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Transcript

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Iliyana Dimitrova  0:03  
Hi, welcome to the Forward Food Tech Podcast, where we explore the future of food and agriculture, with the people who are taking us there. This is the second episode of our series of podcasts focusing on venture capital raising. What do VC's care about most when investing in a foodtech business? What are the growing trends in FoodTech? We're speaking to a special guest today - Giancarlo Addario, principal at Five Seasons Ventures to answer these questions. Giancarlo has spent most of his professional career working 21 years at leading pasta and bakery goods Barilla, covering various roles from Quality Assurance/Food Safety to Research & Development across several product categories both in Italy and internationally. In the area of Open Innovation, Giancarlo led various collaborative projects with research institutes, enterprises and startups worldwide, also providing valuable mentorship to food accelerators and incubation programmes to the likes of Startupbootcamp FoodTech, MassChallenge, H-Farm and Future Food Accelerator. Here's the conversation between Rob and Giancarlo - enjoy!

Rob Ward  1:14  
Welcome Giancarlo to the Forward Food Tech podcast! It's an absolute pleasure to have you here, you've got an amazing career history. And today, you're now running as part of the founding team of Five Seasons. Tell me what Five Seasons does?

Giancarlo Addario  1:28  
We are a venture capital fund, we are based in Paris, and we are specialising in food tech. So all we do is about food from the beginning of the supply chain till the consumer part, we are most focused on the last part of supply chain, on consumers. We are series A and B Round investors.

Rob Ward  1:48  
Just for normal people, what does A and B Round mean, what number is that?

Giancarlo Addario  1:53  
It means like £10 million round, just to give you the flavour.

Rob Ward  1:58  
Obviously that business needs to be fairly up and running, because that would put it round about valuation around about 14 million pound dollars or euros, it doesn't really matter. It's a big, it's a big number! So what sort of what sort of revenues, obviously, there will be some revenues for that stage. But how important are revenues?

Giancarlo Addario  2:16  
It depends on the kind of company, of course. It could be around from two to five million, or it could be even pre-revenues, if we think about a deep-tech company. And like the one we have invested in, a company called Tropic Biosciences. It still solves consumer's problems, but working at the beginning of supply chain.

Rob Ward  2:39  
Great stuff. So how did you get to this place? I you know, speaks a lot of people and and for years, you hear about venture capitalists? And you see them as almost god-like in some ways, and I just think well, how did you get to become a venture capitalist?What got you here?

Giancarlo Addario  2:54  
I didn't know what venture capital is, hen I was about to decide to be a venture capital, I was working as an open innovation manager. So it was about collaborating a lot with the outside environment of the company I was working with during my frequent travels. It was before COVID. I had the chance to meet with Ivan and Niccolo that we're raising this fund. And we started to cooperate together to see a lot of companies together to discuss about them. And we saw that working together could bring value for all of us. And that's how everything started. I mean, it was quite natural.

Rob Ward  3:38  
Okay, so let's let's talk about what works for you when you're investing as an entity. And I suspect some of these could be very common for many other people like yourself. But let's look at the really crucial things that you like to see when you are ready to make an investment. What are the crucial ingredients that you need to have?

Giancarlo Addario  3:57  
We need to have a very interesting product, we need to see some traction potential or given traction, better if it's already demonstrated on the field, we need to see ambitious and great entrepreneurs, we need to see a high potential for the company to grow based on these ingredients.

Rob Ward  4:19  
I guess a lot of people could say that. What is the bit that you like to see? What's the thing that really makes it stand out? You must see hundreds of decks. What's the thing that really gets you about someone?

Giancarlo Addario  4:29  
I think the spark comes from the team. I have no doubts about this. You can see nice decks, you can listen to nice pitches, but once you meet the team, you really understand if there is something in it or not. It's something not only about one entrepreneur, but it's also about the entrepreneur with his or her co-founder, or the entrepreneur with his team. So how does the team work? What are the team dynamics? I think that's what really makes the difference from a very nice business model, maybe delivered by Harvard genius, and a real company.

