FRESH SOURCE CAPITAL

Providing investment solutions to rebuild local food and agriculture systems

Fresh Source Capital Fund I – 2015 Impact Report

Lisa Sebesta

2015 saw the successful launch of Fresh Source Capital Fund I.  The Fund was created with the mission of making financial investments in businesses that are rebuilding local and regional food systems.  More specifically, we focus on supporting businesses along the supply chain that are leveraging local, sustainably produced food.  These businesses generally fall under the categories of value-added processing, aggregation and distribution, consumer product goods, as well as unique land/sea based production companies.

Concurrent with this mission, we look for companies that are creating impact along environmental, community, and social lines.  With respect to environmental impact, our focus on food produced locally inherently reduces food miles within the region, given that less food would need to be imported from elsewhere.  We also look at the methods used to produce the food and how waste is treated.  We consider all these things to be important to protect the long-term viability of our resources.  In terms of community development, we look numbers of jobs created and where.  We see that businesses can also add value to their communities by building infrastructure other organizations can leverage.  Also important to the long-term sustainability of any company is social justice.  We look for companies that pay fair wages for work and appropriate prices to farmers.  Businesses that are tackling food access and affordability in challenged neighborhoods score high here as well.

While very few companies could meet all these criteria, they serve as guiding principles in our evaluation process.  Some companies may be far along in achieving these goals; some are not yet there but committed to the process.  In general, the mission of these companies is aligned with ours because they value long-term sustainability; a competitive advantage that attracts a values-minded customer base. 

In summary, the impact of our portfolio companies for 2015 is aggregated in the table below:

2015 PORTFOLIO COMPANIES 

Farmers To You

Farmers To You (FTY) continues to grow it’s base of Boston-area families it serves with deliveries of farm-fresh produce sourced primarily from Vermont.  Many of the producers that sell to the company (over 50) operate at a small scale, and FTY provides them a great service.  FTY’s direct to consumer sales of their products allow farmers and producers to focus more on their business, and is often a more profitable sales avenue compared to farmers’ markets.  For many of these farmers, sales outside co-ops and local grocers in Vermont is difficult logistically as well as economically. 

FTY is committed to making the partnership a viable and attractive one for farmers.  Farmers and their products are carefully curated to meet very high standards for product quality and sustainability.  While the company offers consumers a wide variety of goods (meats, cheese, bread, produce, value-added products), the number of products offered (sku’s) are over 250 and have been slow to grow.  The company will only add goods if they are produced according to their values.

The number of families served under FTY continues to grow.  The company also added more delivery sites, including one in Boston’s lower-income neighborhood of Dorchester.  FTY also offers home delivery in certain communities, utilizing bicycle-powered Metro Pedal Power for deliveries in dense city-centers (Boston, Cambridge, Somerville) to be consistent with its environmentally friendly model.  Finally, the company utilizes very environmentally friendly packaging, much of it recyclable or reusable. 

Just Add Cooking

Just Add Cooking (JAC) operates in the highly competitive meal kit space, but with a few key competitive advantages that set it apart.  First, the company is committed to local sourcing within the region.  Second, they deliver only to the greater Boston area, same day as boxes are packed, to ensure freshness.  Response from the marketplace has been positive, as JAC’s year-over-year revenues grew significantly in 2015.

JAC’s management is committed to sourcing locally, and has been very receptive to new supplier relationships.  Fresh Source has introduced the company to several producers that fill gaps in their sourcing, as well as distributors who focus exclusively on local suppliers.  JAC uses these as selling points to customers who care about transparency in their food supply.  Fresh Source has encouraged the company where possible to buy directly from producers, as more of the consumer dollar gets back to producers and farmers.

With it’s same-day delivery model, JAC uses far less packaging than national competitors.  Boxes are couriered to families on their delivery day, and drivers text customers when their box is delivered.  In early 2016 JAC introduced new biodegradable cooling bags to further reduce packaging waste.  Overall, JAC’s average box weighs under 2 lbs (including ice pack and cooling bag) vs. 10 lbs for competitors that ship via 2-day Fedex or USPS. 

The company offers the convenience of home delivery along with the inspiration to cook a variety of recipes which change weekly.  Most subscribers order every other week.  Subscribers also receive products they may not have access to otherwise – offerings like cheeses, breads, and goods from small producers that aren’t carried in larger grocery chains.  Our research indicates that consumers want to move away from shopping at larger grocery chains and value artisan products, which is what they can expect from JAC.