GFI Startup Manual

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THE GOOD FOOD

STARTUP
MANUAL
An all-you-can-read buffet
on planning, launching, and
growing a good food business.

Version 1.1. Last updated April 2019.

STARTUP MANUAL

Table of Contents

SECTION 1: PLAN YOUR COMPANY......................... 5

SECTION 3: FUND YOUR COMPANY...................... 25

Join the GFIdeas Community........................ 7

XIV.

Accelerators.................................................. 27

Editor’s note: this manual uses the term
“clean meat” to describe products
produced through cellular agriculture
methods. As the industry evolves, there
are a variety of terms being used for
this category of foods including cellbased, cultured, and cell-cultured.

II.

Learn about the Plant-based and
Clean Meat Industries.................................... 7

XV.

III.

Find a Co-founder and Pick
a Company Idea.............................................. 7

IV.

Conduct a Feasibility Study............................ 8

Write a Business and Technical Plan............. 9

Types of Funding........................................... 28
Equity............................................................. 28
Debt................................................................ 28
Warrants and Options................................... 29
Convertible Debt............................................ 29
Grants............................................................ 30
Crowdfunding................................................ 30

XVI.

Venture Capital (VC) Fundraising................. 31
Understand Your Legal Needs
and Obligations............................................. 31
Securities Laws.............................................. 32
Decide How Much Money to Raise................ 33
Create a Pitch Deck ...................................... 34
Identify Potential Investors........................... 35
Get Introductions and
Pitch to Investors........................................... 36
Term Sheets................................................... 38
Financial Terms............................................. 38
Control Terms................................................ 40
Managing Your Board of Directors............... 40
Capitalization Tables.................................... 41
Liquidation Analysis...................................... 41
Due Diligence................................................. 42
Closing the Deal............................................. 42

SECTION 2: CREATE YOUR COMPANY................... 11
VI.

Hire a Lawyer................................................. 12

VII.

Determine your Company Structure
and Form Your Business............................... 13

VIII. Post-formation Setup Activities .................. 14
IX.

Founder’s Stock............................................ 14
83(b) Election................................................ 15

Business Insurance...................................... 15

XI.

Hiring Workers............................................... 16
Compensation............................................... 16
Cash Compensation...................................... 16
Equity Compensation.................................... 16
Employee Benefits......................................... 17
Advertising and Recruitment........................ 17
Reviewing Applications and Interviewing.... 19
Making an Offer............................................. 19
Welcoming and Onboarding......................... 19

XII.

Human Resources (HR)................................ 19

XIII. Accounting..................................................... 20
Financial Accounting .................................... 20
Managerial Accounting ................................ 21
Tax Accounting and Auditing........................ 22
Accounting Software and ERP Software...... 22
Hiring an Accountant.................................... 23
Cash Flow ...................................................... 23
Invoicing........................................................ 23

STARTUP MANUAL

Table of Contents

SECTION 4: CREATE YOUR PRODUCT................... 43

SECTION 5: SELL YOUR PRODUCT........................ 66

XVII. Product Development Frameworks............. 45
Observe-Orient-Decide-Act
(OODA) Loop.................................................. 45
Stage-Gate Process....................................... 46

XXVI. Developing Your Marketing Plan.................. 67
Step 1: Set Your Marketing Goals
and Objectives............................................... 68
Step 2: Conduct a Situation Analysis........... 68
Step 3: Define Your Competitive
Positioning and Brand Strategy.................... 68
Competitive Positioning
and Segmentation......................................... 68
Targeting..................................................... 69
Positioning.................................................. 70
Brand Strategy............................................... 71
Naming........................................................ 71
Logo Design................................................. 72
Brand Architecture..................................... 72
Step 4: Develop Your Marketing Mix............. 72
Step 5: Build Your Marketing Plan................ 73

XVIII. Food Industry Product Development.......... 49
XIX.

Scaling Up and Hiring a Food Scientist........ 50

XX.

Manufacturing............................................... 51

XXI.

Packaging...................................................... 52
Packaging Materials...................................... 52
Food Labeling – Marketing Component....... 53

XXII. Product Testing and
Quality Assurance (QA)................................. 55
XXIII. Consumer Testing......................................... 57
XXIV. Intellectual Property (IP)............................. 58
Ownership...................................................... 58
Patents, Copyrights, Trademarks,
and Trade Secrets......................................... 58
Non-Disclosure Agreements (NDAs)............. 60
XXV.

Regulatory Considerations........................... 60
FDA Authority................................................. 60
Food Safety Modernization Act..................... 60
State and Local Requirements...................... 61
Food Labeling – Regulatory Component...... 61
Standards of Identity................................. 62
Recalls ........................................................... 63
Traceability.................................................... 64
Lot Codes....................................................... 64
Barcodes........................................................ 65
Recordkeeping............................................... 65
Determining the Regulatory Status
of Novel Food Ingredients............................. 65

XXVII. Marketing Mix................................................ 73
Product........................................................... 73
Price............................................................... 73
Place .............................................................. 74
Channel Strategy........................................ 74
Distribution................................................. 76
Distributors............................................... 76
Redistributors........................................... 77
International Distribution........................ 78
Promotion...................................................... 78
Advertising.................................................. 79
Traditional Advertising............................ 79
Digital Advertising.................................... 79
Search Engine
Optimization (SEO)................................ 80
Search Engine Marketing (SEM)........... 80
Display Advertising................................ 80
Email Marketing.................................... 80
Content Marketing................................. 81
Social Media.......................................... 81
Website.................................................. 82

Public Relations (PR)..................................... 82
PR Monitoring............................................. 84
Media Relations.......................................... 84
Corporate Social Responsibility (CSR)....... 85
Public Affairs............................................... 86
Crisis Management..................................... 86
Employee Relations.................................... 86
Sales Promotion............................................ 87
Sell Sheet..................................................... 88
Catalog/Brand Book................................... 88
Point of Purchase (POP) ............................ 88
Product Sampling....................................... 88
Sampling to Consumers.......................... 88
Sampling to Wholesale Customers
and Investors........................................... 89
Trade Shows............................................... 90
Direct Marketing............................................ 90
Personal Selling............................................. 91
Selling to Retail........................................... 91
Selling to Foodservice................................. 93
Selling via eCommerce............................... 94
Amazon.................................................... 94
Selling to Distributors................................. 95
Brokers ....................................................... 96
Acknowledgments......................................... 98

STARTUP MANUAL

Introduction

About The Good
Food Institute

The free support that The Good Food Institute
(GFI) provides to startups creating plant-based and
clean meat includes:

The Good Food Institute (GFI) is a
nonprofit that serves as a think tank,
incubator, and accelerator for the fields
of plant-based and clean meat. Our
team of scientists, entrepreneurs,
lawyers, and policy experts is focused
on using food innovation and markets to
transform our current system from
industrial animal agriculture to plantbased and clean meat.

•• Advisory – GFI’s team of entrepreneurs, scientists,

and policy experts is available to work with you
one-one-one to help you navigate a wide variety of
business, technical, and regulatory issues.

•• Networking – GFI’s network can help you connect

with potential employees, contractors, volunteers,
mentors, and more. Additionally, the GFIdeas
entrepreneur community gives you the opportunity
to meet other mission-focused entrepreneurs
through monthly video calls and a Slack group.

•• Resources – GFI’s extensive startup resources,

including this guide, give you information you need
to succeed as a food entrepreneur.

If you’re interested in engaging with GFI, please fill
out this form and you’ll receive a response within
one week.

Introduction

So you want to start a plant-based or clean meat
company. Congratulations! You’re about to embark
on an exciting journey. It won’t always be easy,
but GFI can offer support every step of the way.
We’re here to provide advisory, resources, networking opportunities, and more. We’ve helped
companies like Memphis Meats, Good Catch, and
Good Dot from their very early stages to where they
are today—and we can help you, too.
We created this guide to help you understand the
steps involved in starting a plant-based or clean
meat company. This is the first startup resource
that has been designed specifically for this unique
sector of the food industry. We hope that you find it
helpful not only for providing information on topics
you’ve heard of before, but for flagging steps that
you might not have even considered. Each section
contains links to further resources so you can dive
deeply into the topics that are most relevant to you.
The Startup Manual is just one resource that GFI
provides entrepreneurs. If you’d like to get plugged
into the rest of our entrepreneur support, please
fill out this form and you’ll hear back from us within
a week.

This manual is intended to provide information for your general education on the many aspects of plant-based and clean meat startups.
Although it discusses general business strategies and legal, financial, and other issues, it does not constitute legal or tax advice, and you
should not base any decisions solely on the information provided. Instead, you should seek the advice of legal counsel, accountants, and
others who can discuss the facts and circumstances of your particular business needs. The Good Food Institute expressly disclaims all
liability with respect to any actions taken, or not taken, based on any contents of this manual.

Section 1

PLAN YOUR
COMPANY
I.
II.
III.
IV.
V.

Join the GFIdeas Community
Learn about the Plant-based and Clean Meat Industries
Find a Co-founder and Pick a Company Idea
Conduct a Feasibility Study
Write a Business and Technical Plan

STARTUP MANUAL

Section 1: Plan Your Company

Before you jump into action mode, you need a
good plan to guide you along the way.
The first step is to surround yourself with a community. Starting a company is hard, and it’s nearly
impossible to do on your own. Peer support,
collaboration, and networking are essential
components of entrepreneurial success. In this
section, you’ll learn how to join GFIdeas, our
community for plant-based and clean meat
entrepreneurs, where you can meet other founders,
ask questions, share resources, and potentially
collaborate.
The next step is to gather as much information as
possible. Before you can innovate within a market,
you need to understand the market really well,
including the technology behind it. We’ve included
lots of resources that can help you better understand the technology behind plant-based and
clean meat, as well as the commercialization
opportunities in these markets.
When you’ve gathered a more complete understanding of the market and technical space, you
get to do what entrepreneurs do best: innovate.
This is your moment to dream big about all of the
possibilities and come up with a company idea.
This is also your time to find a co-founder whose
skill set complements yours and is a good fit for
the company idea you’ll be pursuing together.
Selecting a company idea can be really exciting,
but before you go any further, it’s time to make
sure your idea is grounded in reality. Conducting a
feasibility study is your opportunity to objectively
evaluate your company idea before investing
significant time and resources into it. If you find

out through this process that your idea is not
actually feasible, that’s a bummer, but you just
saved a lot of time and money by deciding not to
move forward with an idea that would have failed.
If you confirm that it is a promising idea—then
great, you’re armed with that information to create
an even more compelling pitch to investors.
After you’ve validated the feasibility of your
company idea, the next step is to write a business
and technical plan. Many entrepreneurs think
business plans are outdated, and in some ways
they are. Such a lengthy document is not particularly useful for catching the attention of potential
investors or business partners. However, while
you shouldn’t lead by attaching your business plan
to an investor intro email, investors will likely
ask to see a formal, written business plan during
the vetting process. Technical plans are even
more important for this purpose—you should
expect investors to dive deeply into your technical
plan during the vetting process.
Beyond their value in the investment process,
though, we believe that the true benefit of writing
business and technical plans is that they force
you to strategize around every aspect of starting
your company. While your strategy is bound to
change and evolve throughout the course of your
company’s growth, it can be very helpful to have
your guiding principles and plans on paper to help
meaningfully direct your business decisions.
Now, let’s jump into how to plan your company!

STARTUP MANUAL

“The GFIdeas community
helped me with data
sources and worldwide
connections, boosting
my startup with a global
scope. They advised
me throughout product
development and defining our business model.
It is incredible how being
connected with bright
minds driven by a similar
purpose can improve
your company.”
Linda Obregón,
CEO and Co-Founder of Foodture

Section 1: Plan Your Company

I. Join the GFIdeas Community
GFIdeas is a community for entrepreneurs who
are creating clean meat and plant-based
alternatives to conventional animal products.
We host monthly calls and have a Slack group for
entrepreneurs to connect with each other,
ask questions, share resources, etc. If you’re
interested in joining, please fill out this form and
you’ll receive an invite within one week.
You can also use GFI’s events calendar to find
upcoming events like conferences, expos, pitch
competitions, workshops, and meetups for
entrepreneurs creating innovative food products.

II. Learn about the Plant-based and Clean
Meat Industries
Learn about the technologies that make plantbased and clean meat possible. Check out GFI’s
list of essential readings and research, including
the GFI White Papers Plant-Based Meat Mind
Maps: An Exploration of Options, Ideas, and
Industry and Mapping Emerging Industries:
Opportunities in Clean Meat to learn about the
current state of technology in the plant-based and
clean meat industries. Also read Opportunities for
applying biomedical production and manufacturing
methods to the development of the clean meat
industry, a peer-reviewed article authored by GFI
scientists published in Biochemical Engineering
Journal. We also recommend reading GFI’s blog
and our list of academic papers.
In addition to learning about plant-based and
clean meat, it’s important to learn about the
food industry. Many resources throughout this
document help entrepreneurs navigate the
complexities of product development, product
testing, manufacturing, sales, distribution, and

more, but signing up for food industry newsletters
can be a great place to start. Co-founder of Spoiler
Alert Emily Malina recommends this list, and our
favorites are Food+Tech Connect, Specialty Food
News, Food Navigator, and GFI’s newsletter.

III. Find a Co-founder and Pick a Company Idea

You might pick your company idea and then
look for a co-founder, or you might choose your
co-founder and decide together on a company idea
to pursue. We’ve seen entrepreneurs have success
with both approaches, and with having more than
one co-founder. Either way, it’s important that your
background and your co-founder’s are complementary, and that both of your backgrounds are
well-suited for the company idea that you choose.
It’s also essential that you and your co-founder
have a solid working relationship. Of course,
finding a co-founder is optional, and there have
been many successful solo founders, but due to
the labor intensity of starting a company and the
preference of investors, we generally recommend
co-founding rather than going it alone.
Some potential methods for finding a co-founder
are through your personal networks, the GFIdeas
Community, and LinkedIn searching. Many startups are modeled such that there is a CEO with a
business background and a CTO with a technical
background. What skills you should look for in a
cofounder will vary greatly depending on your
company idea. GFI can help you figure out what
qualifications are most important for your specific
company idea.

STARTUP MANUAL

Section 1: Plan Your Company

When considering business opportunities within
the plant-based and clean meat sector, a great
place to start is GFI’s list of Commercialization
Opportunities in the Plant-based and Clean
Meat Markets. It’s important to keep in mind that
these commercialization opportunities are not
fully-formed company ideas, but rather areas of
opportunity that entrepreneurs might innovate
within. In order to determine the best path
forward for starting a company, additional research
into the market and technical opportunities will
be required. These opportunities should be
interpreted as preliminary ideas, and businesses
should perform their own feasibility analysis to
determine commercialization potential.

IV. Conduct a Feasibility Study
Conducting a feasibility study will allow you to
make an informed “go or no go” decision and will
help you understand what risks and opportunities
are involved prior to investing significant time
and resources into the business. The goal of a
feasibility study is to determine the company’s
feasibility, not to pitch the idea. Thus, it is important to be as objective as possible in your analysis
and base your conclusions on evidence rather
than speculation as much as possible. Feasibility
studies can be used to evaluate any project,
not just company ideas, so you might find it useful
to conduct feasibility studies throughout the
growth of your company, such as prior to a new
product launch or when deciding whether to obtain
your own manufacturing facility. The Balance
has a great overview of how to conduct a feasibility
study, as does Cleverism.

You may organize your feasibility study into the
following four sections or use an alternate format.
But in general, a feasibility study should address
the following topics. Needs within each area
should be taken into consideration simultaneously,
since there may be impacts across topic areas:
•• Market feasibility

The goal of the market feasibility study is to
examine the market opportunity for the proposed
business. The market feasibility section should
include a description of the industry, the current
size and anticipated growth of the market, and
an overview of your competitors and potential
customers. In addition to using market research
to size the market and examine consumer pur
chasing trends and motivations, it is critical to
talk to potential consumers as part of your market
feasibility study, as well as potential wholesale
customers like retailers, foodservice establishments, and distributors. Talking with consumers
and customers allows you to validate whether your
business idea meets a genuine need in the
market. It also helps you to understand if there
are ways you can update your strategy to better
meet customer needs and expectations.

•• Technical feasibility

The goal of the technical feasibility study is to
determine whether the business is viable from a
technical perspective. This involves examining
what resources the company needs to provide the
proposed product or service at an appropriate
price point. Both physical (e.g., labor, materials,
space) and non-physical (research and development, industry knowledge and connections, staff
skills and experience, regulatory) needs should be
considered, as well as the company’s ability to
meet these needs.

STARTUP MANUAL

Section 1: Plan Your Company

•• Commercial feasibility

The goal of the commercial feasibility study is
to determine whether the business is viable
from a commercial perspective. The commercial
feasibility study synthesizes the market and
technical feasibility studies to determine the
proposed business’ profitability. The commercial
feasibility study should quantify costs and estimate
a timeline for revenue generation and profitability.

•• Overall risk assessment

The goal of the overall risk assessment is to
synthesize findings from the previous sections to
make a determination about the riskiness of
moving forward with the business. Porter’s Five
Force Analysis is one tool for structuring a risk
assessment. In addition to conducting a risk
assessment, we also recommend using SWOT
analysis or a similar strategic planning tool to
examine the business’ strengths and opportunities
in addition to weaknesses and threats.

V. Write a Business and Technical Plan
If you’ve conducted a feasibility study and decided
to move forward with starting a company, your
next step is to develop a business plan. First, let’s
define what a business plan is and is not.
What a business plan is: A strategic plan for
running your business that helps you minimize
risks and seize opportunities.
What a business plan is not: A tool for pitching
to investors (that’s what pitch decks are for).