Rob Ward  5:13  
I guess it must be also about how they respond to a difficult question from you and your team.

Giancarlo Addario  5:19  
There are no difficult questions, there is people talking to each other, each one putting on the table, his own ideas, his own dreams, his own beliefs, his own values. And when you see a company, when you talk to a company, you don't ask difficult questions, you just ask questions, and they ask questions to you. So it's about finding the right chemistry, just like when we see the teamwork, we see whether there is a chemistry inside the team, we are somehow candidates to join the team. And we see whether this chemistry can happen or not, of course, then we analyse all the rational part of it everything, all the numbers must be there and must work. But you can read over several times, the same numbers, without understanding whether it is a company to be invested in or not. Most likely, you will understand that by talking to people.

Rob Ward  6:19  
And something when we spoke beforehand, previous times, we've had a few conversations over the last couple of years. But you did mention the word marriage, you saw it like a marriage, which I thought was fascinating. And of course, not everybody's marriage works out. But nobody intends, after getting married, to fall out. What happens when things have been difficult, and they must have been difficult last year, what happens then?

Giancarlo Addario  6:42  
I actually have no experience on that because in the last three years, we have done 10 investments. And we've been quite lucky in not having critical situations. Also COVID, we didn't have a negative impact on any of our company's portfolio. But I know that things can go wrong anytime, even if somebody decides to do something else or decide to 'marry' somebody else. To go away from the company or to start a new adventure, things can happen. And the strength of a team is also to be strong in these difficult situations and to find together a solution.

Rob Ward  7:25  
I guess it's like being on a ship, isn't it? And if everybody knows what they're doing, and they do the right things at the right time, and that ship will get through that storm.

Giancarlo Addario  7:33  
I didn't want to be that banal with the same metaphor...I tried not to use it, but...

Rob Ward  7:45  
I fell into that easy trap then! Okay, let's move on. It has been an amazing transformation in the the economy that has fallen in the favour of particularly food tech in your world. We met a couple years ago and I remember, way before COVID struck, what you're doing and who you're investing in and I totally believe and understand. And it's just been an accelerant, hasn't it for doing what actually was the right thing anyway. But it has really fallen into your lap, how are you going to deal with the next stage of growth? Because I can only imagine there's quite a lot of people that want to work with you. And maybe you've got more looking to invest more and grow the fund. Where are you with that?

Giancarlo Addario  8:31  
The team is growing. We started with three people. No, we are more than three. And we heard very, very good colleagues in March and September. So we have new people on board and that helps us to grow and to manage much better investments, our operations and everything. And that's also nice, because the level of interaction is much more intense. Of course, we need to organise ourselves to be larger, so we might be less immediate as an organisation. And more organised. We organise some teams for specific deals, and we go for it and it works quite fine.

Rob Ward  9:19  
That's exciting. Let's talk about what do you think the next or the key trends are? We'll obviously seen the people you've invested in an alternative protein with 'This', I can only congratulate you on a great example of a brilliant marketing team. It's a really good product, in fact last time we chatted, I had some but now we've eaten it. So it's nice. I haven't got it to eat again but I was really impressed. You know, I eat anything but my son who's 18, he went  'that's cool'. And I think that the magic of achieving that with an 18 year old is amazing. I don't know what cool is, I'm totally not qualified for that. But when an 18 year old says that...So other than meat alternatives, what are the key trends are you seeing or you think as a team you're particularly interested in working with?

Giancarlo Addario  10:03  
I'm glad to see that sustainability is something that is getting more and more base. Also in consumers behaviours. It actually didn't make that strong difference in the past, now is becoming more and more upcoming. Plant based is still a trend that is going to grow. It's not only meat, but it's also milk, dairy in general. Who knows if we will ever eat insects for breakfast or for lunch?

