The food industry is receiving more attention and investment than ever for environmental and consumer health reasons. According to a U.S. Environmental Protection Agency report, food waste comprises 24 percent of material sent to landfills in the U.S. and 22 percent of combusted municipal solid waste. Around the world, a study published in Nature Food found that such loss contributed 9.3 billion tonnes of carbon equivalent to the atmosphere in 2017.
On the health side, the World Health Organization says 3.1 billion people globally could not afford a healthy diet in 2020.
Here in the U.S., the Dietary Guidelines for Americans note that the average American does not follow a healthy diet, with too much salt, saturated fat, and not enough fruits and vegetables.
Noramay Cadena and Shayna Harris, friends who graduated from MIT Sloan School of Management (MIT) in 2011, co-founded Supply Change Capital in 2020 to tackle these crises. Cadena used to be an aerospace engineer at Boeing, while Harris was Global Lead for Sourcing/Impact at Mars and Chief Growth Officer at Farmer’s Fridge, which offers healthy meals via vending machines. “We both come at this from deeply rooted shared values but vastly different work and life experiences. It makes Supply Change Capital stronger and more impactful,” Harris told MIT.
The company invests “at the intersection of food, culture, and technology,” as it explains on its website. It made five investments in 2021 and has grown since to invest $13 million across 15 companies, most recently participating in Michroma’s $.64 million seed round in February for its natural, fungi-based food colorings and replacements for other petroleum-based ingredients.
Supply Change Capital’s portfolio promises to make waves across the industry: 73 percent focuses on creating a positive environmental impact, while 60 percent focuses on better health. Upcycling is a common theme in many of these investments. California-headquartered, Afro-Latina-founded Agua Bonita produces Mexican agua frescas with 80 percent less sugar using upcycled fruit. Sold in infinitely recyclable aluminum cans, it also combats plastic pollution. Another California company, Latina-founded Compound Foods, produces Minus Coffee by replacing beans with upcycled roots and seeds. As a result, it uses 94 percent less water, has 91 percent fewer emissions, and avoids deforestation in traditional coffee-producing, biodiverse regions.
Photo Courtesy Agua Bonita
Other investments focus on producing food in better ways. For example, Chicago-based, woman-led Aqua Cultured Foods uses fungi to produce GMO-free seafood alternatives with microbial fermentation; some of their products include shrimp, squid, tuna, and whitefish. Heavy in fiber and with no saturated fat or cholesterol, it is better for you than fiber-less, animal-based seafood and in particular, cholesterol-heavy squid and shrimp. Meanwhile, 99 Counties, also in Chicago, delivers food grown by 20 regenerative family farmers in Iowa and Minnesota to all lower 48 states. This allows them to compete with industrialized agriculture through more environmentally friendly techniques like rotational grazing.
Photo Courtesy Aqua Cultured Foods.
An essential aspect of the business is its emphasis on community and underrepresented founders. The Supply Change leadership team co-founded initiatives like the New American Table Coalition, which aims to increase funding, shelf allocation, and awareness for BIPOC-founded food companies.
Harris and Cadena are limited partners in women-led funds, including some from Portfolia, and are on nonprofit boards of directors that invest diversely, like the Latino Community Foundation. They promote diversity in the world of venture capital by by supporting the Diversity Rider, which requires language in every term sheet to commit a fund to “make commercial best efforts to offer and make every attempt to include as a co-investor in the financing at least one Black [or other underrepresented group including but not limited to Latinx, women, LGBTQ+] check writer (DCWs), and to allocate a minimum of [X]% or [X] $’s of the total round for such co-investor.”
It is no wonder that 80 percent of the company’s portfolio has underrepresented founders, and 75 percent of the investments they considered in 2021 were in women-led companies. Supply Change Capital’s commitment to diversity no doubt stems from Cadena’s position in the Latina community, as well as the fact that when it launched, only 1 percent of the most significant 25 venture capital firms’ investments were going to Latino/founders as reported in LatinxVC’s 2022 Annual Report. Today, Cadena is part of the two percent of venture capital professionals that are Latino/a, and Supply Change Capital is part of an ecosystem of minority-led firms managing only about 1.4 percent of venture capital or private equity funds.
Photo Courtesy Supply Change Capital
Notably, the company showed such promise that General Mills’ venture arm, 301 INC, split a $15 million investment between Supply Change Capital and the Fearless Fund in 2022. Limited partners in the company now include Bank of America, J.P. Morgan Asset Management, MassMutual, and the Office of the Illinois Treasurer, in addition to 301 INC. Most recently, on July 24, Supply Change Capital closed its inaugural $40 million fund, out of which it plans to invest in 25 companies.
On the business side, “We are focused on fundamentals. We invest in startups that have a stellar team, are addressing a real problem in a large market, and where we see a path to a profitable business,” Harris told Forbes. At the same time, they are hoping to carve a path for other women and minority groups: “We want to help bring about the next generation of iconic brands that will be authentic to women, people of color, LGBTQIA+, immigrants, and more cross sections of the U.S. population,” Candena expressed to MIT.