Your business plan should be a living document
that evolves along with your strategy. Writing a
business plan will help you think through every
aspect of building and running your company.
While you shouldn’t rely on your business plan to
capture investors’ attention, you should be able to
provide one upon request at a later stage in the
vetting process. In addition to your full business
plan, you might also develop an executive summary that can be distributed as a one- or two-page
resource. Purple Carrot provided this executive
summary business plan from 2015.
While you can organize a business plan in many
different ways, it should cover the following topics
and describe competitive advantages as well as
risks within each area:
•• Company description and mission
•• Market analysis, including potential customers,

partners, and competitors

•• Organization and management, including current

team and hiring plan

•• Description of product or service
•• Technology
•• Marketing, including forecasting
•• Funding requirements, including how much

funding is needed and how it will be used

•• Current financial state and projections
•• Planned key milestones and time-bound goals,

both immediate and long-term

STARTUP MANUAL

Section 1: Plan Your Company

The US Small Business Association has lots of
resources on business planning to help you
throughout the process. The Balance provides a
business plan template, as well as an example
executive summary. Entrepreneur also has a
number of sample business plans and a business
plan template.
As a food business, some of the questions
you’ll want to think through in your business
plan include:
•• Where will product development be performed,

and who will provide the technical expertise?

•• Where will manufacturing and packaging

be performed?

•• What will be your channel strategy?
•• What are the regulatory considerations

for bringing your product to market?

In addition to a business plan, you’ll also need
a technical plan that outlines the technical
components of what you’re planning to do. If
you’re developing a highly technical product (like
clean meat), your technical plan should be thoroughly cited with primary research. You might
choose to make your technical plan a section
within your business plan or create a separate
document. Either way, some of the questions you
should answer in your technical plan include:

•• What are the components of your strategy that are

novel compared to your understanding of what
other companies are doing?

•• What are concrete milestones (every 6 or 12

months) that would demonstrate meaningful
de-risking events?

•• What aspects of your plan do you consider to be

high risk, moderate risk, and low risk? How will you
de-risk the elements you perceive to be riskiest?
What will be your plan A, B, C, etc. to ensure you
will accomplish your milestones when unexpected
situations arise?

•• What is your intellectual property (IP) strategy?
•• What aspects of your work will you conduct

in-house versus contract out, and what is the
justification for those decisions?

•• What technical skill sets do you already have,

and what do you need to bring on board to perform
this work?

•• What specific protocols do you intend to use? You

need not actually write out every protocol step-bystep, but you should set forth an actionable plan
that you could jump into tomorrow if you were
given the money today.

Section 2

CREATE YOUR
COMPANY
VI.
VII.
VIII.
IX.
X.
XI.
XII.
XIII.

Hire a Lawyer
Determine your Company Structure and Form Your Business
Post-formation Setup Activities
Founder’s Stock
Business Insurance
Hiring Workers
Human Resources (HR)
Accounting

STARTUP MANUAL

Section 2: Create Your Company

After you’ve developed your plan, your next step
is to deal with all the not-so-exciting logistics
involved in setting up your company. While it might
be tempting to gloss over this section so you can
focus on the more fun aspects of starting a company, it’s critically important that you get this
stuff done right. Otherwise, your company could
face serious legal and financial consequences
down the line.
Lucky for you, you don’t have to figure it all out
from scratch. All companies have to get this done,
so there’s a good amount you can learn from
existing resources and from other startups who
have done it before. In this section, we’ve included
information on hiring a lawyer, determining your
company structure, forming your company, performing post-formation setup activities, issuing
founder’s stock, getting business insurance, hiring
workers, and accounting. We also recommend
reading Parts I, II, and III of The Shoobx Guide to
Starting a Startup, which provide additional
information on the topics covered in this section.

VI. Hire a Lawyer
Virtually every startup will need legal support at
some point in its growth, but to what extent and
when this support is needed can vary from company to company. Today, there are alternatives to
hiring a lawyer for many of the simpler legal issues
that startups face, e.g., Clerky for incorporation,
third-party service providers for payroll tax and
hiring (see Human Resources section). If you
choose to use a lawyer for these items, smaller
regional firms or solo practitioners would likely be
more affordable than larger, more specialized firms.
For more complex issues, there is no substitute for
legal support from a qualified professional.

When hiring an attorney, it is best to start your
search by asking for recommendations within your
personal and professional networks. Asking other
startup founders can be a great place to start. If
you are applying for an accelerator, they will also
likely have a list of recommendations. If you can’t
find a referral through your networks, we recommend using a directory. Many state bar associations compile directories of lawyers by area of
expertise or provide lawyer referral services. When
searching for a lawyer, one of the most important
criteria is finding someone with relevant expertise
in the particular subject area for which you’re
seeking assistance. For example, if it’s a regulatory
issue, finding someone with significant experience
working with the administering agency will be
extremely valuable.
Since having experience with specific issues is
so important, it is not uncommon for a company
to hire one lawyer for assistance with a particular
issue (e.g., a corporate securities lawyer for VC
fundraising), and a different lawyer for assistance
with a different issue (e.g., a former FDA lawyer
for regulatory approval of a new food ingredient).
This Forbes article explains why startups might
need a lawyer and considerations for hiring one.
Rubicon Law provides a list of dos and don’ts
of hiring a lawyer for your startup.

STARTUP MANUAL

Section 2: Create Your Company

VII. Determine your Company Structure
and Form Your Business
Before you can form your business, you need to
select a business structure. The US Small Business
Association also has information on the different
types of business structures that can help you
choose what structure is right for your company.
We also recommend speaking to a tax expert and
possibly an attorney about this decision, as your
choice of business structure can have tax and
liability implications for you personally as well as
for potential investors.

For a variety of reasons, the typical structure for
a high-growth startup is a Delaware C Corporation
(C Corp). If you would like to incorporate your
company as a Delaware C Corp, using a service
such as Clerky can help facilitate the incorporation
process. Clerky provides step-by-step instructions
for how to incorporate your company as a
Delaware C Corp. Startup Company Lawyer also
has a great collection of incorporation advice,
including when to incorporate your company, what
type of company to form, what state to incorporate
in, and more.

Most companies that intend to raise venture
capital incorporate as a corporation, which is a
legal entity that is separate from its owners.
Corporations can make a profit, be taxed, and be
held legally liable. Corporations are the preferred
business structure by VCs for a variety of reasons.
In fact, some VCs will not invest in any entity that is
not a Corporation. Therefore, if you are seeking
VC funding, you will likely have more investor
interest if you incorporate your company. If you’re
not planning to raise VC funding, an alternative
business structure like a Limited Liability Company
(LLC) might be a better fit.

To state the obvious: in order to form your business,
you’ll need a name for it. Ideally, you would select
a name that is a reflection of your overall marketing strategy and brand identity. If you haven’t fully
figured this out by the time you form your business,
you can always choose a name that works for now
and switch to using a “doing business as” name
later on. For example, Beyond Meat originally
incorporated as Savage River Inc. until they
decided to take on their more consumer-friendly
“doing business as” name. Memphis Meats was
originally called Crevi Foods before they made a
similar decision. While it’s not ideal to do it this
way, it is a viable workaround if you decide at some
point that your name just isn’t working for you (or
consumers). Refer to the section on Naming in this
manual for more information on how to select a
name for your company that fits your overall
marketing goals.

You’ll also need to decide in which state to form
your business. Your business doesn’t need to be
located in the state where you do business. In fact,
many companies that are not located in Delaware
choose to incorporate there due to the expertise
and experience of that state’s courts and regulators, the flexibility of its corporate statutes, the
preference of VCs, and a variety of other reasons.
If you choose to form your business in a state
outside where you do business, you will need to
complete a filing to do business in your home state,
as discussed in the next section of this manual,
Post-formation Setup Activities.

STARTUP MANUAL

Section 2: Create Your Company

VIII. Post-formation Setup Activities
After you choose your company structure and
register your business, the next step is to set
up the structure of the organization. Certain
things might be required under state law; for
example, bylaws, a Board of Directors, company
officers, etc. If you are using Clerky, each of
these steps can be performed through the Clerky
system. If you are not using Clerky, having an
attorney to help you navigate each of these steps
is highly recommended.
You will need a federal tax ID number, also known
as an Employer Identification Number (EIN). An
EIN is like a Social Security number for your
business, ensuring that when you pay taxes, the
payments are properly credited to you. Depending
on your state’s tax laws, you may also need a state
tax ID number. The SBA provides information on
how to get federal and state tax ID numbers. You
can apply for an EIN online via the IRS. Additional
information about obtaining an EIN is available
from Clerky.
Depending on the nature and location of your
business, you also may need to apply for federal or
state licenses and permits. You should also open a
business bank account when you’re ready to start
accepting or spending money as your business.
If you incorporate in a different state from where
you conduct business, you will need to complete a
filing with the state in which your business is based.
This is usually a filing with the Secretary of State or
State Corporate Board and is called something
such as “foreign qualification” or registration as a
“foreign corporation.” Clerky has more information
about how to complete this process. The SBA also

has information on how to obtain federal and state
licenses and permits and how to stay legally
compliant depending on your business structure.

IX. Founder’s Stock
Founder’s stock is not a special class of stock—it
simply refers to common stock that is issued to a
company’s founder(s). However, since the transfer
of securities is regulated, founders cannot simply
issue stock without taking steps to comply with
state and federal securities laws. You can learn
more about these laws in the Securities Laws
section of this manual. For now, we’ll just say that
when issuing founder’s stock, startups often use
the exemption found in Rule 4(a)(2), for “transactions by an issuer not involving any public offering.”
If you issue securities based on Rule 4(a)(2), you
will also need to find a state law securities exemption, file the appropriate forms, and pay any
required fees. Startup Law Blog and Bend Law
Group provide further information about securities
laws and exemptions.
Aside from complying with state and federal
securities laws, there are other considerations
when issuing founder’s stock. First, make sure the
company owns all intellectual property (IP). It is
important to incentivize the founder to stay with
the company and add value. And if the founder
leaves the company or someone else ends up with
the founder’s shares, it is critical to be able to get
those shares back, in order to keep the voting
power within the company. The founder’s
restricted stock purchase agreement aims to
achieve all three of these objectives using terms
such as IP assignment, transfer restrictions,
repurchase rights (including vesting), and more.
Refer to this Silicon Hills Lawyer article for a
description of each of these terms.

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As specified in the purchase agreement, founder’s
stock is usually vested, which means that the
stock is transferred over a period of time (usually
3-4 years) rather than all at once. Vesting requirements protect the company in the event that an
employee or founder decides to leave or is terminated from the company sooner than expected.
Cooley GO has an explanation of founder’s stock
and common vesting provisions.

83(b) Election

Each founder of a new startup who receives
stock that is subject to vesting should consider
whether to submit an 83(b) election to the IRS
within 30 days of the transfer date of the stock.
The IRS will not accept 83(b) elections that
are submitted late, so entrepreneurs must be
aware of this time sensitivity as well as the
potential tax consequences of 83(b) elections
prior to transferring stock.
Since the IRS considers stock to be a form of
income, you must pay income tax on any shares
you receive. 83(b) elections allow you to choose
when you pay that income tax, which is important
since the amount of tax you pay is based on the
shares’ current valuation, and valuation changes
over time.
Since founder’s shares are issued shortly after
company formation and will presumably increase
in value over time, and since 83(b) elections are
time sensitive, lawyers will usually advise founders
of new companies to file an 83(b) election. If you
are an employee receiving vested stock in a
company that already has significant value, the
choice is less clear. Cooley GO, Accelerated Vesting,
and Bend Law Group all provide explanations of

what an 83(b) election is and when it makes sense
to file one. The IRS has a sample 83(b) election
that includes all the information you will be
expected to provide. Clerky also has step-by-step
instructions and templates for how to file an
83(b) election.

X. Business Insurance
Business insurance provides protection against
the unexpected costs of running a business.
There are different types of business insurance,
but some examples include general liability
insurance, which covers risks that come from
operating your business in general, and “Directors
and Officers” liability, which will cover liability for
actions you, other company leaders, or board
members take as part of your business operations.
The SBA provides general information on different
types of business insurance.
As a food business, you’ll also want to consider
more specific types of insurance that relate to the
handling and manufacturing of food, such as
product liability insurance, recall insurance, and
contamination insurance. PennState Extension
has an article on Insurance for Food Entrepreneurs
and The Balance has a Guide to Food Business
Insurance. StartupResources.io also provides
information about the types of business insurance
needed in different stages of startup growth, but
note that since this resource is primarily intended
for software startups, it does not include details
about insurance specific to the food industry.

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Section 2: Create Your Company

XI. Hiring Workers
Before you hire people to work for you, you’ll need
to set up a payroll structure, including obtaining an
EIN (See Post-formation Setup Activities). After
you have this structure in place, the next step is to
define the hiring need. In other words, what is the
job that needs to be done?
You should determine whether this need could
best be filled by an employee or an independent
contractor. It’s important to note that this decision
can have tax and legal consequences, as explained
in the Hire and Manage Employees section of the
SBA Business Guide. You should also define how
much staff time will be required to fill this hiring
need—for example, will you need a part-time or
full-time employee (or multiple full-time employees)? Will you need temporary or seasonal hires due
to fluctuations in workload, or the one-off nature
of a specific project?
You should also set a hiring timeline, including the
application deadline, target dates for each step
in the process, and when the role needs to be filled.
You should decide where the person performing
this role will be located, including whether you
can allow the flexibility to work remotely. And you
should set a budget for hiring, including travel
costs and advertising and recruiting fees.
Then, write a job description for the open position,
including expected roles and responsibilities, and
the required and desired qualifications and experience. When writing job descriptions, be aware that
the language you use might affect who applies.
Glassdoor has an article on how to reduce gender
bias in job descriptions, and we recommend
testing job descriptions using this gender decoder
tool. For sample job descriptions, check out job
sites like Food + Tech Connect’s job board.

Compensation
Startup founders and employees are usually
compensated with a combination of cash, benefits,
and equity. Homebrew’s Compensation Guide
provides compensation advice to startups.
Cash Compensation
Determine whether the employee will be paid
on an hourly or salaried basis, as well as whether
the employee will be exempt or non-exempt.
You should also set salary/equity ranges and a
policy around negotiation prior to engaging with
candidates to reduce subjectivity and bias in
determining employee compensation. The Society
for Human Resources Management provides some
tips on how to establish salary ranges. We also
recommend using industry benchmarking data
from sources like Salary.com, AngelList, and
PayScale. Note that several states have banned
employers from asking for past salary history
to prevent pay inequality from following people
from job to job, so use caution with this type
of information.
Equity Compensation

For both founders and employees, there is a
balance between cash and equity compensation.
Often, founders will choose to pay themselves
below market rate in cash compensation because
they have a large equity stake in the company.
Thus, it is not uncommon for founders to pay
their employees a higher salary than their own.
Founders might choose to take a higher salary in
exchange for less equity, but most founders prefer
to hang onto their equity in the hope that it will
one day be worth much more than a salary bump.

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Equity is usually vested over a period of 3-4 years
when offered as part of a compensation package.
Just as you wouldn’t pay someone a full year’s
salary and have them quit the next day, you
also wouldn’t want to give someone their full
equity stake and have them quit the next day.
By transferring ownership rights to the recipient
of the stock gradually over a defined period of
time, vesting requirements protect the company
in the event that an employee or founder decides
to leave or is terminated sooner than expected.
Clerky and The Startup Toolkit have articles that
discuss standard vesting terms for founders,
advisors, and employees.
In addition to equity, founders are often granted
options, which usually are tied directly to performance and vest over 3-4 years. Employees might
be offered options instead of equity, which also
typically vest over 3-4 years. Note that options
and warrants provided as a form of compensation
are both subject to Section 409A of the Internal
Revenue Code, meaning you will need to perform
a 409A valuation prior to issuing employee
stock options.

Employee Benefits

As outlined in the Hire and Manage Employees
section of SBA’s Business Guide, there are a
number of required employee benefits, including:
•• Social Security taxes

•• Workers’ Compensation

•• Leave benefits as required by states

(varies by state) and by the Family and
Medical Leave Act (FMLA)
•• Disability insurance (varies by state)
•• Unemployment insurance (varies by state)

Other benefits are not required but can help you
attract and retain top talent. These include life
insurance, retirement plans, dental and vision
insurance, paid vacation time, and more. Medical
insurance is another benefit that is not required
but will be expected by most job candidates.
Furthermore, businesses with 50 or more full-time
employees will face an employer shared responsibility payment if they do not offer health insurance
that meets certain minimum standards. As a small
business, you may be eligible to purchase employees’ health insurance coverage through the Small
Business Health Options Program (SHOP). Refer to
the Human Resources section for more information
about managing employee benefits.
QuickBooks provides a Guide to Employee Benefits
for Small Business that outlines the required and
common employee benefits that employers offer.

Advertising and Recruitment
After you’ve identified the hiring need and compensation structure, you should decide how to
identify candidates. To start, you should post the
job description on your website, as well as to
LinkedIn and possibly other social media outlets.
You should include an equal employment opportunity statement on your jobs page that not only
states a commitment to non-discrimination, but
actively encourages diverse groups to apply (see
GFI’s jobs page for an example). You might also
consider posting the position to university or
industry job boards like Food + Tech Connect.