Rob Ward  10:35  
I guess we eat prawns, don't we? And we actually eat lobster, or crayfish. That's an insect, isn't it really? But maybe it's a taste thing? I mean, it's certainly in some cultures, insects are a luxury. And I guess they're not necessarily in Europe or North America. But one of the highest invested food tech businesses is one of the ones used to feed animals with. So maybe there's a journey the insect has to make before we actually eat it by another animal. But on other trends, shifting diets is one of your key areas. We mentioned insects, but beyond that, are we genuinely seeing a improvement in healthy eating? Is there something that the aftermath of post COVID world, are we generally going to see some change there in nutrition, do you think or is it just idealism? At the moment?

Giancarlo Addario  11:28  
No, I don't think it's idealism. It's started years ago with low fat, low sugar, low carbs in general. Behaviour now is going towards function foods, more and more, even medical foods. If we think about nootropics, if we think about all the all these trends are growing a lot, so if we think about silver tech, people who are ageing and who try to eat better to age slower.

Rob Ward  12:05  
I live and breathe this industry. I've never heard of silver tech, I actually thought you're talking about a commodity currency then! We've got pieces of eight tech next coming up, but silver tech is great. That's interesting. I tell you what about silver tech, my parents have worked out how to use Zoom, and that was never gonna happen. But in lockdown it forced them to do that, and they're actually quite good at it now. Now I don't see them upside down or see their nostril for an hour listening to them. And also they buy online now which they never did before. They never never thought it was necessary. And actually, they've got to like it. And it's funny, isn't it? How it actually takes something like what we've had (Covid) to make people change. All of this must be feeding right into your food tech world.

Giancarlo Addario  12:52  
We have seen it happen already in most of the companies. We have two grocery e- groceries in our portfolio. And both of them grew a lot during COVID. Because of these shifting behaviours we live most our lives offline, our parents also are living their lives a little more online than offline. Our children live their lives, maybe more online than offline. And when you leave online, you purchase online. So the online purchases are gonna are going to grow, for sure. E-commerce in general. And in the food space that was a little slower than other than other sectors. Now, the barrier buying food online has been broken down, even by COVID. So COVID has accelerated what already was happening. But there's been a very strong catalyser of this process. So I see a lot of people buying more and more online. And also we always say, elderly people, maybe they cannot use technology, they actually can and the elderly people of the future is us. We are here talking online, also because of the COVID. But we will probably would have done this talk online even in a non-COVID situation.

Rob Ward  14:24  
You're actually right. And it's become normal, isn't it? Yeah, I think it's really exciting. I think one of the best things about online though, is not just the growth of it, but the growth of independent food producers selling direct to consumer. I noticed you've got some really good investment in that, particularly pet care, lovely business that I'm very fond of. This actually is really liberated - a lot of very modest food producers to build a direct commercial relationships with their consumers. That has been around for a long time. We were doing it 20 years ago as a business. Nothing new but what it's done it has created new habits around buying from those people. And I guess in a more open world after getting vaccines and boosters are routine, will that continue? Do you think? Would that still continue for the small producers selling direct online?

Giancarlo Addario  15:14  
I think so. Because selling online is not about selling, it is also about interaction with the consumers, know them much better, improve your products, thanks to the all the data that you achieve. Improve your product means to acquire more customers. And so it's a virtual loop that starts when you start selling online, if you are able to read through the data that you achieve, it's about data. It's about knowing, improving the interaction with with your consumer, when I was working for a CPG company, the black box was the consumer. We would do anything to know more about consumers, to understand the consumers, we were trying to get data from the retailers. Now, the big advantage of being online and selling online is to talk directly, to interact directly to consumers. And that's a great advantage. Offline sales are not dead will not die. They will turn in an improved, enhanced experience. So the points of sales will be points where you can make more experience and then you can buy online. So there is a good synergy between online sales and offline sales. And I think the future is omni channel. Also in terms of being flexible when shit happens like COVID, a lot of companies who are flexible by working online and offline, were able to really pivot their business models. And to use both tools to acquire customers and to react to an event like COVID that nobody could expect before.

