SAN FRANCISCO — A new venture will seek to incorporate algae into existing food and beverage products by first investing in or acquiring manufacturers of those products. VMG Partners, a private equity fund, and TerraVia, a supplier of algae-based ingredients, on April 5 said they had launched the venture, called TerraBrands.
|Jonathan S. Wolfson, founder and c.e.o. of TerraVia
“It’s basically a partnership to develop consumer-branded, algae-based foods,” said Jonathan S. Wolfson, founder and chief executive officer of South San Francisco-based TerraVia, formerly known as Solazyme.
Leaders of TerraBrands include Mr. Wolfson; Keith C. Belling, founder and former c.e.o. of popchips; and Michael L. Mauzé, managing director of VMG Partners. TerraBrands will target established lower middle-market companies in the food, pet and nutrition segments.
|Keith C. Belling, founder and former c.e.o. of popchips
“It’s really to look at established companies that have a shelf position (at retail) and positive cash flow,” Mr. Belling said. “We’re looking for existing businesses that already have shown some level of success that we think we then can take to the next level.”
TerraBrands will consider three factors when choosing which companies to invest in or possibly acquire, said Kara M. Cissell-Roell, managing director of VMG Partners. First, a business must be established, or have shown what she called “proof of concept.” Second, the business must have a passionate consumer base.
|Kara M. Cissell-Roell, managing director of VMG Partners
“You need to have a good platform on which to bring these ingredients and accelerate the brand growth,” she said.
Finally, the business must show interest, both in algae as an ingredient and in a potential investment from TerraBrands.
VMG Partners previously invested in Kind, Pretzel Crisps and Pirate’s Booty.
“What TerraBrands is, is a shot across the bow to demonstrate to people that the time for algae as a mainstream food ingredient is here,” Mr. Wolfson said, “VMG is one of the leaders in the world at identifying emerging food trends, and beverage and nutrition trends, and the proof is in the investments they’ve already made.”
Mr. Belling has advised TerraVia for almost two years. He is still chairman of popchips.
“He’s a category creator with a lot of the healthy snacking work that he’s done,” Mr. Wolfson said of Mr. Belling. “He’s also a brand builder and a marketing genius.”
Mr. Belling said he and Mr. Wolfson both think of algae as the original super food.
“It really hits on taste, nutrition and sustainability in a way that I have not seen in the marketplace,” Mr. Belling said.
Algae-based ingredients may serve as a source of plant protein or as a source of healthy fat, Mr. Wolfson said.
“We can infuse existing products from existing companies with our ingredients to dramatically improve nutrition and in many cases dramatically improve taste and texture,” he said.
TerraVia has had an active few weeks. The company on March 11 said it was changing its name to TerraVia from Solazyme and that it had entered into a definitive purchase agreement for a financing round of about $28 million. VMG Partners is part of that investor group.
Ms. Cissell-Roell said working with algae as an ingredient was exciting because it has a history in the food chain and is not made in a laboratory.“It’s not about Franken-fooding it,” Ms. Cissell-Roell said. “It’s a really exciting super food ingredient that has been around since the beginning of time, and we’re just on the forefront of bringing it back and making it famous.”