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During the recruitment process,
you should implement strategies
to ensure you are attracting
diverse talent. This might include
posting positions on diversityfocused job boards or reaching
out to diversity-focused
professional organizations.
Various opportunities are listed
in Harvard’s list of Diversity
Recruitment Resources. Harvard’s
guide on Recruiting for Diversity
and Ideal’s guide on Workplace
Diversity Through Recruitment are
also helpful. Homebrew’s
Diversity Guide outlines strategies
for startups specifically, and
Project Include, Paradigm, and
Encompass have additional
resources on how to make
organizations and startups more
inclusive, both in the hiring phase
and as part of your ongoing
team culture.

Section 2: Create Your Company

While these broad advertising strategies can be
helpful, they might not be enough to attract
qualified candidates. If you are looking for a highly
specific skill set (e.g., a food scientist with experience in plant-based meat manufacturing or a cell
biologist with experience in tissue engineering),
you may have to seek out passive candidates (i.e.,
people who aren’t necessarily applying for jobs).
This active outreach is referred to as recruitment.
For recruiting, you can either take an in-house
approach or hire outside professional help. The
in-house approach includes using the advertising
strategies identified above, using tools like
LinkedIn and Kolabtree to find and reach out to
potential candidates, and using more sophisticated
recruiting software platforms (some examples are
LinkedIn Recruiter Lite, LinkedIn Recruiter
Corporate, Entelo, Lever, and iCIMS). Capterra is a
useful tool for comparing different types of recruiting software. There’s quite a range in cost
between these different software options—for
example, LinkedIn Recruiter Corporate is about
$600/year for 1 license, whereas Entelo is about
$15K/year for 2 licenses (2-seat minimum). In
addition to the cost of the software itself, you also
need to consider the time and effort that will be
spent on using the software, including a pretty
substantial learning curve.

If you decide to take the outsourced approach,
there are a few different types of recruiting firms
you might consider:
•• Search/Placement firms are the most specialized

and most expensive type of recruitment firm.
They are responsible for identifying and reaching
out to qualified candidates. Typical fees are
20%-35% of first-year annual base salary.

•• Name Generation firms are less expensive than

Search/Placement firms, but their role is less
extensive. While they are responsible for identifying potential candidates, you are responsible for
reaching out to them. Fees vary but are typically
96%-97% lower than search/placement firms.

•• Contract Recruitment firms perform recruitment

activities at an hourly rate, which varies based
on the geographic region and scope of work
to be done. This method is more expensive
than name generation, but much less expensive
than using search/placement firms. Companies
often use name-generation firms to obtain
candidate lists, then engage contract recruiters
to contact and pre-screen candidates.

In selecting a recruiting firm, it is beneficial to
choose someone who understands your industry
and has demonstrated past success within it.
There are various firms that cater specifically to
biotech or food companies. For example, Helix
Recruiting is a biotech recruiting firm whose past
clients include Perfect Day and Modern Meadow.

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Section 2: Create Your Company

Reviewing Applications and Interviewing
After candidates submit their resumes, cover
letters, and any other materials specified in the job
posting, it is time to start reviewing applications.
You should then screen candidates according to
the requirements outlined in the job description
and provide additional written prompts if desired.
You might choose to conduct interviews over
phone/video conference or in-person. The Balance
provides a list of interview questions, though it’s
always a good idea to customize your questions
to the specific role being filled. Avoid asking
questions related to age, gender, race, religion, or
any other protected class to avoid putting your
company at risk for a discrimination lawsuit. The
Balance provides of list of interview questions not
to ask. After the interview process, you should
check the final candidates’ references and make
decisions about whom to reject and to whom you’ll
extend an offer. It is best practice to respond to
everyone who applied for the job to inform them of
your decision, even if it is to reject them. Tracking
applicants through an applicant tracking system
(ATS) can make it easier to stay organized throughout this process.
Making an Offer

Once you decide whom you’d like to hire, you
can make a verbal offer and present a written offer
letter. Note that a written offer is not an employment contract, but rather a confirmation of your
offer and their acceptance of the role, compen
sation, etc. You should then conduct any necessary
final screenings such as background checks or
drug tests as defined and agreed to in the offer
letter. After you work with the employee to identify
a start date, it’s time to get to work on new hire
paperwork, including W-4s, I-9s, direct-deposit
forms, and other documents outlined in
Betterteam’s article on Essential New Hire Forms.

You should also consider having all new employees
sign a Employee Proprietary Information Agreement
form to protect the company’s IP. If you are
planning to raise VC funding, there will likely be
a clause in your term sheet specifying that this
form is required for all employees.

Welcoming and Onboarding
Once the new hire has accepted the offer, it’s
important to make them feel welcome! The Balance
provides some advice on how to welcome new
employees, as well as how to onboard new
employees to give them the tools they’ll need
to succeed in their new jobs.
XII. Human Resources (HR)
When you hire an employee, you must register with
the state taxing authority to submit payroll taxes
and you must register for unemployment insurance
with the state. A wide variety of rules apply to
taxes, payroll, and employee benefits. These
include wage and hour laws, state and local
employee leave requirements, anti-discrimination
rules, and others. Due to the number of varying
requirements, you might consider using a
Professional Employer Organization (PEO), a firm
that provides comprehensive HR outsourcing to
help manage a company’s employee benefits,
regulatory compliance, payroll, and more. Some
examples of PEOs are Trinet, ADP, and JustWorks.
One alternative to hiring a PEO is to shop around
for different HR providers and outsource to specific
companies, then use a payroll service provider or
an all-in-one Human Resource Information System
(HRIS). Capterra is a useful tool for comparing
different types of HR software. Gusto is one option
that has been recommended by several of the

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Section 2: Create Your Company

companies we work with. Many of these software
systems also offer “Managed HR” services, in
which they act as your third-party HR department.
You can also hire someone in-house to manage
HR issues for all your workers. Whether to rely on
a third-party service provider or manage these
issues by hiring a dedicated employee will depend
on many factors, including the number of employees you have.
The Society for Human Resource Management
provides a number of resources, including an
overview of HR topics, legal and compliance
resources, and sample forms and tools.

XIII. Accounting
Accounting is the act of recording and summarizing
business and financial transactions and analyzing,
verifying, and reporting the results. There are
different branches of accounting, but the two that
will be most relevant to startups are financial
accounting and managerial accounting, also known
as management accounting. This article from
Investopedia explains the differences between
financial and managerial accounting.
Financial Accounting

Financial accounting is the process of preparing
financial statements to show the company’s
financial performance over a set period of time.
The three basic financial statements are the
balance sheet, cash flow statement, and profit &
loss (P&L)/income statement. These statements
are used to show the company’s financial position
to external stakeholders, including investors,
creditors, and other partners.

Financial accounting can be performed in one of
two methods: cash or accrual. In cash accounting,
transactions are recorded at the time of money
transfer. In accrual accounting, transactions are
recorded when income is earned or expenses are
incurred, regardless of when money was actually
transferred. For example, if you issue an invoice for
a shipment of products that was delivered in
January but don’t receive payment until February,
cash accounting would record this transaction in
February, while accrual accounting would record it
in January. These articles from QuickBooks explain
the pros and cons of cash accounting and accrual
accounting and how to choose which is right for
your business.
Note that public companies’ financial statements
must adhere to generally accepted accounting
principles (GAAP), a set of standards issued by the
Financial Accounting Standards Board (FASB).
Since GAAP is based on accrual accounting, public
companies must use accrual accounting to prepare
their financial statements. Private companies do
not have to adhere to GAAP, though investors
and other stakeholders will have some level of
expectation that your financial statements are
prepared in a clear and consistent manner. Due to
the high costs of full GAAP compliance, Vanessa
Kruze, CPA, recommends that startups use a
semi-GAAP system.
QuickBooks’ Accounting 101 for Small Business
guide provides information on how to prepare a
balance sheet, a cash flow statement, and an
income statement, including templates. For more
information on these three basic financial statements, refer to the SEC’s beginner’s guide to
financial statements and the SBA’s overview of
three essential financial statements.

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Section 2: Create Your Company

Managerial Accounting
While financial accounting is used to inform
external stakeholders about past financial performance, managerial accounting is used internally
to help inform business decisions. A great tool
for managerial accounting is financial modeling.
A financial model is a spreadsheet that acts as
a virtual representation of your company. Financial
models allow you to model how different business
decisions or external factors might impact your
company’s future financial performance, allowing
you to make informed business decisions and
plan for unexpected circumstances. For example,
financial models can help you answer the following
questions and more:
•• How much money do we need to raise?

•• How long is the runway for that funding?

•• When do we expect to become profitable?
•• How do we justify our valuation?

The simplest type of financial model is the three
statement financial model, which links the balance
sheet, cash flow statement, and P&L/income
statement into one connected model. The
Corporate Finance Institute has a free video
tutorial on how to link the three basic financial
statements. Once these financial statements are
linked into one model, you can incorporate more
complex features such as sensitivity analysis and
scenario analysis to help inform business decisions. Wall Street Prep has guides on conducting
sensitivity analysis and scenario analysis, as well
as best practices for financial modeling.
WallStreetMojo’s guide to financial modeling is
another useful resource.

You can find example financial models online,
such as SlideBean’s example financial model,
but in order to be a truly informative and reliable
business tool, your model will need to be
customized to include assumptions specific to
your business. While not every company builds
a custom financial model in its early stages,
the complexity of a company’s model is usually
indicative of its maturity, and investors view it as
such. The further a company is from having a
built-out financial model, the harder it is for an
investor to justify funding the company. Generally,
a seed round company is expected to have a
basic model informed by assumptions unique to its
business. However, at this stage, VCs often model
the business themselves during due diligence
under the assumption that the company’s own
model is not well-informed.
By the time a company is in its Series A round,
investors will expect that the company has progressed to a full, detailed model with thoughtful
projections that move beyond unfounded percentage-growth estimates and hockey-stick curves.
Later-stage and public companies model every
aspect of their business. In summary, you have a
lot to gain and little to lose from making your
model as comprehensive as possible in your early
stages, but it won’t be an absolute necessity until
later on.
Most companies use Excel to build a financial
model. Financial modeling software packages can
help prevent errors that might go unnoticed in
Excel if your methods are sloppy, but since these
software packages are less customizable than
Excel, they usually aren’t as useful.

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Section 2: Create Your Company

Tax Accounting and Auditing
Tax accounting and auditing are branches of
accounting that support or challenge results
obtained from financial and managerial accounting
work. As an early-stage startup, you likely won’t
need to worry about auditing for a while. Early
Growth Financial Services describes when your
startup might need an audit.
You will, however, need to pay taxes. Business
taxes may be collected on the federal, state,
or local level. The IRS provides an overview of the
different types of business taxes. You can hire a
tax accountant to help you determine your tax
obligations and ensure compliance with all legal
requirements. The IRS provides tips on hiring
a tax preparer. There are also software options
for doing your own business taxes. Regardless of
whether you choose to hire a tax accountant or
use tax accounting software, you should look
into tax credits that could help reduce your tax
burden. For example, startups can claim up
to $250,000 in R&D tax credits through the US
Research & Experimentation Tax Credit (R&D
Tax Credit) program.
The IRS provides information on tax implications
for different business structures. The SBA
also provides information on paying business
taxes, and QuickBooks has a guide on how to
prepare for taxes.

Accounting Software and ERP Software
Most companies start out by managing their
bookkeeping in Excel, and then move to accounting software once it becomes too complex
and cumbersome to accurately manage this

information in spreadsheets. This article
from QuickBooks describes how to make the
transition from spreadsheets to accounting software. As an early-stage startup, small business
accounting software will likely meet your
needs, though as you grow, you may need to
upgrade to enterprise accounting software.
Eventually, you will likely need to implement an
Enterprise Resource Planning (ERP) system, which
not only keeps track of accounting information,
but also performs other functions across your
business, such as customer relationship management (CRM), supply chain management, business
intelligence, front-office functions (sales force
automation, marketing automation, eCommerce),
and more. ERP systems measure in real-time the
current status of the business, automate core
business functions, and improve financial compliance and customer service.
ERP systems are feature-rich, but they are expensive and usually require customization during
implementation. To gain some of the benefits of a
fully integrated ERP system without breaking the
bank, early-stage companies may choose to use an
inventory management system to complement
rather than replace existing accounting software.
An example of this type of inventory management
software is Fishbowl, which integrates with
QuickBooks and Xero accounting software.
Capterra is a useful tool for comparing different
types of business software, including accounting
software, inventory management software, and
ERP software.

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Section 2: Create Your Company

Hiring an Accountant

At some point in your startup’s growth, you will
need an accountant for assistance with financial
and tax issues. Most early-stage companies
choose to hire an outsourced accountant as
opposed to hiring one in-house. A certified public
accountant (CPA) is an accountant that has been
certified by the licensing authority in that state.
You will likely need a CPA to help with more
complex issues such as tax planning and strategic
financial advice, but more straightforward tasks
can be handled by a bookkeeper. This article
from QuickBooks explains the difference between
a bookkeeper and a CPA and The Balance
provides further insight on working with CPAs
and bookkeepers.
When hiring an accountant, it is best to start your
search by asking for recommendations within your
personal and professional networks. If you can’t
find a referral, we recommend using a directory
like your local CPA society (e.g., GWSCPA).
However, while these directories will turn up
results, it can be difficult to evaluate different
options without a recommendation. As with hiring
a lawyer, one of the most important factors is
finding someone with relevant experience in the
subject area within which you’re seeking assistance. For example, have they worked with startups before or only well-established companies?
Are they familiar with the states in which you have
hired or plan to hire employees? Are they familiar
with your tax software? Xero provides other
considerations in their guide on how to choose
the right accountant for your small business.

Cash Flow
Cash flow is the net amount of cash moving into
and out of a business. Since businesses cannot
function without adequate cash, cash flow
management is a critical aspect of running your
business. Keep in mind that profit and cash flow
are not the same thing. A business can be
profitable and not have adequate cash flow—
for example, if you’re not collecting on your
invoices in a timely manner (see the Invoicing
section of this manual for more information).
This article from SCORE describes four common
causes of cash flow problems.
You can identify cash flow problems by staying
on top of your financial accounting (particularly
your cash flow statement) and conducting a
cash flow analysis. Xero provides five rules for
managing cash flow, and entrepreneur Tim Berry
provides ten more.

Invoicing

An invoice is a bill that itemizes a transaction
between a buyer and a seller and provides information on the available methods of payment.
Your invoicing practices can affect your cash flow.
Specifically, invoice payment terms will determine
when payment on an invoice is due. You might
have different invoice terms for different business
partners (e.g., ingredient suppliers, retailers,
distributors) depending on your agreements with
those entities.

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Section 2: Create Your Company

InvoiceBerry provides an overview of invoice
terms, including Net 30 and 2/10 Net 30, which
are common among food distributors. While the
payment terms determine the amount of time
between the issuance of the invoice and the due
date, the clock only starts ticking once the invoice
is issued. Therefore, it’s important to be diligent
about issuing invoices promptly after the product
or service is provided rather than waiting until
an arbitrary date (e.g., the end of the month).
To encourage on-time payment, you should have
a clearly communicated late payment penalty.
You should also have procedures in place to collect
on overdue invoices, including sending friendly
payment reminders when an invoice is almost
due, making collections phone calls for overdue
invoices, and stopping future shipments for
accounts that are overdue. American Express
provides tips for collecting on overdue invoices.

You can also take preventive measures to avoid
overdue invoices—be careful with whom you
do business, and pay attention to red flags, such
as suspiciously large first-time order quantities.
You can always ask a new customer for references
from their existing suppliers or visit their store/
website to find out who their existing suppliers
are. This article from Medium provides some other
best practices for invoicing.
You should be able to manage invoicing through
your accounting software or ERP software
(see Accounting Software and ERP Software
in this manual for more information).

Section 3

FUND YOUR
COMPANY
XIV. Accelerators
XV. Types of Funding
XVI. Venture Capital (VC) Fundraising

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Section 3: Fund Your Company

With the planning and logistics out of the way, it’s
time to focus on how you will fund your company.
As they say, it takes money to make money.
The first step in the fundraising process is to
consider what type(s) of funding to pursue. There
are a number of different funding mechanisms,
including equity, debt, warrants, options, convertible debt, grants, and crowdfunding—all with
unique benefits and drawbacks.
Many early-stage startups choose to go through
an accelerator program to obtain pre-seed funding,
workspace, business training, mentorship, and
access to a network. Lots of startups in our space
have used them (for example, Clara Foods, Finless
Foods, Geltor, Memphis Meats, New Wave Foods,
NotCo, and Terramino Foods are all alumni
of IndieBio), but the choice isn’t for everybody.
Many other companies in our space (e.g., Beyond
Meat, BlueNalu, Good Catch, Impossible Foods,
No Evil Foods) have opted not to participate in
an accelerator. It all depends on the needs of your
team and your company.
The same is true with venture capital (VC) fund
raising—it’s not for everybody. As much as it may
seem like the iconic Silicon-Valley fundraising
method is taking over the food industry, VC is just
one of many methods of obtaining funding. Some
plant-based companies like Tofurky have been
successful in growing over time without raising VC
capital. If you can avoid it, there are lots of benefits
to not raising VC capital, including maintaining
ownership of your company, both financially and
in terms of decision-making power.

For lower-tech companies, pursuing organic
growth over time through bootstrapping and more
traditional funding mechanisms like small business
loans might be a viable option. For higher-tech
companies that are years away from having a
market-ready product, it might be difficult, if not
impossible, to proceed without VC funding. That
being said, VC funding can always be used in
conjunction with other funding mechanisms like
grants or loans. Entrepreneurs often choose to
obtain funding from a combination of sources to
balance the benefits and drawbacks associated
with each.
If you do decide to move forward with VC fund
raising, there’s a lot you’ll need to learn about the
process. We’ve covered the basics here and have
linked to lots of additional resources for further
support. Before jumping into the VC fundraising
process, you need to understand your legal needs
and obligations, not only to keep your company out
of legal hot water, but to ensure that you are armed
with the best legal resources, including a good
business transactional lawyer. You then must
decide how much money to raise based on how
much you need to accomplish concrete milestones
and reach a de-risking point that will add value to
your company. You should then create a pitch deck,
a short PowerPoint presentation that you will use
to pitch your business opportunity to investors.

