Proxy Foods Inc., a startup co-founded by Ted Leonsis that offers a way for food and beverage companies to create recipes using artificial intelligence, has raised $2.3 million in funding.
Leonsis, the billionaire founder and CEO of Monumental Sports & Entertainment and Washington Wizards and Capitals owner, is also backing the startup financially, joining the seed round. Fundraising started in October.
Other investors include three of the co-founders of Cava Group Inc. — Ike Grigoropoulos, Ted Xenohristos and Dimitri Moshovitis — as well as Anthony Nader and Fredrick Schaufeld, two partners at D.C.-based venture capital firm SWaN & Legend Venture. Robert G. Hisaoka, chairman and CEO of RGH Capital, also participated.
Proxy Foods CEO and co-founder Panos Kostopulos told me he doesn't think he's had "more than three days" apart from working with Leonsis on the startup since its initial formation in 2022. That year, Kostopulos participated in the Leonsis-funded Bark Tank entrepreneurship competition at Georgetown University.
At the time, Proxy Foods was merely in the idea stage, but its approach of using machine learning algorithms and AI to more quickly craft recipes for food and beverage companies, a process that can take months to produce, earned it the first-place prize and its $30,000 award for the further buildout of a minimum viable product. That idea has since become a platform of tools for food and beverage companies that is ready to be scaled across the industry, Kostopulos said.
"What we do is we collect all the data around ingredients, and we focus more on the scientific part of the ingredients — and not so much yet on consumer analytics — like what makes strawberry taste like strawberry, what makes chicken taste like chicken," Kostopulos said. "By combining this data, we analyze it with AI and we are creating a user-friendly, collaborative way to work."
To keep up with expected demand, Kostopulos wants to grow his roughly 15-person team to about 25 people within the next year, an effort fueled by the capital raise. Many of the company's workforce is based out of the startup's headquarters at 200 Massachusetts Ave. NW, though it also has offices in San Francisco and in Athens, Greece.
Kostopulos said the startup is generating revenue with a growing customer base, but he declined to disclose figures or names of companies using its platform, which is offered via a software-as-a-service subscription model with several tiers.
"We're mostly targeting and working with the larger food and beverage companies and we're in touch with a few companies," Kostopulos said. "We still think that this space is very empty and we think we can accelerate our impact by targeting these bigger clients and then we could go support some smaller food service restaurants."
Having the experience and financial backing of someone like Leonsis will also aid in those efforts.
“Panos has showed unwavering passion, relentless drive, and audacious vision since the first day we met at Georgetown’s Bark Tank competition when Proxy Foods was just an idea," Leonsis told me in an email statement. "As we have worked together to continue its development, Proxy Foods has emerged to offer one of the most innovative and AI-forward platforms for modern food and beverage development."
