operating officer and co-founder. “We had no way of paying American wages.” Lee was related to someone in Hanoi, Vietnam, who put her in touch with a group of engineers. Fortunately, they spoke English. The team has grown from four engineers to 16. The company recently hired Timothy Wee as a CTO. He previously led machine learning projects at Google, Amazon, and Walmart Labs.

Russell and Lee have deployed the Pod Food platform in San Francisco, their home port. “We faced a lot of initial hesitation because people [investors] I thought we were aiming for a niche market and only people on the east and west coasts would be interested, ”said Lee. To emphasize that every part of the United States was thirsty to access emerging food brands, Pod Foods rolled out its second market. “We had the most traction [among grocery stores] and also, we’ve been successful in importing a lot of products from other parts of the country into the Midwest, ”Russell said.

They were in the right place at the right time. Midwesters were starting to explore their options for healthier foods made from more sustainable ingredients, but distributors in the middle of the country didn’t have the smaller emerging brands people were hungry for.

In July 2019, Food Pod announced a $ 3 million funding round led by Moment Ventures, with participation from M12, Microsoft’s venture capital fund, and Unshackled Ventures.

In addition to having distribution centers in the Chicago and Bay areas, Pod Foods can be found in Southern California, Texas, New York, and Washington.

“The [logistics] The problem has become even more pronounced with the production shortages associated with the pandemic as well as the new expectations of consumers in the retail industry, ”said Russell. retailers to have a streamlined process for providing consumers with a greater variety of food and beverage products.

“We are now seeing consumers shifting their spending habits towards emerging locally sourced products, and it is imperative that retailers adapt quickly,” said Lee. “Since last year, we have more than doubled the number of brands on our platform.”

Last week, Food Pod announced the close of a $ 10 million Series A round led by Industrious Ventures with participation from Microsoft’s M12 venture capital fund, Moment Ventures and others.

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