STARTUP MANUAL

“We participated in the IndieBio
accelerator program in San
Francisco. We were a part of
their second class. Before that
we had an embryonic concept
for the company, but we formally
incorporated and launched the
business through the application
process of IndieBio. So, for us,
the program was really transformative—both from the perspective
of launching the business
and focusing on early business
and technology development.
They also provided us financing
of $200K in cash in addition
to a physical lab space in
San Francisco plus a very valuable network of scientists and
entrepreneurs who have walked
the walk before.”
Alex Lorestani,
Co-Founder and CEO of Geltor

Section 3: Fund Your Company

Then, you will need to identify potential investors
that are a good fit for your business opportunity
and get introductions to them so that you can
increase your chances of getting the opportunity to
pitch. Once you deliver your pitch and one or more
investors are interested in moving forward, the
next step is to negotiate on and sign a term sheet,
which dictates most of the terms of the investment,
but does not yet constitute a finalized deal or even
a legal commitment to move forward with the
funding. First, the investor must conduct due
diligence on the company, and the company should
conduct due diligence on the investor as well. After
the investors have done a deep dive into your due
diligence documents and you feel comfortable with
your vetting of them as well, it’s time to move
forward with closing the deal. The lawyers will sign
the documents, and the funds will be transferred.
Pretty straightforward, right?
In our view, the biggest key to the VC funding
process is being well prepared. Do as much
research on the topic as you can so you know what
to expect. Learn how to read a term sheet so you
don’t have to pay your lawyer to explain every little
thing to you. Make sure your due diligence documents are in order before you start the process so
you don’t cause delays. Thoroughly research
potential investors so you can target the most
promising prospects and tailor your pitch to what
they’re looking for. Invest in a great pitch deck that
effectively tells your story and is visually appealing.
Become familiar with tools like liquidation analysis
and capitalization tables before you really need
them. We could go on (and we will in this section),
but for now, we’ll just stress that being prepared
will lead to much better outcomes for you and your
investors.

XIV. Accelerators

Accelerators are programs designed to accelerate
the progress of early-stage startups within a set
amount of time (usually around four months).
Accelerators often provide pre-seed funding,
workspace (can be office, lab, kitchen, or some
combination depending on the program), educational workshops, mentorship, and networking
opportunities, including access to investors.
Accelerators will usually take an equity stake in
your company in exchange for their monetary
investment as well as services provided, though
some nonprofit accelerators do not take any equity
or fees.
Different accelerators focus on companies at
different stages. Some accelerators will take on
teams with just a well-thought-out, innovative idea
(like IndieBio), while other accelerators are
focused on scaling up companies with established
revenue streams (like FoodFutureCo). GFI’s global
map of accelerators and incubators contains
information on accelerator programs across the
globe in relevant fields such as food, biotech, and
agtech. This map includes a description of each
program, as well as information on how much
funding is provided, what equity or fees are taken,
how many companies are accepted per cohort, the
program’s length, and eligibility requirements.

STARTUP MANUAL

“Alpine Roads was part of the Y
Combinator 2017 batch. YC has
now funded 1,773 companies and
3,500 founders. We got advice
from top CEOs and built an
incredible network of advisers,
investors and founders. The best
part is, the benefits of being part
of YC don’t stop after the program
is over. You can reach out to any
YC partner at any point in time to
discuss whatever challenges you
are facing, whether it’s go to
market strategy, product development, hiring or fundraising. They
also have a Series A program that
helps you gear up for raising your
next big round and even connect
you to investors that might be a
good fit. I highly recommend it for
early stage startups.”
Magi Richani,
Founder and CEO of Alpine Roads

Section 3: Fund Your Company

If you choose to be part of an accelerator program,
it is important that you plan to make your transition
out of the accelerator program as smooth as
possible. Many companies raise their seed round
while they’re in an accelerator program so they
have capital to spend on working space and other
necessities after they no longer have access to the
accelerator’s resources.
Teams that already have a solid understanding
of the startup process as well as a well-thoughtout business and technical plan might find they
can achieve progress faster by skipping the
accelerator step and raising their seed round
directly. If you decide to go this route, you’ll still
need access to workspace.
A good option for startups who are choosing not
to pursue an accelerator, or transitioning out of
an accelerator, is an incubator. Like accelerators,
incubators offer physical space—like kitchen space,
lab space, or some combination—but participation
is less structured. Incubators often offer business
development services, but usually don’t have a
curriculum, workshops, and mentorship opportunities. Incubators typically charge a per-month fee
for access to their space and services and allow
teams to stay as long as they need to. In contrast,
accelerator programs are usually fixed in duration
and usually take an equity stake in the company.
GFI’s global map of accelerators and incubators
contains information on food incubators (which
offer kitchen space) and biotech incubators (which
offer lab space). An example of a food incubator is
KitchenTown and an example of a biotech incubator is QB3. Another useful tool for locating biotech
incubators in California is the California Life
Sciences Association’s (CSLA) lab space directory.

XV. Types of Funding
Equity

Equity is defined as ownership interest in a company. There are two main classes of stock: common and preferred, with sub-classes within those
two types. Generally, founders and employees own
common stock, while investors own preferred
stock. Preferred stock comes with certain rights,
privileges, and protections over common stock as
defined by the term sheet (and later the closing
documents) for that funding round. Both common
and preferred shares can be subject to certain
restrictions. Silicon Valley Startup Attorney has a
great explanation of different types of equity.

Debt

Debt is money borrowed under the condition that it
will be paid back later, usually with interest. One
benefit of debt over equity is that it is non-dilutive,
meaning that the lender does not own a stake in
the company or have significant decision-making
power over your business. However, recurring
monthly payments leave little flexibility for borrowers, and lenders may have the right to claim
company and/or personal assets if payments are
late, depending on your business structure and the
loan agreement.

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Section 3: Fund Your Company

If you’re interested in obtaining a small business
loan, one option is to apply directly through a
lender like a bank. If you have trouble qualifying
for a loan in this way, you could apply for an
SBA-guaranteed loan. The SBA doesn’t lend money
directly to small businesses—rather, it guarantees
loans that are administered by third-party lenders.
This guarantee provides an extra level of protection
to lenders, which helps entrepreneurs qualify for
loans they might not otherwise be eligible for.
However, since the SBA only partially guarantees
loans, the borrower will still be responsible for
the full loan sum in the event of a default. If a
guaranteed loan defaults, the lender may request
SBA to purchase the guaranteed portion. SBA’s
Lender Match tool can help you find SBA-approved
lenders, and the SBA Resource Guide for Small
Business contains additional information on the
loans offered through the SBA, including the 7(a)
loan program, the 504 loan program, the microloan program and more.
Separate from the SBA loan programs, you can
also obtain loans through banks, private lenders,
retailer programs like Whole Foods’ Local Producer
Loan Program, and local programs like Slow Money
(which offers 0% interest loans to sustainable
food businesses).

Warrants and Options
Warrants and options are similar yet distinct
types of securities. Warrants and options are both
contractual rights to purchase stock in a company
at a specific price within a specified date range.
Options are commonly awarded under equity
incentive plans, while warrants are more often
issued to investors. Options provided as a form of
compensation are typically subject to vesting as

well as repurchase in the event of the employee’s
termination of service. Options and warrants
provided as a form of compensation are both
subject to Section 409A of the Internal Revenue
Code, meaning that you will need to perform a
409A valuation prior to issuing employee stock
options. Shoobx provides more information on
409A valuation, and Davis Wright Tremaine and
UpCounsel describe the differences between
warrants and options.

Convertible Debt
Convertible debt, commonly referred to as a
convertible note, is a type of funding often used in
seed round investments. A convertible note is a
loan that automatically converts into equity shares
(typically preferred stock) at the close of a future
funding round (usually Series A) or other event.
Since the loan is not converted to equity until a
later date, the price per share and valuation are not
set until that later round. To reward investors in the
convertible debt round for investing in an earlier
stage and therefore taking on more risk compared
to Series A investors, they are usually offered
incentives such as a discount, a valuation cap, and
a modest interest rate. SeedInvest explains these
incentives as well as other key features of a
convertible note. TechCrunch featured a three-part
series on convertible notes that goes into further
depth about considerations founders should be
aware of regarding convertible notes (Parts I, II,
and III). There is also more information about the
pros and cons of convertible debt in the book
Venture Deals by Brad Feld and Jason Mendelson.

STARTUP MANUAL

For examples of successful product crowdfunding campaigns,
see Beyond the Shoreline (now
Akua)’s PieShell campaign and
Kickstarter campaign, Memphis
Meats’ Indiegogo campaign,
SuperMeat’s Indiegogo campaign,
and Freshiez’s Kickstarter campaign for its Meatless Butcher Box.

Section 3: Fund Your Company

In addition to convertible debt, there are other
types of hybrid securities that convert from one
type of security to another based on some future
event, like the close of a funding round. Y
Combinator’s SAFE or Simple Agreement for
Future Equity is a warrant that converts into equity.
Another type of hybrid security is 500 Startups’
KISS, or Keep it Simple Security. Rubicon highlights
the key similarities and differences between the
SAFE and the KISS.
Hybrid securities like convertible debt, SAFE, and
KISS have become increasingly popular in recent
years due to their simplicity and standardization.
Raising a convertible debt, SAFE, or KISS round is
often faster and less expensive than raising an
equity round. However, there are also potential
downsides which are discussed in further detail in
the book Venture Deals. As always, we recommend
talking to a lawyer before issuing any securities.

Grants

A grant is a financial award given by an
organization, usually a governmental agency or
nonprofit foundation. Grants are non-dilutive and
debt-free, making them an attractive option for
entrepreneurs. However, the application process is
time-consuming and competitive with no
guarantee of success. Furthermore, grants often
have a long lead time (~9 months to a year)
between application submission and grant award.
Upon award of the grant, periodic reporting to the
administering agency is often required.
GFI launched its inaugural competitive grants
program in 2018, and is planning to issue new
RFPs in 2019. You can also try searching for grant
opportunities through platforms like Global
Innovation Exchange.

The SBIR/STTR program provides a number of
agency-specific grants to entrepreneurs. The two
programs that are most relevant for entrepreneurs
pursuing plant-based or clean food tech are the
USDA SBIR Program and the NSF SBIR/STTR
Program. GFI drafted a synopsis of SBIR/STTR
information most pertinent to entrepreneurs
in this space.

Crowdfunding
Startups might also consider raising money
through crowdfunding. There are two types of
crowdfunding: equity crowdfunding and product
(rewards) crowdfunding. In equity crowdfunding,
investors are given equity in exchange for their
contribution. Equity crowdfunding platforms
include AgFunder, Seedrs, Crowdfunder, AngelList,
SeedInvest, CircleUp, and Republic. This list
provides a comparison between different equity
crowdfunding platforms. The Jumpstart Our
Business Startups (JOBS) Act created an exemption
under the federal securities laws so that companies
can use equity crowdfunding to offer and sell
securities to the general public (as opposed to
accredited investors only). However, certain equity
crowdfunding platforms (e.g., AngelList) still require
that investors be accredited. The U.S. Securities and
Exchange Commission (SEC) provides more
information about equity crowdfunding. To our
knowledge, no companies in the plant-based or
clean meat space have raised money through equity
crowdfunding, likely due to the complications
involved in having such broad ownership of equity.

STARTUP MANUAL

“We loved our PieShell experience
to alpha launch Kelp Jerky to the
world. It allowed us a low-risk
and supportive environment to
successfully raise over $10,000 in
much needed, equity-free funding
at the very earliest stages of our
CPG business!”
Courtney Boyd Myers,
Co-Founder, Co-CEO,
and CMO of Akua

Section 3: Fund Your Company

In product crowdfunding, backers are given products or other perks in exchange for their contribution. Typically, these incentives include samples of
the product, branded company swag (like t-shirts
and stickers), or samples or subscriptions from
partner companies. Note that in product crowdfunding, contributors are not “investors” since
they do not receive an equity share, and “investment”-based language should be avoided as to
not mislead backers. Kickstarter and Indiegogo
are both product crowdfunding platforms.
While product crowdfunding provides the oppor
tunity to raise equity-free money, it’s important to
remember that this money isn’t free. In order
to incentivize people to contribute, you will need
to provide perks that potential contributors
value at a roughly equal amount to their monetary
contribution. You will also likely need to spend
some marketing dollars to ensure the success
of the campaign. That being said, raising money
is not the only goal of product crowdfunding.
Other goals of product crowdfunding might include
developing your product/market fit, identifying
and gaining the support of your early adopters, and
demonstrating traction to future investors.
Since the earnings of product crowdfunding are
treated as taxable income, you should talk with a
CPA about your tax liability before conducting a
product crowdfunding campaign. There are also
legal considerations to be discussed, such as
potential liability if you don’t deliver on what was
promised to your backers. This article from Strictly
Business discusses some of the legal considerations for crowdfunding that you should be aware
of prior to conducting a campaign.

Shopify’s Ultimate Guide to Crowdfunding is a
helpful resource for navigating the crowdfunding
process. Courtney Boyd Myers, co-founder of Akua,
provides this advice for entrepreneurs considering
product crowdfunding.

XVI. Venture Capital (VC) Fundraising

If you decide to raise VC funding, we’ve already
highly recommended reading Brad Feld and Jason
Mendelson’s book, Venture Deals (Wiley, 2016),
which provides a concise yet comprehensive
introduction to raising VC capital and evaluating
terms of investment. Law firm Riggs Davie’s
Guide to Negotiating a Venture Capital Round,
Y Combinator’s guide on How to Raise a Seed
Round, and Pitchbook’s glossary of venture capital,
private equity and M&A terms, and Parts IV and V
of The Shoobx Guide to Starting a Startup provide
additional information on the topics covered here.

Understand Your Legal Needs and Obligations
You will need a lawyer with experience in startup
fundraising to help you through the VC fundraising
process—not only to ensure you are complying
with all state and federal securities laws, but
to vet the terms of the deal. Our number one piece
of advice: don’t hire your uncle who is a divorce
attorney just because he’s willing to give you a
good hourly rate. Unless a lawyer has experience
in brokering these types of transactions on behalf
of startups, they won’t have a good understanding
of what to look out for. If they fail to identify the
terms that do matter, you will be left with a sub
optimal term sheet. If they harp on the terms that
don’t matter, you could end up with investor ill
will or deal fatigue. If they are unfamiliar with

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Section 3: Fund Your Company

securities laws, you could put your company at risk
for legal action. Rubicon’s article on the do’s and
don’ts of hiring a startup lawyer provides a list
of the types of experience and attributes to
look for in a business transactional lawyer. Refer
to the Hire a Lawyer section of this manual for
additional information.

Securities Laws
Startups most commonly use equity or convertible
debt vehicles to raise their first round of funding from
VCs and angel investors. Equity and convertible debt
are both securities whose transfer is regulated by
federal and state securities laws. If you don’t comply
with securities laws, you could harm the value of
your company and expose you and your company
to potential civil and criminal liability.
As a broad overview, the Securities Act of 1933
requires that the offer and sale of securities must
be registered unless an exemption from registration is available. This means anytime a company
issues equity stock, options, convertible debt, or
any other type of security as defined by 15 U.S.
Code § 77b, the company must either comply with
registration requirements of federal and applicable
state securities laws or identify an applicable
exemption from the registration requirements.
Registering an offering with the SEC would make
your company a public company, and would
impose significant new obligations that are both
burdensome and expensive. Thus, an earlystage company that is not yet ready to “go public”
needs to identify an exemption each time it issues
securities. You should work with your lawyer to
identify the appropriate exemptions.

Once an exemption is identified, companies must
comply with SEC filing requirements that are
specific to the type of exemption being claimed.
For example, for Rule 506(b)—an exemption
commonly claimed in VC fundraising—companies
must use SEC Form D to file a notice of an exempt
offering of securities with the SEC, as well as
provide additional information for any non-accredited investors involved in the round. In contrast,
for rule 4(a)(2)—the exemption often claimed for
issuing founder’s stock—there are no SEC filing
requirements. You must also follow all procedures
required by state securities laws, which vary
by state.
The SEC provides more information on exemptions.
This table of different types of exemptions includes
issuer requirements, investor requirements,
SEC filing requirements, and more. Law firm Davis
Wright Tremaine’s Securities Law 101 also lists
different types of exemptions that startups commonly use, though the list is somewhat outdated.
Attorney Alex Davie of Riggs Davie discusses newer
types of exemptions that have become available
to startups more recently, including exemptions
related to equity crowdfunding.
Some additional background on SEC Form D is
that it must be filed within 15 days after the first
sale of securities in the offering. SEC provides a
compliance guide on Form D. It is important to
note that Form Ds are public and can be viewed
through the SEC’s EDGAR database. For example,
here are Form D filings from Miyoko’s Kitchen
and Memphis Meats.

