Morris had an idea for a new health care related business that he believes is very much needed. In fact, he spent many hours doing research on his idea only to confirm that it was very much needed. Despite all he read and heard about the difficulties of starting a new business nowadays, the idea would not leave his mind. A very close friend even helped him put together a business plan that Morris’s banker had suggested and offered to help him raise the necessary capital. The banker offered a great deal of encouragement but warned that several new startups that he was involved with in the past three years were either faltering or ceased operations. In other words, “be careful.”
The banker was right to caution Morris. Statistics show that about 90% of all startups fail, 10% within the first year. It doesn’t really matter what field the business is in as it applies equally across all industries. In almost every instance, startup failure rates seem to be close to the same. Failure is most common for startups during years two through five, with 70% of failed startups falling into this category. Raising money for a startup is no small fete. Venture capitalists focus on businesses that are solving complex issues for legacy economy sectors, such as healthcare and manufacturing – and doing so profitably. In other words, they are not only banking on a good future return but want to make sure that a startup business is already in a good financial position.
Despite all the negative publicity and caution about startups, I have seen an unprecedented interest by people in starting new businesses. One business consultant predicted that there would be a major surge in new startups, “particularly as we move further away from Covid-19.” He pointed out that “you simply can’t stop people’s creativity.” I have particularly noticed this creativity when it comes to food. Everyone loves to eat! There is a great deal of innovation in the food industry, as a wide range of food startups and new food companies are breaking barriers, developing new business models, and improving upon existing ones, such as food delivery.
Whether it’s a new type of burger or a unique technique for food processing, there are many entrepreneurs who are doing everything they can to make their vision a reality and make eating the foods we love more enjoyable. Technology is of course playing a big part in this explosive growth in the food industry.
The idea of using plant based ingredients to replace animal meat has caught on big time. In 2009, Ethan Brown launched Beyond Meat and two years later Patrick Brown founded Impossible Foods including its iconic “impossible burger.” Once a new idea is launched there are likely to be “followers” who believe they can produce a better product or can capture a significant market share of a potential market. In 2018 Adam Lahav and Yisachar Ben-Shitrit launched Redefine Meat in Tel Aviv. The two raised $170 Million through a variety of venture capital funds. Their innovative brand takes everyday products, like ground beef and burgers, and completely redefines them. Using 3D printers, they take plant products like soy and turn them into familiar dinner favorites. They currently have plans to expand their line into products like minute steak and beef skewers.
It is not necessarily the well-funded enterprises that dominate major new product launches. Some new food ideas begin in a home kitchen where a “secret” family recipe becomes the germ of an idea for a new business. I have seen entire families rally behind a new food idea not only pitching in with praise but even helping establish business ventures. Their best route is to begin with initial research to determine how the product would fare on the grocery shelf, for example. Many products fail simply because not enough research was done before launch. How often is it that someone has an innovative idea only to find out that the idea is already well entrenched in the market. There is always a need to determine if the item can be mass produced and who would be an appropriate co-packer to produce the product. An alternative is to raise enough capital to build (or lease) a plant that can do the production A new product must acquire an identity, not only a company business name that will be transacting the business but a brand name, which can often spell the difference between success and failure. The next steps include packaging, distribution, and marketing.
The same process that went into meat is happening with pasta and even rice where a company called RightRice based in the UK is producing vegetable-based rice alternative. Gabi Lewis and Greg Sewitz from Brooklyn founded Magic Spoon that produces low-carb cereal foods that are childlike and fun to eat, but for adults. All their cereal products are keto-friendly, don’t contain any GMOs, and are free from grain, soy, gluten, and artificial sweeteners. By using a natural sweetener that’s found in maple syrup and figs, allulose, they are able to make a cereal that tastes great and has zero glycemic impact.
The experts say that ideas that fulfill a universal need are concepts that survive the startup doldrums and have the best long term survival prognosis. In 2022 some products with a great future included the Body Scan by Withings, PerfectFill for the perfect bath temperature and level, new refrigerators with expedited cooling, and luggage with built-in tracking and more.
We have also witnessed how many products and systems designed for Covid look like they are here to stay. One notable innovation was telehealth where medical care is dispensed by video, rather than in person, the increased use of robotic equipment to minimize human interaction, virtual learning and testing, street dining, meetings by Zoom, and sidewalk pickups in shopping venues. These are all ideas that stuck and are good examples of the kind of thinking that needs to go into a new business concept. And now is as good a time as ever as long as the proper planning goes along with it.