Dealflow | June 27, 2023

Illumen Capital and MassMutual back Supply Change Capital to invest in the future of food

Roodgally Senatus

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ImpactAlpha Editor

Roodgally Senatus

ImpactAlpha, June 27 — LA- and Chicago-based venture fund Supply Change Capital is gearing up for the final close of its planned $40 million fund to invest in early-stage technologies that support a more resilient and sustainable food system.

“Food is responsible for up to a third of our emissions. We can’t address the climate crisis without thinking about it,” Supply Change’s Shayna Harris told ImpactAlpha. “For Supply Change Capital and many others around the world, food is also culture and we have a huge opportunity to develop a more resilient and sustainable food system by thinking about the future of food.”

The latest limited partners to join the fund are Illumen Capital and MassMutual, which invested in the fund through its First Fund Initiative, a $150 million commitment to co-invest with Black, Indigenous and Latino-led emerging funds. Illumen invested via its Catalyst Fund.

“Supply Change has a unique lens on the environmental, demographic and technological forces that are reshaping our food supply chains,” said MassMutual’s Diane Henry.

Return on inclusion

After launching Supply Change in 2020, first-time fund managers Noramay Cadena and Harris joined other first-time women of color fund managers from The 22 Fund and WOCstar Fund to form the Ally Capital Collab to coordinate fundraising efforts.

Since then, Supply Change has received commitments from high-net-worth investors, foundations, family offices and other investors, including Bank of America and General Mills. The fund has deployed more than $13 million in 15 portfolio companies. The majority of the fund’s portfolio companies are led by women and minority founders, says Supply Change.

“Ultimately, each LP and founder in our community understands the same thing we do: that we really are on the precipice of a huge change at the intersection of food, culture, and technology,” Cadena told ImpactAlpha.

Impact scoring

In a new impact report, Supply Change highlights its portfolio companies and how it screens them for impact. Among the portfolio is Latina-led Compound Foods, which through a precise fermentation process, creates coffee without using coffee beans. Compound’s coffee uses upcycled inputs and mainly local ingredients, and has a 91% lower carbon footprint than regular coffee, according to Supply Change.

Another portfolio company, women-led Aqua Cultured Foods, makes fungi-based seafood using microbial fermentation.

“Any of the companies we’ve invested in, in addition to going through a very traditional venture capital returns-first screening, goes through a pre screener that helps us score the company on impact,” said Supply Change’s Harris.

The pre screening is an additional step in Supply Change’s due diligence process to ensure that its portfolio companies’ are in alignment with the fund’s impact objectives. From a social impact perspective, “we look at increasing equity and inclusion in the food system and a big part of that is ownership,” Harris said.