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Section 3: Fund Your Company

Decide How Much Money to Raise
A funding round is a discrete round of investment
in which a company offers securities to investors.
Funding rounds are usually about 12-24 months
apart. Anything shorter would mean that your team
would have to start preparing for the time-consuming process of fundraising shortly after closing
the previous round, and anything longer might
require raising so much money in a single round
that it would be difficult to attract investors or
obtain favorable terms. Companies sometimes
raise a bridge round, or a small funding round
between two larger funding rounds, but this is
usually only done if the company is running out of
money. The chart below describes the different
types of funding rounds and the typical timing,
amounts, and sources.
Regardless of which round of funding you are
raising, you should never raise an arbitrary amount
of money. While the averages below can help give
you a rough idea of how much money is typically
raised at each stage, you should only raise as much
as you are reasonably able to use in a way that
adds value to your company. You should raise
enough money to get your company to a defined “derisking event,” or a point where you have increased
Funding
Round

the value of your company more than the investment that was put in. Examples of de-risking
events might include building a manufacturing
facility, producing a prototype, achieving a
measurable R&D accomplishment, launching
a product, or generating revenue. Questions to
ask yourself include:
•• What do we hope to achieve before our next round

of funding?

•• How much money do we need to achieve

those accomplishments?

•• What are the measurable milestones that investors

can hold us accountable to?

•• What, specifically, will we spend the money on?

•• What is our contingency budget if things don’t go

as planned?

•• What will we have to show when the funding is

deployed? In other words, how will this money add
value to the company?

Identifying a de-risking point and making
a detailed budget for how to get there will help
with your strategic planning and will also help
to increase investors’ confidence that their investment in your company will lead to returns.

Pre-seed

Seed

Series A

Series B

Series C, D, E, etc.

Stage

Formation, business
plan development

Founding to
launch

Post launch

Growth

Growth and expansion
to harvest event

Median Deal
Size (2018)

<$1.0 million

$1.0 million

$7.5 million

$17.0 million

Series C: $30.1 million
Series D+: $50.0 million

Common
Investors

• Founders
• Family & friends
• Angels
• Accelerators

• VCs
• Angels

• VCs
• Strategic
investors

• VCs
• Strategic investors
• Private equity firms

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Section 3: Fund Your Company

Create a Pitch Deck
A pitch deck is a brief visual presentation (often
created in PowerPoint) that provides more details
about your company and includes sections that
aren’t in your elevator pitch. As its name suggests,
you will use your pitch deck to pitch your company
to potential investors and business partners,
including VCs, angel investors, and accelerators.
You will likely be pitching in a variety of different
environments, ranging from large pitch competitions to one-on-one meetings with VCs, so it’s
important to tailor your pitch deck to the appropriate length and structure for the audience. As such,
you might have several different versions of your
pitch deck, each tailored for different audiences.
In general, pitch decks for early-stage companies
are about 12 slides. The following structure is
suggested by Pitching Hacks:
1. Cover
2. Summary
3. Team
4. Problem
5. Solution
6. Technology
7. Marketing
8. Sales
9. Competition
10. Milestones
11. Conclusion
12. Financing
While this particular slide order might work for you,
the most important piece of advice is to tell a story.
Why? Because people love stories, people remember stories, and stories are better at motivating
people to action. Ultimately, you should cover each
of these topics, but you should structure your deck
in such a way that overall you tell a compelling

story about your company and that puts your best
foot forward (as in, early in the presentation). If
your team is a perfect fit to solve your problem, if
you already have impressive sales, or if your
technology is highly dependable, feature that
information in a prominent place in your deck.
Don’t forget to include the fundraising slide
(usually last); every pitch deck should have a clear
ask for how much money you’re raising, what you
intend to use it for, and what milestones the
funding will enable you to achieve.
Purple Carrot provided examples of past iterations
of its pitch decks from 2015 and 2016. Alexander
Jarvis provides this database of more than 100
pitch decks from VC-funded companies. Sidebean
also has a number of pitch deck examples, as well
as useful templates for creating your pitch deck.
Presentation Hacks also provides tips for preparing
and executing a pitch.
You can create the first draft of your pitch deck
using software like PowerPoint, Keynote, Google
Slides, Prezi, or Slidebean, but unless you have
significant design experience, it can be extremely
helpful to engage a graphic designer to help you
refine this content into an aesthetically appealing
deck. Hiring a designer can make your deck look
more professional and lends credibility to your
company. The cost of hiring a graphic designer is
marginal when you consider the impact it could
have on investor interest and your negotiation
power during fundraising. Depending on your
needs, you might hire an independent graphic
designer or a design firm. You might also consider
using a freelancing service like Upwork, 99designs,
or Fiverr.

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Section 3: Fund Your Company

You should use a PowerPoint version of your pitch
deck when presenting live, but if you’re sending it
to a VC for reading purposes, you should send a
PDF version. While most investors are professional
enough to treat pitch decks as confidential by
default, there is always a risk that it could be
redistributed. There are some steps you can take
to prevent this from happening. For example, you
might include phrases like “CONFIDENTIAL/
PROPRIETARY” and “Prepared for [Name of VC]”
on the title slide of your deck. If there’s any information that you absolutely must keep confidential,
don’t include it in your pitch deck.

Identify Potential Investors

In identifying target investors, you need to understand each firm’s investment mandate. In other
words, what types of investments fall within its
scope, and what types of things the firm values in
making investment decisions. Understanding an
investor’s mandate prior to approaching them will
help you to avoid wasting anyone’s time (including
your own) and target the most promising investors.
You can glean information about a firm’s investment mandate by looking at its website and
researching its past investments. For example, on
Tyson Ventures’ website, you can find the four
pillars that all of its investments must fit into
(alternative proteins, food waste, food insecurity,
and food safety) as well as a list of its portfolio
companies. If your company doesn’t fit in to one of
these four pillar areas or you’re in a totally different
stage of growth than the portfolio companies, it
probably would not be fruitful to approach Tyson.
If there is alignment, then you will be better
informed to tailor your pitch to what you know that
investor is looking for.

Most broadly, VCs that invest in plant-based and
clean meat companies can be categorized into four
types of investors: impact investors, food and
agriculture investors, generalist investors, and
strategic investors. Each type is described here:
•• Impact investors are mission-driven and financial-

ly-driven investors who might focus exclusively on
investing in alternatives to animal products, or on
broader issues such as environmental sustainability and health. Some impact investors that invest
exclusively in companies creating alternatives to
animal products include New Crop Capital, Stray
Dog Capital, Blue Horizon, VegInvest and other
members of the Glasswall Syndicate. Because of
their highly-aligned mission focus, these investors
are often the most willing to fund companies in
their earliest (and therefore highest-risk) stages,
though they will still expect companies to have
some traction. Impact investors that have a
broader focus beyond alternatives to animal
products include firms like Obvious Ventures, GV
(Google Ventures), and Radicle Impact.

•• Food and agriculture investors are financially-

driven funds that primarily or exclusively invest in
food and/or agriculture companies. Some examples of food and agriculture investors include
S2G Ventures and Closed Loop Capital. Various
other food and agriculture investors can be found
in AgFunder’s AgriFood Tech Investing Report.

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Section 3: Fund Your Company

•• Generalist investors are financially-driven funds

Language is important: a Harvard
Business Review analysis suggests that
startups who use “disrupt”-focused
language raise close to twice as much
money ($38 million more on average) as
those that use “build”-focused language.
Thus, there is an argument for plantbased and clean meat entrepreneurs to
use “disrupt”-focused language in their
pitch decks and presentations.
However, if you’re pitching to strategic
investors or food and agriculture
investors who are involved in the animal
agriculture industry, “disrupt”-focused
language might sound more like a threat
than an opportunity. If you’re pitching to
these investors, don’t slam the animal
agriculture sector in your pitch. Instead,
focus on the potential for profit, risk
mitigation, and portfolio diversification.
If a corporation has a venture arm (e.g.,
Tyson Ventures), approach them first.
They are more likely to see the idea as an
opportunity, whereas another business
unit might see it as a threat to their
existing business.

that invest in a wide variety of areas, though
usually in tech. Some generalist investors that
have invested in companies in our space include
Khosla Ventures and DFJ. Generalist investors
are usually not involved in seed rounds, but
rather invest in later rounds once the company
has demonstrated substantial traction.

•• Strategic investors (sometimes called strategics)

are corporations or their affiliated funds that invest
in or acquire startups to achieve strategic goals.
These goals might include expanding their product
line, boosting innovation, or mitigating the risk
of being disrupted. Tyson Ventures and General
Mills’ 301 Inc. are examples of strategics that
have invested in Beyond Meat. Big food companies,
suppliers, distributors, and import/exporters can
all make beneficial strategic investment partners,
not only for the money that they invest, but for
the services and resources they can provide, such
as production space or distribution infrastructure.
Strategic investors are usually not involved in seed
rounds but rather invest in later rounds once the
company has demonstrated substantial traction.
However, there are several corporate incubators
that will invest in companies at the earliest stages,
such as Kraft’s Springboard Incubator, the Chobani
Incubator, and Pepsi’s Nutrition Greenhouse. See
the Accelerators section of this manual for more
information on accelerators.
Crunchbase is a great resource for identifying VCs,
angel investors, and all types of investors who have
made investments in plant-based and clean food
tech companies, and therefore might be open to
similar deals. AngelList can also be used to identify
angel investors.

Another helpful resource for identifying potential
investors is the GFI Investor Directory. This is a list
of investors who have expressed interest in
plant-based foods, clean meat, and other innovative alternatives to animal products. The directory
contains information about each investor, including
what types of investments they’re looking for, at
what stages they invest, how much they usually
invest, and contact info. This allows fundraising
startups to make connections to investors that may
be interested in participating in their current round.
Alternative protein startups that are currently
fundraising or have previously successfully closed
a funding round can request access to this list by
emailing briannac@gfi.org.

Get Introductions and Pitch to Investors
VCs can get dozens or even hundreds of inquiries
per week, so getting yours to stand out is critical
for opening a dialogue. Rather than sending an
email cold, getting an introduction from a “middleman” whom the VC trusts (perhaps an entrepreneur they’ve invested in or a fellow investor)
can be an effective way to get the VC’s attention.
This introductory email should be a written
(<100-words) version of your elevator pitch, a
20- to 30-second speech intended to pique the
audience’s interest about your company. As
outlined by Chris O’Leary in Elevator Pitch 101,
the purpose of the elevator pitch is not to close
the deal—it’s to interest the audience in continuing
the conversation. As outlined by Pitching Hacks,
“Your middleman sells investors on reading your
elevator pitch. The elevator pitch sells investors
on reading your deck. And the deck sells investors
on taking a meeting.”

STARTUP MANUAL

Traction
You

Social Proof
Product
Market
High Concept Pitch
Elevator Pitch

Section 3: Fund Your Company

When asking a middleman for an introduction to a
VC, you should use a brief elevator pitch email that
allows the middleman to reply and loop in the VC
as an introduction. We recommend using a structure similar to what Alexis Iskold outlines in his
post on how to draft a forwardable introduction
email. Pitching Hacks provides additional advice
for crafting your elevator pitch, including several
examples. We do not recommend asking the
investor to sign a non-disclosure agreement (NDA)
in this introduction email—this can rub investors
the wrong way and lead to your email being
ignored. Depending on how novel your technology
is, you may or may not want to ask the investor to
sign an NDA later in the process. Refer to the
section in this manual on Non-Disclosure
Agreements for more information.
If you do land a meeting with a VC, you should
(obviously) prepare by practicing your pitch.
GFI is available provide feedback on your pitch
deck itself, and we can even schedule a virtual
practice pitch session if you’d like feedback
on your delivery. What may be less obvious is that
you should also prepare by researching the VC,
including its investment mandate, its investment
history, and the individuals involved in the deal.
This can help you to tailor your pitch to be most
effective to the audience. When you meet with
the VC, make sure you bring product samples if
you have them (or offer to send product samples
if it’s a virtual meeting).
This graphic from Presentation Hacks attempts to
answer the question: what do investors care about
most? Some of these terms are self-explanatory,
but we’ll spend some time on two that might
not be: social proof and traction.

Social proof is the psychological phenomenon that
people will conform to the actions of others under
the assumption that those actions are reflective of
the correct behavior. Social proof is a powerful tool
for marketing to consumers, but it can also be
powerful for getting investors on board. Some
common ways of demonstrating social proof are
customer testimonials, ratings and reviews, celebrity/influencer endorsements, media mentions,
and follower counts. This article from Kissmetrics
by Neil Patel provides an overview of different
types of social proof, as well as a list of considerations for social proof marketing.
Traction is a measure of your product’s engagement with the market—in other words, your product-market fit. The most powerful type of traction
is paying customers, which can be measured by
profitability or revenue. If you don’t yet have paying
customers, the next best thing is demonstrated
interest by potential customers. In the food
industry, this might mean retailers, foodservice
operators, and distributors who want to carry your
product, or consumers who are interested in
purchasing it. The types of traction you’ll be
expected to have will vary greatly depending on
the nature of your company. A clean meat company, for example, would likely not be expected to
be generating revenue or even have a prototype by
the time they raise their seed round. On the other
hand, a plant-based company creating a relatively
low-tech product (e.g., baked goods) would likely
be expected to have established sales and distribution prior to raising a seed round. This article
from Fundable provides an overview of types of
traction and how to demonstrate it.

STARTUP MANUAL

“When I look at companies for investment
potential, I always take a hard look
at the entrepreneurs. Do they have grit
and perseverance? Can they lead others
and be humble? Do they have heart?
Leading a company is tough work.
Almost all the companies in the
Stray Dog Capital portfolio have gone
through really tough spots at one
time or another (despite what it may
look like from the outside). They almost
run out of money, got delisted from
important retailers, had product
issues—founders need to have grit to
survive and thrive in these conditions.”
Lisa Feria,
CEO of Stray Dog Capital and Leader
of Glasswall Syndicate

Section 3: Fund Your Company

Term Sheets
If the entrepreneur and investor decide to move
forward, the first major step toward closing a
deal is signing a term sheet. A term sheet is a
document that lays out the terms of the proposed
investment. In each funding round, the lead
investor will typically draft the term sheet and
negotiate its terms on behalf of all investors in that
round. It is critical that you understand each term
in your term sheet and pay attention to how each
term will affect your company’s future, not just
this immediate round of investment. You should
work with your lawyer to review the term sheet,
and later, closing documents.
It’s important to note that signing a term sheet
does not constitute a legal commitment to move
forward with the funding. The transfer of funds
does not occur until after due diligence is conducted and closing documents are signed.
However, some provisions of the term sheet may
be legally binding. Some terms that are usually
binding are confidentiality provisions (which
require that the company not disclose certain
information about the deal) and “no shop” provisions (which require the company to work in good
faith toward closure of the deal and not solicit
offers from other investors for a period of time).
Understanding which provisions of the term sheet
are binding and non-binding will help avoid
unwelcome surprises in the process of closing the
deal. Another strategy for avoiding surprises
is to be as detailed on the term sheet as possible
without getting to the point of deal fatigue.
Detailed term sheets are preferable from
the entrepreneur’s perspective, since vague term
sheets give investors a large amount of wiggle
room when drafting the definitive agreements that
will close the deal.

The National Venture Capital Association provides
a number of model legal documents, including a
sample term sheet. Each section of this term sheet
contains alternate variations, each of which might
present different advantages or disadvantages
for investors or founders, and are potential points
of negotiation. Law firm Riggs Davie’s Guide to
Negotiating a Venture Capital Round walks through
this term sheet and explains each of these variations in detail. The book Venture Deals also goes
into detail about what each term means and its
relative importance, ranging from deal-critical
items to things you shouldn’t waste lawyer fees to
negotiate. Here, we discuss a few of the financial
terms of the control sheet (regarding how money
is distributed in a liquidity event) and control terms
of the term sheet (regarding investors’ decisionmaking power). However, the content provided
here should not be treated as an exhaustive
list—refer to the resources in this paragraph for
more complete information.

Financial Terms

The most basic financial term is the share price,
or the price that investors pay per equity share.
Multiplying the share price by the number of
shares purchased equals the total amount of the
investment. In order to set a share price (which
determines the number of shares an investor
gets for a fixed investment amount), the investor(s)
and entrepreneur(s) decide on a valuation for
the company.

STARTUP MANUAL

“They [entrepreneurs] have to be able
to sustain themselves and their team
through the tough spots and keep
going against all odds. The great ones
can inspire others to follow them—as
co-founders, as customers, and as team
members. They are contagious in their
belief in their company and in their
heart. They thirst for learning and are
humble to admit mistakes, learn from
them and then lean on others to level
up. The really excellent founders look
20 years into the future and prepare
for it. They know what they need
to do to grow into a $50MM company.
They persistently seek a diverse leadership team because they know it’s
what they need to win in the long term.
They operate in the now but always,
always with an eye on the future.”
Lisa Feria,
CEO of Stray Dog Capital and Leader
of Glasswall Syndicate

Section 3: Fund Your Company

There are two types of valuation: pre-money and
post-money valuation. Pre-money valuation is the
value of the company prior to the investment, and
post-money valuation is the value of the company
after an investment has been made. This post on
Venture Capital Deal Algebra from Brad Feld
explains in further detail the relationship between
share price, number of shares, and pre- and
post-money valuation. Although these equations
describe the relationships between these variables,
keep in mind that there is no formula for deciding
what a specific company’s share price or valuation
should be.
The process for determining valuation is subjective
and somewhat arbitrary, especially for pre-revenue
companies. Typically, the entrepreneur(s) and
investor(s) negotiate a post-money valuation,
and then subtract the investment amount to arrive
at the pre-money valuation. Alternatively, the
entrepreneur(s) and investor(s) could negotiate
the pre-money valuation and add the investment
amount to arrive at the post-money valuation.
When negotiating valuation, it’s important to be
on the same page as your investors about whether
you are negotiating pre-money or post-money
valuation. Why? Because this can lead to differences
in expectation about percent ownership of the
company. For example, if an investor were to invest
$5 million at a post-money valuation of $20 million,
the investor would own 25% of the company.
In contrast, if an investor were to invest $5 million
at a pre-money valuation of $20 million, the
investor would own 20% of the company (since the
post-money valuation would be $25 million). If
there’s any ambiguity about whether an investor is
referring to pre-money valuation or post-money

valuation, just ask for clarification. During the
process of negotiating valuation, it is important for
entrepreneurs to understand that valuation does
not equate to market value. Fred Wilson’s 2004
blog post on valuation explains why.
Another important financial term is liquidation
preference. Liquidation preference is one of the
factors that determines who gets paid how much
in a liquidity event, such as the sale of the company. Liquidation preference is a protective term
for investors. To explain what it means, recall from
the Equity section that investors hold preferred
stock, while founders hold common stock. In a
liquidity event, holders of preferred stock get paid
in full before holders of common stock get paid
anything. In other words, in cases where the
company is sold for less than the investors are
owed, the entrepreneurs, employees, and all
common stockholders get nothing.
A 1x liquidation preference (which is common)
means that preferred shareholders get repaid for
their full investment amount before common
shareholders get paid anything. Be very wary of
multiples greater than 1x preference—a 2x preference means you must pay investors back twice
(2x) the amount they invested before anything is
distributed to common stockholders, a 3x preference means you must pay back three times (3x)
the original investment, etc. Unless your company
is extremely successful, it’s easy to end up with
very little money left over for common shareholders after an aggressive liquidation preference is
paid out.