Rob Ward  17:05  
I totally agree and remember Dorset Cereals, back in the early 2000s developed a very good online communication system but never sold online. But it was different then about selling online. But their argument for that was to do precisely that, is to know their customers so well. And as somebody that's worked a lot with the supermarkets as I have pretty much all my life, the problem we have before this online selling direct or at least communicating properly. You just have to take the supermarkets have the opinion of what is going on, who's buying it, why they're buying it, how often they're buying it, what they're doing with it when they buy it, all this stuff that is crucial to knowing what to do next or to say improve your product alone, let alone develop new products. The challenge is there was a smoke, it was just a fog. And whereas, you're right, omni channel is great. And of course it's de-risking that because it's a blend of two things. You could lose a supermarket account for whatever reason completely not a fault of your own. It could be just a simple circumstances of change buyer, change of departments and you're out. And not having another sale elsewhere. So it's a good strategy for lots of reasons. So it's interesting, we'll see where that goes next, shall we? You also look at productivity improvements within the food industry at seems, things to make more efficient, reducing waste those areas are interesting. They're not very sexy, are they? I think actually probably they've got the biggest world impact for both profitability and sustainability. What do you think about that space?

Giancarlo Addario  18:32  
I think it's very interesting space, I think that consumers are willing more and more to have products and services in that space and are more and more sensible. We need to solve a problem and the resources of the planet are limited and we need to find solutions for that. Companies are all striving to find solutions to reduce waste, to reduce the use of plastic, to reduce the use of water. We have invested in a company, in a German company, called Air Up who actually makes a bottle where you can drink water and you can feel the taste of a capsule that you put on the top of the bottle, just by smelling it. So you have water without sugars, without anything inside and you can have a lemon flavour. So this helps reducing the packaging waste because you don't have any any plastic bottles and this helps in terms of shifting diets because you drink water and not sugar inside your drinks. You look curious, Rob, you want to try that?

Rob Ward  19:49  
I think it sounds like magic. It really does. What flavours do they do, you said lemon?

Giancarlo Addario  19:55  
There's several flavours and they will be more and more as the time goes. Of course, based, again, on listening consumers, needs and habits. And it's really magic.

Rob Ward  20:12  
I can't wait. Put me on the list, I have to find the website. Just to top tip now for a brand that's listening to this and thinks I really would like to work with Five Seasons. I'm at the stage that you've discussed. I'm the markets you've already mentioned. Top tip of not to do when they approached you, what's the one thing you don't want them to do?

Giancarlo Addario  20:29  
I said before, it's not going to an exam, I will say be yourself, talk about openly about your product, about your business, about your dreams, about your ambition. And that's what to do. What not to do, I'd say don't try to be fake, don't try to tell me something that you are not because going back to the marriage metaphor. If we don't know very well each other, it will be very unlikely that the journey that you are starting with your investor will be successful.

Rob Ward  21:06  
When I first met you, Giancarlo, I asked you about a brand. And you said pretty much that and we won't talk about that, because it's not fair on that brand. But what I get from you is direct talking but with a smile. You know where you are. And I can imagine that it would be a bit of a waste of time to try and pull the wool over your eyes. But I suspect your combination of analytical and compassion the honest truth is far too infectious for it not to happen. But I think it's actually right, we see quite often brands that are window dressing too much. And there's one thing being ambitious, but there's another faking until you make it type of thinking, it is actually incredibly transparent. As you see, you see a lot of it. One of the questions we've asked people in the past, it might feel a bit odd answering this, but it's there some people you'd like to thank in this world that helped you get to where you got to today? Who would they be?

Giancarlo Addario  21:56  
Good question, I actually don't know...

Rob Ward  22:01  
You can't say your mom, is what I'm saying.

