A woman- and Latina-owned venture firm has just closed its debut fund.
Supply Change Capital aims to invest in a range of pre-seed and seed-stage companies throughout the United States that operate in the food space, ranging from deep-tech food, agriculture and ingredient companies to supply chain tech to enterprise software.
The firm started investing in June 2021 and now around two years later has officially closed its first fund at $40 million.
Supply Change has deployed more than $13 million across 15 early-stage food and ag-tech companies since its inception. Startups led by Latino, Black and female founders and CEOs comprise 80% of the portfolio.
Led by two industry veterans Noramay Cadena and Shayna Harris, who has 20 years of experience in the food industry that includes time at Mars and as an early employee at Farmer's Fridge, Supply Change Capital wants to represent the next wave of innovation in the food industry.
The firm has already invested in PartnerSlate, an online marketplace that connects food and beverage product companies with manufacturing and packaging businesses, and Chicago-based food-tech startup Aqua Cultured Foods.
Harris said the firm has stayed disciplined through the fundraising highs and lows of the past few years.
"We've always been very focused on business fundamentals as we invest, and we've always thought very carefully about valuations," she said.
While other investors have said that they are done with uncapped notes — that is, funding rounds with no valuations — Harris said that was never something that Supply Change Capital ever considered as a tool.
"Our investment strategy, our evaluation of the fundamentals has not changed over the last two years," she said.
Harris did say that market headwinds have extended Supply Change's fundraising timeline a little bit.
"Between market conditions and the Silicon Valley Bank situation that happened, fundraising just took us a little bit longer," she said.
Getting institutional investment
Limited Partners in Supply Change Capital include 301 Inc., MassMutual, the Illinois Growth and Innovation Fund, Bank of America, Illumen Capital’s Catalyst Fund and J.P. Morgan Asset Management.
Harris said getting Bank of America on board, along with other institutional investors, was "catalytic" to the fund.
While the venture capital industry is experiencing a pullback from the highs of 2021, corporate VCs aren't the ones sitting on the sidelines. An analysis from PitchBook showed that corporate venture investors have remained more active startup funders than other nontraditional investors, and there's been an influx in the number of companies, and their in-house VC firms, that have led venture capital deals.
Food tech in Chicago
Supply Change Capital has invested in six companies headquartered in Chicago thus far.
Harris credited World Business Chicago along with other community organizations for helping bring Chicago's food-tech scene to the next level. Chicago's food and food-tech scene has taken off in recent years, and investment in food innovation has increased more than 500% between 2019 and 2021 in terms of capital raised compared to 73% nationwide, according to data from World Business Chicago.
Harris said she expected Supply Change's overall portfolio to be around 25 companies.