STARTUP MANUAL

Section 3: Fund Your Company

Aside from preference (the multiple), other aspects
of liquidation preference include participation
and seniority structures. The Ultimate Guide
to Liquidation Preferences from Medium explains
each of these features in detail and their impact
on who gets what in a liquidity event. Brad Feld’s
post on liquidation preferences, as well as the
Founder’s Guide to Liquidation Preferences and
Captable.io’s interactive case study, are also
helpful resources.

Aside from the board of directors clause, other
control terms include protective provisions, dragalong rights, and conversion. These terms, as well
as other terms that don’t deal directly with either
finances or control, are discussed more fully in
Riggs Davie’s Guide to Negotiating a Venture
Capital Round and Venture Deals. Here, we’ll dive
into a further discussion of managing your board
of directors.

The potential consequences of an aggressive
liquidation preference demonstrate why it’s
important to understand every term in your term
sheet and how it could impact you and your
company in the future. Heidi Roizen’s piece, How to
Build a Unicorn from Scratch – and Walk Away with
Nothing is a cautionary tale on this subject. Aside
from share price and liquidation preference, other
financial terms include pay-to-play, vesting,
exercise period, employee pool, and anti-dilution.
These terms are discussed more fully in Riggs
Davie’s Guide to Negotiating a Venture Capital
Round and Venture Deals.

One of the critical roles of a startup founder—and
one of the most overlooked—is the management
of the board of directors. Done right, it will help the
board to add value to the organization far beyond
the financial investments they may have made.
Done poorly, and it can lead to distractions and
headaches that take time, attention and energy
away from actually making the business work.

Control Terms
One of the important control terms of a term sheet
is the board of directors clause. This clause
typically sets the size of the board and the process
by which each member will be elected. In most
cases, the investors for any particular funding
round will expect the right to select a member of
the board of directors, and they may also request
the right to select a non-voting board observer.
Brad Feld’s FeldThoughts blog on the board of
directors explains some of the key considerations.
More information on building and managing a
startup board can be found in this Kauffman
Foundation Primer.

Managing Your Board of Directors

A startup’s board of directors can provide
numerous benefits:
•• Mentoring and guidance through the business

challenges faced (both expected and unexpected)

•• Financial oversight to keep the business as healthy

as possible

•• Strategic planning advice and ratification
•• Connections with their business and

even personal networks

•• Objective “outsider” perspectives on your business

STARTUP MANUAL

“You can divorce your
spouse, but you can’t
divorce your investor.”
VC proverb

Section 3: Fund Your Company

When assembling your board, consider what skills
you would like to have available to you. Ideally,
these skills would be complementary to those of
the founding team. They should also have experience that is relevant to the business—not necessarily in the same industry, but sufficiently similar
that their experience can be applied to the business at hand. Also consider their network connections, as an expansive network can be very helpful
as unexpected issues arise.
Managing a board involves more than just
meeting management (although effective board
meetings are very important). Ongoing, regular
communication with board members between
board meetings is at least as important. Actively
seek advice, inform them of developments, or just
have check-in conversations. You want to have
developed a strong, trusting relationship with
your board members long before challenges test
those relationships. First Round Review provides
further tips for running efficient and productive
board meetings.

Capitalization Tables
You should have a capitalization table (cap table)
that lists your company’s securities and who
owns them. While your lawyer can help you create
your cap table, it is ultimately your responsibility
to ensure that your cap table is accurate and
up-to-date. Most startups use Excel to manage
their cap table. There are software options for cap
table management, but they are often less customizable than Excel. Cooley GO and Venture Hacks
both provide free Excel cap tables that can
be customized to meet your company’s needs.

Alexander Jarvis provides an example cap table
that includes built-in waterfall analysis for many
scenarios. Waterfall analysis is described in the
next paragraph.

Liquidation Analysis

It is important to keep in mind that while cap
tables show who owns what percentage of the
company, they do not show how each of these
shareholders will get paid in a liquidity event. If all
shareholders owned common stock, the cap table
would accurately reflect how funds are distributed
in a liquidity event (the funds would be distributed
according to percent ownership of common stock).
However, in reality, investors (who own preferred
stock) get paid in full before founders (who own
common stock) get paid anything. Using your cap
table and term sheet (or hypothetical terms) as
inputs, waterfall analysis is a tool that can be used
to model who gets what in a liquidation event.
Michael Dempsey’s blog post on waterfall analysis
and example liquidation model are great resources
for understanding waterfall analysis. The Ultimate
Guide to Liquidation Preferences from Medium
also shows a number of waterfall analysis examples, visually depicted by a graph.

STARTUP MANUAL

“If you walk away after the closing
and just wait for the company’s
quarterly newsletter, both parties
lose. VCs can offer life-changing
non-monetary resources—introductions, mentoring, strategic
support—to ensure success.
Startups that get their checks and
never look back miss out on a
great resource by not speaking to
people who have a different
perspective, additional connections, and in many cases, a deeper
and broader understanding
of the marketplace.”
Mark Langley,
Portfolio Manager,
New Crop Capital

Section 3: Fund Your Company

Due Diligence
After (or sometimes before) the term sheet is
signed, investors begin to conduct due diligence
on the company. During this process, investors
will do a deep dive into your business and technical plans, financial statements and models, and
various other legal, operational, and financial
documents. Cooley GO and Rubicon both have
sample due diligence checklists of documents
that investors commonly request. You should have
these documents ready prior to beginning the
fundraising process so that you can provide them
upon request without causing delays. If you take
too long to provide these documents, it could
indicate to the investor that you’re unprepared,
which could negatively impact your negotiation
power or even kill the deal. You should also ensure
that your documents are well-organized and
founded in facts. Be prepared to answer very
specific questions about assumptions you made
during financial modeling or the source for facts
and figures you use.
During the due diligence process, the company
should conduct due diligence on the investor, too.
Investment is a long-term business partnership,
and you should be confident that you’re entering
into this commitment with a competent, capable,
partner who can add value to your company beyond
just funding. This might include doing online
research, talking to their portfolio companies or
co-investors, and examining their funding source

and investment history. This article from the Angel
Investment Network provides some tips on how to
do due diligence on your investor. If this process
raises any red flags, you should strongly consider
walking away from the deal. It might be inconvenient to start over with a new investor, but you’ll be
better off in the long run with the right partner.

Closing the Deal
After the investors complete the due diligence
process, lawyers will draft the closing documents
to complete the deal. As in the due diligence
process, you should continue to be responsive and
make an effort to close the deal quickly. After the
deal is closed, the funds are transferred. At this
point, you’ve successfully completed a VC fundraising round. However, it’s important to keep in
mind that this is only the start of your journey with
your investors. After the deal is closed, VCs often
provide introductions and strategic guidance
around distribution, branding, positioning, hiring,
pricing, financial modeling, and more. Strategic
investors might provide even more tangible
services such as access to production equipment
and infrastructure. As an entrepreneur, you should
foster your relationships with your investors and
leverage them to help your company succeed.

Section 4

CREATE YOUR
PRODUCT
XVII.
XVIII.
XIX.
XX.
XXI.
XXII.
XXIII.
XXIV.
XXV.

Product Development Frameworks
Food Industry Product Development
Scaling Up and Hiring a Food Scientist
Manufacturing
Packaging
Product Testing and Quality Assurance (QA)
Consumer Testing
Intellectual Property (IP)
Regulatory Considerations

STARTUP MANUAL

Section 4: Create Your Product

With your company funded, you’re ready to create
something awesome. After all, that’s probably why
you became an entrepreneur in the first place—to
build something out of nothing, to fill a white space
in the market, or to meet a consumer need in an
innovative way.
The product development process will look different for different types of companies. For example,
a clean meat company will likely begin product
development in a lab, while a plant-based ice
cream company might begin recipe testing in a
home kitchen. However, regardless of your end
product, there are product development frameworks you can use to help structure the innovation
process. For example, the OODA Loop and the
Stage-Gate frameworks can guide your product
development process to help you achieve a desired
end product as efficiently as possible. We’ve also
included a framework on how product development usually works in the food industry.
As early as possible in the product development
process, you should consider how to scale up your
production process. You’ll also need to find
somewhere to manufacture and package your
product (ideally in the same place), and conduct a
variety of in-house and outsourced tests to ensure
product safety and quality assurance. You should
also perform consumer testing to gather feedback
from consumers in your target market, which
will inform iteration on product development
and marketing.

There are some topics that you’ll need to consider
throughout the entire process of developing and
producing your products, and two of those topics
are intellectual property (IP) protection and
regulatory considerations. IP protection includes
ensuring that the company’s IP is legally owned by
the company, making a plan for how to use patents,
copyrights, trademarks, and trade secrets, and
working with your lawyer to implement non-disclosure agreements (NDAs) as appropriate.
In terms of regulatory compliance, your company
will need to be familiar with regulations at the
federal, state, and local level. On the federal level,
plant-based foods are regulated by the Food and
Drug Administration (FDA), and the Food Safety
Modernization Act (FSMA) is an important federal
law that applies to all establishments that manufacture/process, pack, or hold food for human
consumption in the US. On the state and local level,
there may be additional regulations you need to
comply with, such as obtaining health permits
and complying with an annual inspection. You will
also need to consider the regulatory component
of food labeling, including topics like ingredient
lists, allergen statements, statements of identity,
nutrient declaration, net contents declaration, and
label claims.
And you’ll need to make a recall plan in preparation for potential food safety issues, including
establishing robust traceability procedures that
require accurate recordkeeping of lot codes and
barcodes. Finally, if you are using any novel food
ingredients or processing methods that have not
yet been introduced to the food supply, you’ll need
to determine its regulatory status and make a plan
for how to introduce it to market.

STARTUP MANUAL

“Talk to your customers very early.
Through those conversations,
we were able to validate our value
proposition, the ways in which
we wanted to use the material
we were making—things that
only people who ran a company
for years would know. It helped
focus our value proposition
in places of need while keeping
our vision intact. It can also
help convert early testers into
customers.”
Alex Lorestani,
Co-Founder and CEO, Geltor

Section 4: Create Your Product

XVII. Product Development Frameworks
Product development frameworks like the OODA
Loop and the Stage-Gate Process can help guide
your innovation process. You might be thinking that
using a framework for innovation sounds a bit
academic or contrived. In some ways, you’d be
right, but to be clear, there’s no one right framework, and we’re certainly not recommending that
you stick to any one religiously. These frameworks
are simply tools for your entrepreneur toolkit, and
we think they can be quite helpful.
Regardless of whether you use these frameworks,
our number one piece of product development
advice is to talk to your customers early and often.
It’s important to understand your consumers—
what attributes are important to them? What
ingredients do they avoid? What types of product
are they looking for? Where do they do their
shopping? Use their feedback to influence your
product development and marketing plan. If you
ever find that there’s a major disconnect between
what your customers are telling you they want
and what you’re offering them, it’s a signal that
you’ll need to course-correct, whether that means
fine-tuning your approach or implementing a
major pivot.

Observe-Orient-Decide-Act (OODA) Loop

A common type of approach for technology startups can be classified by the terms “Lean,” “Agile,”
or “Lean/Agile.” A variety of specific approaches
fall under such a classification, but they have some
common themes:
•• Focus on learning as quickly as possible;
•• Achieve learning through experimentation;
•• Plan your experiments to learn as much as possi-

ble while spending as little as possible;

•• Be willing to adjust or even completely change your

direction based on what you learn.

Eric Ries, author of The Lean Startup, recommends
a three-step “Build-Measure-Learn” process, while
other “Agile” advocates frame the process as the
Plan-Do-Check-Act (PDCA) cycle.
A comprehensive model of these types of cycles
can be found in the Observe-Orient-Decide-Act
(OODA) Loop. While this methodology was originally developed for military purposes, it has proven
to be a powerful tool in the business world as well.
It is comprehensive, but can be scaled easily to
meet the needs of all sorts of decisions, big and
small, short- or long-term.

STARTUP MANUAL

Section 4: Create Your Product

The steps of the OODA Loop are:
•• Observe: Observations are the inputs that feed

into your decision-making process. Such inputs
include internal factors (mission; values; strategy;
available resources, skills, capabilities, etc.) and
external factors (environmental circumstances,
trends, events, urgencies, opportunities, etc.)

•• Orient: This step involves making sense of the

available data. Data must be filtered, sorted, and
processed into a cohesive story. There is great
value in a diverse team analysis at this point,
blending multiple perspectives, experiences, and
analytical methods to come to a common conclusion. Having people who think differently come
together to make sense of ambiguous information
is vital.

•• Decide: In the context of the OODA loop, the

“decide” step is to make a choice among several
alternative actions to take. In essence, you generate a hypothesis that doing action X will lead to
desirable outcome Y. This hypothesis follows from
the sense you’ve made of the available data. A key
question to ask yourself before moving on to the
“Act” phase is, “What would prove to me that my
hypothesis is wrong?” Asking this question helps
to design the experiment (meaning the action you
will take) and measurements you will take.

•• Act: Test the hypothesis by taking action (conduct-

ing an experiment that tests the validity of the
hypothesis) and measuring outcomes. Be as
objective as possible in measurement and interpretation of the results.

Every step of the OODA Loop provides feedback to
the observations phase of the next trip through the
OODA loop. Such feedback should not be limited to
“hard” data, but should include the feelings of team
members as they go through each stage. Those
feelings can lead to new insights. Always consider
what your intuition is telling you throughout the
process, neither undervaluing nor overvaluing it.
Just take it as part of the overall data you have
available to you.

Stage-Gate Process

Another common process for product development
is the Stage-Gate process. As organizations grow
in complexity, and as investments they make
become bigger or riskier, this process provides
a set of strategic decision points that help to
mitigate that risk.
The basic concept of a stage-gate process is to
have a series of decision points (“gates”) that
determine if further investment in a project is
merited. Early in the life of a product development
project, there are many unknowns. Each “stage” of
development is intended to answer questions
around some of those unknowns.
Most product development projects will prove to
be unviable, either financially or technically. The
key idea behind the stage gate process is to only
slowly commit funds to any particular project. Each
stage involves investing as little as possible to
learn as much as possible that will contribute to
decisions on whether to continue investing in a
project or not. Each stage tends to commit an
increasing level of investment in time, money, and
energy that must be justified before deciding to
commit to the next stage of investment.

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Section 4: Create Your Product

Stage-Gate® Five Stage Innovation Process

Courtesy Stage-Gate International™, used with permission.

A “standard” stage-gate process (as presented by
the originators, Stage-Gate International) consists
of five stages and five gates. However, this need
not be a one-size-fits-all approach. Each organization should tailor the process to their specific
needs. Considerations that would impact the
number of stages and gates include size of the
organization, pace of change in the industry, risk
tolerance, and size of the investment in a particular
set of projects. It is common for organizations to
have more than one process defined, with fewer
stages and gates for simple, low-risk investments,
and more for complex, high-risk investments.
The stages of this standard process are:
•• Stage 0: Discover: Before generating product

ideas, you need to gather data about the world in
which you operate. In innovation circles, this is
often known as the “fuzzy front end.” It involves
observing a market space, collecting data, and
making sense of that data, much like in the
observe and orient phases of the OODA Loop.
The key point is to generate insights on the target
market that will allow you to create unique and
valuable goods and services. The end of this stage
involves generating a range of ideas to consider
for development.

Gate 1: Decide which ideas will receive further
investment of staff time to refine and support.
Eliminate ideas that are not worthy of investment.
•• Stage 1: Scope: For each idea selected to pass

through Gate 1, assess the market potential,
strategic fit, and technical merits. This step
involves minimal financial investment, as assessments are usually based on available data.

Gate 2: Decide which ideas have sufficient
strategic, financial, and technical merit to invest
more staff time and external research in continued
development. Eliminate ideas that do not meet
minimum criteria for additional investment.
•• Stage 2: Design: Invest greater time and energy

in designing the product and creating a business
case. Assess technical, marketing and business
feasibility. Define the product and establish plans
for further development. Spend time and money
conducting research to address project justification
and establish reasonable forecasts.
Gate 3: Decide which projects have business cases
that justify continued investment in development.
Eliminate ideas that do not meet the criteria for
investing limited development resources in them.