Giancarlo Addario  22:03  
No, she's not involved in this. Well, maybe also my previous employer. I had quite a good freedom to operate to build the open innovation with the company I was working before. It's really grown my curiosity, my attitude to interact with the outside ecosystem, and that's the main leverage to maybe become a venture capital. You have to be very, very curious, you have to be empathic also with entrepreneurs.

Rob Ward  22:39  
And they helped you be like that. So that's your big thank you. And I can only assume then that you pass that culturally on to your brands that you are working with?

Giancarlo Addario  22:47  
I hope so, of course, you are not so strong when you join a company, because you invest in that company, you talk to investors. We always have a board seat, but then we want the entrepreneur to be free. It's their choices, not our choice. We don't want to interfere with them too much. So we, for sure, agree from upfront about the values about the journey, about everything that makes the company grow. But once we are in, we are much less strong in trying to change the fate of the company, because this is the entrepreneurs job.

Rob Ward  23:39  
That makes a lot of sense.

Giancarlo Addario  23:41  
I don't have a picture or profile of a VC, an ideal VC. Of course, my strong belief that I I have learned from Ivan and Niccolo is that we don't want to drive the company. This is something that they made very, very strong. So they want to help the company but not drive it on behalf of the entrepreneur. And this is very, very strong one.

Rob Ward  24:09  
So if anybody's listened to this and have got any fears about working with a VC, I think you've just dispelled them completely. So with that, on that positive note, I'd like to thank you. It's been really great to see you. We always have a good chat, and I love your straight talking. And it's a great team at Five Seasons, I've met pretty much most of the guys there. It's a really credit to the industry, in an industry that's absolutely booming. So good luck to you and I look forward to meeting you and talk to you again soon.

Giancarlo Addario  24:38  
Thank you very much Rob. Thanks for hosting me, that was very nice and very pleasant. It's a pleasure. Thank you.

Rob Ward  24:45  
Wow, that was that was really great. Hope you enjoyed listening to that podcast. It does blow away the myths around what could be a concern around working with a VC of this calibre and of this growth stage. They I guess that one of the biggest areas of concern would be the level of dominance. And that certainly doesn't mean it's simply the case with Five Seasons, which is fantastic to hear. I think probably the most powerful thing I learned today on this as was talked about the omni channel, the channel between learning and engaging through the digital direct marketing space, whether it's a communication channel or a sales channel. And then obviously, with the larger retailers to work directly with them too and this is the food CPG space or FMCG, wherever you're from. That listening device and sales device is critical, and finding ways to stay with that as we go through into a new world beyond COVID. And I'm realising that some of these channels were quite easy to sell into. And people were finding people very, very happily because they're home a lot. And they are really keen to find interesting food. As that changes, when people start to come out, that will get harder again. So the brands that really build an engaging, interesting relationship will be the ones that win. The ones that simply are still just doing a transaction, that transaction will be replaced for another transaction that is easier and less time consuming. But the most powerful thing I thought was this whole conversation around the marriage, that cultural meeting of minds the way that they work together brand and VC, in this instance, with Five Seasons. It's a very emotional thing. Money was hardly discussed today. And yet it is about money. But really, it's secondary to these guys. And that's a really good thing to hear. But not all marriages work out. And I guess the bigger businesses get, the harder is to manage that those marriages. But listening to the guys and knowing them well, I think, if they're able to get it right, they will. Thank you for your time. Hope you find it interesting. And we're always interested in new speakers and topics to talk about. So please feedback, anything that you'd like to be discussed or people you know that you'd like to be interviewed. We'd love doing it. So look forward to next time!

Iliyana Dimitrova  26:53  
Thanks very much for listening. If you enjoyed this episode, please subscribe, give us a five star review and share the podcast with your friends and colleagues. For more information and takeaways from this episode, please visit forwardfood.tech. See you next time!

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Learn more at fiveseasons.vc.

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