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Section 4: Create Your Product

•• Stage 3: Develop: Design and develop the new

product. This will involve significant investment in
prototyping and evaluating the performance of
those prototypes. Development will be an iterative
process, following the OODA Loop or similar
sorts of thinking. As this stage proceeds and the
product becomes more clearly defined, you will
create plans for manufacturing the good (or
delivering the service), marketing the launch, sales
strategies, and overall operations plans. Note:
although the next stage is called testing and
validation, don’t wait until then to test the product
concept and performance. That should be done
iteratively throughout the development stage.
Gate 4: Decide which projects deliver product
performance, financial viability, and strategic fit
worthy of further pursuit. Eliminate projects that
do not meet the criteria for moving forward.

•• Stage 4: Scale Up: This stage involves full-scale

manufacturing trials and large-scale product
testing. Validate that the entire project is ready
for launch: product performance, customer
experience, the production/manufacturing
process, marketing plans, sales plans, and the
financials of the project. Investment at this stage
is significant and should be reserved for those
projects that have a high probability of success.
Note: to reiterate the message of the previous
stage, testing and validation should be conducted
iteratively in the development stage as well.
The testing and validation work of stage 4 is the
final test of the project to ensure launch viability
in all aspects.
Gate 5: Decide which projects are worth
the final stage of scale-up to a full launch.
Eliminate any projects that don’t meet
stringent launch requirements.

•• Stage 5: Launch: This stage is the highest level of

investment, and should be reserved for those
projects that have met the most stringent of launch
criteria. This stage involves full commercialization
of the product—the full production, distribution,
sales and marketing.

•• Post Launch Review

This is perhaps the most important long-term
step; yet few organizations do it well, if at all.
It is important to review the actual results of the
launch, compare them to the expected results,
and learn all you can about why there are any
differences between the two. What you learn
here will help to improve product development
success in future generations.
The major criticism of the stage-gate format is
that it can be too rigid to be useful for innovation.
Innovation is, after all, a messy process, hardly
a linear, beginning-to-end process like assembling
a piece of IKEA furniture. While that is true, it
doesn’t mean that a stage-gate process won’t
work. It will work well if used properly:

•• Keep it cyclical, with iterative processes (like the

OODA Loop) built inside the stages;

•• It’s okay for gate decisions to be a choice to go

backward to a previous stage for further, low-cost
refinement before proceeding forward;

•• Make the tough decisions on where to focus

resources, and kill unworthy projects at the time
of gate decisions. One of the most common
mistakes is to pass everything through every gate.
That is the surest route to wasting time, money,
and energy on products that have no real chance
of success.

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Shelf life
When setting your specifications for shelf
life, it is important to remember that
distribution channels are slow. It is quite
common for products to be warehoused
at a redistributor for a number of days/
weeks before being transported to a
distributor where they are warehoused
again before being delivered to the
retailer or foodservice operator. It is not
uncommon for retailers and foodservice
operators to refuse to accept deliveries of
products unless they have at least
75-85% of their shelf life remaining.
Ingredients
When setting your specifications for
ingredients, it is important to keep in
mind any ingredient restrictions enforced
by retailers or foodservice operators
where you would like to sell your
products. For example, Whole Foods
has a list of quality standards,
including unacceptable food ingredients.
Also think about any allergens or
other ingredients you’d like to avoid
for consumer acceptance reasons.

Section 4: Create Your Product

XVIII. Food Industry Product Development
The OODA Loop and Stage-Gate frameworks can
theoretically be applied to any industry. However,
it’s also useful to understand how product development is typically conducted in the food industry.
A food-specific variation on the Stage-Gate framework is provided by The Design Technology Blog,
which is visualized in the next graphic. As with any
model, it’s important to note that these are not
hard-and-fast stages, but conceptual in nature.
Inside each stage will be an iterative process of
experimentation, testing, and refining.
•• The first stage, the brief, involves stating the

problem that needs to be solved by the new food
product. For example, developing a low-cost,
plant-based chicken nugget.

•• The second stage, market research, involves

evaluating the market for the new food product
and assessing desired attributes. In addition to
market feasibility, we also recommend evaluating
technical and commercial feasibility of the new
food product (see the Conduct a Feasibility Study
section of this manual for more information).

•• The third stage, design specification, involves

listing the needs and attributes of the product,
which are referred to as its specifications.
Examples of product specifications include:

»» Size
»» Shape
»» Shelf life
»» Weight
»» Sensory characteristics (taste, texture,
appearance, etc.)
»» Costs
»» Ingredients
»» Equipment
»» Attributes (e.g., organic, non-GMO)
•• The fourth stage, shortlisting and testing, involves

developing a number of different formulations
(prototyping) and testing them to evaluate how
well each idea meets the design specifications
(see Product Testing and Quality Assurance section
for more information). You should also obtain
consumer feedback during this step through
product sampling and other forms of consumer
testing, and use those findings to inform product
development in an iterative fashion.

•• The fifth stage, manufacturing specification,

involves developing a protocol for how the product
will be manufactured at scale (see Manufacturing
section for more information).

•• The sixth stage, quality control, involves ensuring

that the product is safe and is being manufactured
to consistently meet the design specifications
(Again, see the Product Testing and Quality
Assurance section for more details).

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Another resource that speaks to food product
development specifically is Creating New Foods:
The Product Developer’s Guide by Mary Early and
Richard Earle.
As we explain next in Scaling Up and Hiring a
Food Scientist, food scientists specializing in
product development (as opposed to QA) can help
you develop and scale up your formulation. One
alternative to hiring a food scientist for product
development is to formulate your products through
an ingredient supplier. Many suppliers provide
formulation services in exchange for an agreement
to source ingredients through them. However,
if you do go this route, it’s important to work
with your lawyer to clearly define who owns
the formulation IP and other terms of the agreement. UL Prospector’s food ingredient database
can help entrepreneurs find suppliers and
source ingredients.
If you need specialized equipment like an
extruder for plant-based meat production, you
might consider doing product development
through a pilot plant. A pilot plant is a small-scale
food processing facility, usually within a university,
that is used for research and training purposes
and is sometimes available to the public for
contract work. Pilot plants often have food scientists on staff to help with product development.
GFI’s global map of accelerators and incubators
also has a listing of pilot plants.

XIX. Scaling Up and Hiring a Food Scientist
Whether you’re working on clean meat or cashew
cheese, your production process will be very
different at scale compared to the early stages
of product development. Companies with a long
timeline to commercialization might find that
initially using processes that are not scalable might

actually help speed up progress in certain areas.
For example, a clean meat company might use
non-food-grade materials in its media to expedite
the R&D process, then later phase out these
components prior to commercialization. However,
all companies should keep scale-up front-of-mind
throughout the product development process.
Otherwise, you might end up wasting a lot of time
perfecting a process that ultimately isn’t scalable
and needs to be replaced with something else.
While the specific technology involved in scaling up
clean meat is beyond the scope of this document,
we will discuss what’s involved in scaling up a
recipe developed at home or in a small-scale
commercial kitchen.
When scaling up a food process, you will need to
make various adjustments. For example, you may
need to substitute or eliminate some ingredients or
switch from a batch process to a continuous
process. Oklahoma State University’s Food and
Agricultural Products Center provides this guide to
scaling up your food process. Food Crumbles’
Scaling Up Food Production Series also explains
the steps you can take to scale up your food
process, and notes areas where you’ll likely require
assistance from an expert like a food scientist.
Due to the complexities of scaling up a food
production process, GFI Research Fellow and
product development food scientist Miranda Grizio
recommends hiring a food scientist as soon as you
decide to sell your food product through retail or
foodservice channels. Food scientists specializing
in product development can provide assistance
with product formulation and manufacturing
processes at scale. They can also help develop
protocols for product testing and quality assurance.

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Section 4: Create Your Product

If you decide to hire a product development food
scientist, you can either hire an independent food
science consultant or a food consulting company.
Food consulting companies tend to be more
expensive but have broader expertise since they
have numerous food scientists with various areas
of expertise working as a team. That being said,
an independent consultant with deep expertise in
one specific subject area might be a great choice if
you are developing a product in that area. GFI has
a list of food consulting companies and independent consultants, and professional organizations
like IFT can also be helpful in identifying options.
You might also try reaching out to universities
with food science programs (both undergraduate
and graduate) to expand your search through
their alumni networks or using other recruiting
tools like LinkedIn and Kolabtree.

XX. Manufacturing

You’ll need to find a safe place to produce your
products. Due to the high costs and regulatory
requirements associated with setting up your own
manufacturing facility, manufacturers usually
choose to produce their products at an existing
facility when they’re getting started. There are
many different types of production facilities that
entrepreneurs can use; we think three of the most
relevant are commercial kitchens, food incubators,
and co-packers.
A commercial kitchen (also known as community
kitchen or shared-use kitchen) is a facility that
provides food-processing space and small-scale
equipment, usually for rent on a time-duration
basis. There are a number of online databases to
help you find a commercial kitchen in your area:

•• Specialty Food Co-packers Directory

of Commercial Kitchens

•• Culinary Incubator
•• CookItHere

•• Kitchen For Rent

•• The Kitchen Door

•• Cornell Food Venture Center

A food incubator is much like a commercial kitchen,
in that it provides food processing space and
small-scale equipment, usually for rent on a
time-duration basis. However, food incubators also
provide various types of business development
services. GFI’s global map of accelerators and
incubators can help you find a food incubator in
your area.
A co-packer (also known as co-manufacturer) is a
production facility that uses your IP to manufacture and/or package products on your behalf in
exchange for a fee, usually either based on the
quantity of items produced or the amount of time it
takes to produce them. In contrast to commercial
kitchens and food incubators, co-packers provide
the labor to produce your product in addition to the
production facility. Since co-packers usually have a
minimum production quantity, most manufacturers
start out in smaller-scale facilities like a commercial kitchen or food incubator before moving on to
a co-packer and eventually building their own
manufacturing facility.
Since using a co-packer requires that you share
your formula with them, you should work with your
lawyer to implement a contract to protect your IP.

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Section 4: Create Your Product

Miranda Grizio, GFI Research Fellow and product
development food scientist, provides a summary of
what’s important to look for in a co-packer:

A number of directories exist to
help you find a co-packer, including the Specialty Food Co-Packers
Directory and the Specialty
Food Association co-packers
directory. Services like
PartnerSlate may also be useful
for identifying co-packers and
other food industry partners.
This guide can help you identify
important factors to consider
when selecting a co-packer.
These articles from Food and Tech
Connect and Consolidated Label
Co. are also helpful.

•• The right equipment for your product
•• Location
•• Third-party safety certification (e.g., Safe Quality

Food Institute’s SQF Program)

•• Minimum order quantity that’s not too high for you
•• Transparency (they let you see the facility, answer

all your questions, and seem to communicate in an
honest and straightforward way)

•• Food certifications that you may need

(e.g., Kosher, organic)

Before you communicate with a co-packer, you
should be prepared to discuss your process and
your estimated annual volume. When you meet in
person, it can be good to bring a food scientist with
you so you have someone who knows the industry
and can watch for red flags.

XXI. Packaging
Like food production equipment, packaging
equipment can also be highly specialized and
expensive. Thus, most early-stage food businesses
choose to package their products at an existing
facility, preferably in the same place that manufacturing is performed.

Packaging Materials

A number of recent innovations in packaging have
provided increased shelf-life, sustainability, convenience, and food safety. For example, retort
(pouch) packaging is increasingly being used as an
alternative to canning for shelf-stable products.
The pouches use less than 5% of the packaging
material of cans and help improve food quality,
texture, flavor, and aroma due to shorter processing times at high temperatures. Loma Linda and
Good Catch are examples of plant-based brands
using retort packaging technology. Your food
scientist, co-packer, or manufacturing facility can
help you understand what packaging options are
available to you. Especially when starting, try to
use stock packages as much as possible, which
you can customize quickly and inexpensively with
printed labels. IFT provides a summary of packaging options and what to consider when selecting
packaging materials and methods. When selecting
packaging materials, you should perform QA tests
to determine how well different packaging options
maintain your product quality in various conditions.
Your packaging needs will vary depending on
whether you intend to enter the retail or foodservice market. Retail packaging is consumer-facing,
and therefore requires marketing efforts to make
the product appealing to consumers (see the Food
Labeling – Marketing Component section of this
manual for more information). Foodservice packaging, however, is not consumer-facing.
Foodservice buyers prefer no-frills packaging that
prioritizes function over form. Sturdiness, ease of
storage, and easy opening and discarding are
desirable attributes in foodservice packaging.

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Section 4: Create Your Product

Another difference between retail and foodservice
packaging is that foodservice products will typically be sold in bulk sizes. One exception is that
grab-and-go items sold through foodservice
channels (e.g., a bag of chips at Subway) will still
need to be packaged and labeled for individual
sale. Whether you’re selling in retail or foodservice,
you should talk with your downstream supply
chain customers (e.g., distributors, redistributors,
retailers, foodservice operators) to make sure your
product packaging sizes and case sizes meet their
needs. It’s important that your products fit appropriately on retail shelves, in warehouses, and in
trucks and other forms of transportation.
Another note on foodservice pricing is that bulk
sizing can easily obscure the value proposition of
your product, so foodservice pricing is often
quoted in portion sizes—a $0.50 per serving price
is an easier sell than quoting just the gross case
cost. Per-serving pricing can help emphasize the
profit potential of your products to foodservice
prospects, and you should also note any labor
savings that your products can provide. If your
product can be stored more cheaply than its
competitors, such as at ambient temperature
instead of in a refrigerator or freezer, make sure to
note that in your packaging and in sales materials.

Food Labeling – Marketing Component

As described in this Food Crumbles article on
The Basics of Food Labels, food labels serve two
primary purposes: 1) make the product look
appealing and make people want to buy it and 2)
tell the legal details of your food. Thus, food
labels are both a marketing tool and a component
of legal compliance. In this section, we’ll discuss
the marketing component of food labeling.
In this manual, refer to the Food Labeling –
Regulatory Component section for more infor
mation on that topic.
The average consumer looks at a brand for just a
couple of seconds before making a purchase
decision. In the very short time a person scans a
supermarket shelf, how well will your packaging
perform? Successful package design must clearly
answer the following key questions for consumers:
Who am I? What am I? Why am I right for you? We
recommend hiring a professional designer to make
your packaging as visually appealing as possible
while ensuring the correct hierarchy of communication. You might also consider using focus groups,
eye tracking studies, or other consumer testing
techniques to evaluate the effectiveness of your
packaging design prior to rolling it out. Ask your
packaging design firm to create mockups of your
product on-shelf to examine how it looks in a retail
context among competitors in the category and
whether it creates an effective brand block. Adam
Spriggs of Nucleus Maximus, a packaging design
firm, gave a presentation on effective packaging
design at Expo West 2017.

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As with other forms of marketing, effective packaging is designed with your target consumer in mind.
For many startup brands with limited budgets, your
packaging is going to be one of your primary forms
of marketing. The first consideration is the context
in which the consumer will see your product. Will it
be shown on a shelf at room temperature, displayed behind a freezer door, or lined up in a
refrigerated case? What section of the store will it
be in? What other products will be nearby, competing and non-competing? If you will be offering
multiple items next to each other, such as different
flavors, you will want to ensure that the package
designs you use complement each other for visual
impact when lined up on a shelf. Make sure your
product fits—literally and figuratively—in the
context where stores will display it.
The principal display panel is the front-facing side
of your product where the only most important
information goes, such as brand name, product
name, statement of identity, product photos, and
net quantity (see Food Labeling – Regulatory
Component section for more information on
required components). You might also include
attributes (e.g., organic, “free-from” claims) and
certifications (e.g., vegan certification, Non-GMO
Project verification) that are important to your
target audience, but be careful of including too
much information and making the label feel
cluttered. Good package design follows a clear
hierarchy of communication, with the eye being
drawn to the most salient information first, then
guided to other supporting items. Packaging
design should be extendable to other items as you
grow your product line. Your packaging is effective
if your target customers notice it on a shelf and
quickly understand what it is.

It’s easy to imagine your products being stocked
and displayed in ideal conditions, but in reality, not
every store will display them effectively. Many new
products are stocked at floor level or on the top
shelf, where less people are likely to see them.
Getting placement at eye level often requires
paying the retailer a fee, and can be hard to get
since most established companies take the
premium space. Sometimes your product will not
be faced correctly; it could be pushed aside for
other products, hidden behind pricing stickers or
special displays, or not properly rotated towards
the buyer. Try to make your packaging compelling
from multiple angles, both a wide horizontal angle
and the vertical angle (since your products may be
on the highest or lowest shelf). Make sure it pops
from 4-5 feet away, since most consumers scan
shelves from that distance.
Research from Mattson shows that consumers
respond much more positively to the term “100%
plant-based” compared to the term “vegan.” The
reason might be that consumers who do not follow
a vegan or vegetarian lifestyle might assume that
products carrying those terms are not for them.
Therefore, GFI recommends not using the terms
“vegan” or “vegetarian” prominently on your label.
Instead, we recommend using terms that are more
appealing to flexitarian and mainstream audiences.
There are many ways you can do this.
For example, Beyond Meat uses the term “Plantbased Burger Patties” to identify the Beyond
Burger. Good Catch uses the terms “Fish-free” and
“Crab-free” to describe its plant-based seafood
products. Gardein uses the term Seven Grain
Crispy Tenders to prominently identify its breaded
chicken tender product, then uses the term
“chick’n” in the product description. Field Roast
uses both familiar terms such as “Corn Dogs” and

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Section 4: Create Your Product

unfamiliar but fun terms such as “Fruffalo Wings”
to identify its products, then includes the word
“vegan” in the product descriptions. Having a small
“V” symbol, vegan certification, or subtle vegan/
vegetarian claim will serve as a code that reaches
vegan and vegetarian consumers without being
off-putting to flexitarian and mainstream consumers. You can also use consumer research methods
like focus groups or surveys to evaluate on-pack
messaging and label design.

Golden
Dry

5
4

Bland

3
2
1

Sweet

Soft

Nutty

Crunchy
Chewy

XXII. Product Testing and Quality Assurance (QA)
Product testing has many different purposes,
including informing product formulation, determining shelf-life, and ensuring product safety and
quality assurance. Therefore, various forms of
product testing are conducted during the product
development process, as well as throughout the
manufacturing of products to be sold to consumers. Your food scientist and/or production facility
can help you understand when each type of testing
is needed and which specific tests are appropriate
for your product.
The four main categories of testing are analytical
(including chemical and physical), sensory
(also called “organoleptic,”) microbial, and usage
(also known as “product usage,” “consumer use
testing,” “consumer in-use testing” or “in-use
product testing”).

•• Analytical testing: Analysis of chemical and

physical properties of food (e.g., pH, %acid,
%salt, %moisture, water activity, %fat, color,
viscosity, hardness, density, allergen testing,
nutritional analysis)

•• Sensory testing: Analysis of sensory properties

of food (e.g., sweetness, saltiness, chewiness,
savoriness)

•• Microbial testing: Analysis of microbial activity in

food (e.g., total plate count (TPC), yeast and mold)

•• Usage testing: Analysis of consumer perceptions

and experience of food (e.g., in-home usage test
(IHUT), consumer focus groups)

This article from Food Manufacturing provides an
overview of these types of testing and explains why
each is used.
During product formulation, sensory testing is
often used to compare different iterations of the
product and select the most appealing one.
Companies might perform sensory testing internally or use focus groups to solicit consumer
feedback. Testers might rank products according
to a specific characteristic, e.g., from most salty to
least salty, or they might rate products on a scale
of 1-5 for each characteristic. Ratings from multiple different characteristics can be visualized in the
form of a star diagram, like the example on the left.
During shelf-life testing, various types of sensory,
analytical, and microbial tests are conducted at set
intervals over a period of time. Weekly testing is
common for refrigerated products, and monthly
testing is common for shelf-stable products. In
some cases, accelerated shelf-life testing can be

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Examples of different types of quality
assurance tests include:
•• Weight checks to make sure the product

is within the required weight range

•• Visual checks to make sure it appears

the way it should

•• Organoleptic checks for flavor,

texture, and aroma

•• Temperature checks to make sure

it is being kept at a safe temperature

•• pH checks to make sure it is

not too acidic or basic

•• Microbiological checks to protect

against harmful bacteria

•• Chemical checks to protect against

chemical contamination

•• Metal checks to protect against

contamination by metals

Section 4: Create Your Product

performed, in which the product is held at a higher
temperature than normal so that results can be
determined sooner. In shelf-life testing, microbial
and analytical tests like pH can provide an indication that spoilage is coming before it can be
detected through sensory testing. Prior to beginning shelf-life testing, it is important to run separate tests to confirm the product is as expected
before spending weeks or months on shelf-life
testing a product that was not produced to specification. While the specific tests and specifications
will vary based on the product, this example shelf
life test provides a template for a vegan soft
cheese product and a cracker product.
In addition to performing shelf-life testing under
normal conditions, you should also conduct testing
to understand how your products respond to less
than ideal conditions. It is always possible that your
products will be exposed to heat, humidity, and
physical stress during transport and distribution.
Entrepreneurs should understand how robust their
products and packaging are to such conditions,
and use this knowledge to inform improvements in
product formulation and packaging design.
Another type of testing that incorporates various
sensory, analytical, and microbial tests is QA
testing. QA testing is an essential component of
food safety plans, which all food facilities are
required to have under the Food Safety
Modernization Act (FSMA). QA tests are designed
to safeguard food safety by detecting biological,
chemical, and physical hazards that might be
present within food, as well as establish that the
product was manufactured as intended and meets
the required specifications. QA testing can also

help establish that your products are being produced consistently each time, and that there isn’t
any unexpected variation due to ingredient supply,
manufacturing errors, or other causes. Some QA
tests are intended for in-line testing (i.e., prior to
packaging), while others are used for finished
product testing (i.e., after product packaging).
Normally, product from each production run is QA
tested. For continuous processing, one sample per
hour may be evaluated. Alternatively, samples may
be evaluated from the beginning, middle, and end
of each production run. For batch processing, a
sample from each batch is often tested. Weight
checks, metal checks, and temperature checks are
often automated, with every package being monitored
and automatically kicked off the line if non-conforming.
QA testing is also performed on manufacturing
equipment before, during, and after production.
Within any type of testing, the specific tests that
will be most appropriate will depend on your
product. For example, the tests that are industry
standard for milk products are very different from
those that are typically used for crackers. If you are
working with a food scientist, they will help identify
which tests are needed during which aspects of
the product development and manufacturing
process as well as help you determine which tests
to perform in-house versus outsource to a laboratory. Food consulting companies often have bulk
discount pricing agreements with labs.

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Section 4: Create Your Product

Co-packers, commercial kitchens, and food
incubators will also provide assistance with
understanding which tests are needed and will
often have the equipment and established protocols for performing tests in-house as part of their
existing food safety plan. In many cases, co-packers and other manufacturing facilities will already
have standard protocols in place for product
testing. If there are specific quality control measures that you would like to implement beyond
these standard measures, either on your own
accord or upon your food scientist’s recommendation, you should feel free to bring that up. For
example, if you want to implement a specific
quality control test or increase the frequency of
a certain test, the facility should accommodate
your request.
Entrepreneurs typically perform sensory testing
in-house since you don’t need fancy equipment
to evaluate things like appearance, odor, taste,
and texture. Even if you decide to outsource
some aspects of sensory testing, you should still
conduct your own sensory testing in-house since
no laboratory will be as familiar with your products
as you are. You should also conduct sensory and
usage testing with consumers, whether that’s
through formal measures like focus groups or
in-home usage tests (the gold standard) or through
gathering informal feedback during product
sampling at in-store demos, trade shows, or other
events. Sometimes in-house testing can be biased
away from what consumers really want, or overly
sensitive in a way that consumers aren’t. Getting
your product in front of consumers to solicit
feedback is one of the best ways to inform product
development and continuous improvement.

Analytical and microbial testing require more
advanced equipment, so entrepreneurs often
choose to outsource these tests to laboratories.
However, some analytical tests can be performed
with relatively simple equipment (e.g., pH testing).
Which tests entrepreneurs choose to outsource
will usually depend on their access to resources.
For the tests that you decide to outsource to
laboratories, in addition to getting referrals
through your food scientist or production facility,
you can also look up laboratories through the
IFT Services Directory.

XXIII. Consumer Testing
Product development should be iterative, meaning
that you should constantly be incorporating
feedback from consumers to make your product
better. While you might think that your product
tastes great, your packaging looks great, and your
product is 100% market-ready, consumers might
have a different opinion. Unfortunately, our own
intuitions and feedback from those in our circle
doesn’t always match up with how consumers
perceive your brand or product. Consumer testing
is a useful tool for figuring out whether your
product is meeting consumers’ desires and
expectations, and using that information to inform
the development of your product is invaluable.
There are a number of consumer testing methods,
but perhaps the most powerful is getting your
product in front of people through product sampling and gathering their feedback. You can also
use methods like focus groups, online surveys,
social media, eye tracking studies, or other
experimental designs. For useful results, you
should ensure that you conduct testing only with
consumers in your target market.

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For online surveys, Amazon Mechanical Turk
(MTurk) is a common way to gain quick and
inexpensive feedback from a fairly representative
US population, but there are limitations with using
MTurk that should be considered. Targeted customer groups can also be reached through other
crowdsourcing channels such as Prolific Academic
or more traditional providers such as Qualtrics, SSI,
GfK, YouGov, and Toluna.
In addition to providing insights about your product
itself, consumer testing can also be used to
provide insights into your branding and messaging.
This is especially important for companies who
intend to sell their products internationally. If you
will be entering an international market, you
should take steps to understand how your brand
name and messaging translates into the local
language and how it might be perceived given the
local culture. Failure to do so could result in
marketing that is ineffective at best or offensive at
worst. Even established companies with substantial marketing budgets have been known to make
these types of mistakes. To prevent a marketing
blunder from happening to you, be sure to conduct
consumer testing among locals prior to launch.

XXIV. Intellectual Property (IP)

Intellectual property (IP) is defined by the World
Intellectual Property Organization (WIPO) as
“creations of the mind, such as inventions; literary
and artistic works; designs; and symbols, names
and images used in commerce.” Although this
definition might sound abstract, IP has real
monetary value, and therefore it’s important for
startups to have a strong emphasis on protecting it.
This Forbes article discusses various measures and
considerations for protecting IP.

Ownership

It may sound obvious, but it’s important to ensure
that your company owns its IP. Any IP that was
created prior to incorporation will need to be
transferred to the company by a written agreement,
such as this example Intellectual Property
Assignment Agreement from UpCounsel. As
mentioned in the hiring section, you should also
have all new employees sign an Employee
Proprietary Information Agreement form to ensure
that any IP created by an employee belongs to the
company, not the employee. The same concept
applies to independent contractors, who should
also sign a written agreement.

Patents, Copyrights, Trademarks,
and Trade Secrets
Measures of protecting IP include patents, copyrights, trademarks, and trade secrets. The SBA
explains the difference between these measures:
•• Patents protect inventions or discoveries.
•• Copyrights protect original works of authorship.
•• Trademarks protect words, phrases, symbols or

designs identifying the source of the goods
or services of one party that distinguishes them
from others.

•• Trade secrets protect information that is secret,

has commercial value because it is a secret, and
has been subject to reasonable steps by the
rightful holder of the information to keep it secret
(e.g., through confidentiality agreements).

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Of these four options, patents and trade secrets
are the two that are used to protect technical
innovations. There are a few key differences
between patents and trade secrets. One important
difference is that patents expire after a certain
number of years, and since patents are in the
public domain, the information in your patent
application could be used by someone else if you
application is denied or when your patent expires.
In contrast, trade secrets can be kept indefinitely
(e.g., the formula for Coca Cola has been a trade
secret for more than 125 years).
Another important difference is the eligibility
criteria. While a trade secret can be any type of
commercially valuable information the company
has made an effort to keep secret, the eligibility
criteria for obtaining a patent is stricter. According
to 35 U.S. Code § 101, any person who “invents or
discovers any new and useful process, machine,
manufacture, or composition of matter, or any new
and useful improvement thereof, may obtain a
patent,” subject to the conditions and requirements of the law. Some of these conditions include
usefulness, novelty, and non-obviousness of the
patentable subject. Due to these conditions, food
companies using established techniques and
ingredients to produce their products will likely not
be eligible for a patent and will likely be better off
treating their IP as a trade secret.
However, innovative companies using novel,
non-obvious, and useful manufacturing techniques
might consider applying for a patent. Examples of
patentable IP within the clean meat industry might
include a method for modifying the cell lines to
increase their accumulation of muscle proteins,

a platform for large-scale scaffold fabrication, or a
biomaterial composition of the scaffold that
enhances differentiation efficiency. On the plantbased side, examples of patentable IP include the
use or production of novel ingredients, such as
Impossible Foods’ technology to use leghemoglobin in plant-based meat. Unique texturization
methods may be patentable if the process is
sufficiently novel, though very few patents on
extrusion techniques have been approved to our
knowledge. Harvard Business Review provides
further insight into the advantages and disadvantages of patents and trade secrets.
After you’ve considered all the pros and cons of
different IP protection methods, develop an IP
plan that details the specific methods you will use
to protect specific proprietary information. This IP
plan should be detailed in your company’s technical plan. WIPO provides information about how to
incorporate your IP strategy into your business and
technical plan. In the United States, the US Patent
and Trademark Office provides further information
about patents and trademarks. Internationally, the
World Intellectual Property Organization (WIPO)
has further resources, particularly about the Patent
Cooperation Treaty, which allows companies to file
for international patents that provide protection in
150+ countries.
Accelerator programs and entrepreneurship
centers at universities may also be helpful with
assessing the IP landscape and filing patents. For
example, The Cardozo/Google Patent Diversity
Project provides free legal support to women and
minorities seeking patents.

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Non-Disclosure Agreements (NDAs)

A non-disclosure agreement (NDA) is a contract
that protects the sharing of specific confidential
information. Startups often use NDAs to protect IP
that must be disclosed for business reasons. For
example, it is common for manufacturers to
implement an NDA with their co-packer prior to
disclosing their formulation. Keep in mind that
NDAs protect specific information (for example, a
product formulation) but are usually not enforceable if they are too broad or used incorrectly. You
should work with your lawyer to implement NDAs
as appropriate.
It’s important to note that VCs usually prefer not to
sign an NDA unless they believe there is a compelling reason to have one in place, such as exceptionally unique but not yet protected IP. In other words,
if you’re a new clean meat company with a novel
technical approach, it’s ok to ask investors to sign
an NDA (though we still wouldn’t recommend
doing so upon first contact). If you’re commercializing your grandmother’s pasta sauce recipe, it will
likely make you look inexperienced to ask for an
NDA. McCarthy Garber Law provides insight into
when to use an NDA for your startup.

XXV. Regulatory Considerations
As you develop and produce your product, you
must comply with regulations related to the
processing and handling of food. If you are using a
novel ingredient or creating a novel product (e.g.,
clean meat), you also need to consider the appropriate regulatory pathway to introduce your
product to the market. If you don’t comply with all
of the appropriate regulations, your company will
be at risk for legal action and reputational damage.
North Dakota State University provides an overview
of food-processing regulations that can help you
understand the various requirements.

FDA Authority

The Food and Drug Administration (FDA) regulates
all foods and food ingredients introduced into or
offered for sale in interstate commerce, with the
exception of meat, poultry, catfish, and certain
processed egg products, which are regulated by
the U.S. Department of Agriculture’s (USDA) Food
Safety and Inspection Service (FSIS). It has not
yet been determined whether clean meat will
be regulated by USDA or FDA, but plant-based
products are regulated by the FDA. The FDA has
information on how to start a food business,
including information on FDA requirements and
how to ensure your company is compliant.
Another good place to start is the FDA’s Food
Guidance and Regulation, which contains FDA
guidance and regulatory information with links to
Federal Register documents. It also contains
information about food safety programs, manufacturing processes, industry systems, and import/
export activities.

Food Safety Modernization Act

The Food Safety Modernization Act (FSMA) was
implemented in 2011 to ensure the safety of the
US food supply. The FDA’s FSMA website provides
additional information, including rules and guidance for industry.
FSMA applies to food facilities, defined by the FDA
as establishments that “manufacture/process,
pack, or hold food for human consumption in the
US.” The implication is that if you have your own
production facility, you are responsible for FSMA
compliance, including registering as a food facility
with the FDA, allowing FDA inspections, creating a
food safety plan, complying with current Good
Manufacturing Practices (cGMP), and maintaining
certain records. In contrast, if you manufacture
and package your product through a co-packer,

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Section 4: Create Your Product

commercial kitchen, food incubator, or any external production facility, that facility is responsible
for FSMA compliance. However, it is still advisable
to put this understanding in the co-packer agreement itself, making it clear that the producing
facility has an obligation to comply with all laws
and regulations governing production, including
FSMA, and indemnifying the other party for losses
associated with failure to comply with FSMA or
other requirements.
Even if you are not legally responsible for FSMA
compliance, you could face negative consequences
if unsafe practices compromise the integrity of your
products. Thus, manufacturers should conduct due
diligence to ensure that a potential manufacturing
facility is compliant with FSMA. The Specialty Food
Association provides a list of questions manufacturers should ask potential co-packers before
beginning production.

State and Local Requirements
Regulations vary by state and county, but in
general, companies that manufacture, sell, or
distribute food are required to have state and local
health permits and comply with periodic inspections. In most states, either the department of
health or the department of agriculture is responsible for overseeing the food industry in the state.
For example, in California, the Department of
Public Health is responsible for overseeing food
production, while in Minnesota, the Department of
Agriculture does the same. Foodsafety.gov provides this tool to help you identify the health and
agriculture departments in your state. Once you
identify the appropriate state agency, visit their

website to learn more about permit, inspection,
and other requirements. You should also identify
any local agencies, such as county or city health
departments, that have authority over food production, and take steps to comply with all local
requirements. The National Association of County
and City Health Officials (NACCHO) provides this
tool to help you find your local health department.
The Balance provides additional information on
how to determine if you need a health permit for
your food business.

Food Labeling – Regulatory Component
FDA regulates labeling of food products that fall
under its jurisdiction. FDA has a food labeling guide
that provides guidance to industry on how to label
food products, including topics like ingredient lists,
allergen statements, statements of identity, nutrient declaration, net contents declaration, and label
claims. North Dakota State University provides
further information about regulations regarding
advertising and label claims.
If you are working with a co-packer, they can
usually do the nutrition labeling for you (often with
Genesis R&D food labeling software), but you may
need to provide them with the nutritional data for
any unique ingredients you are using. Covance and
Advanced Food Labs are examples of food labs
that can do that type of testing. You can also look
up food labs through the IFT Services Directory or
the Cornell Food Venture Center. For more information on the other purpose of food labeling, refer
to the Food Labeling – Marketing Component
section of this manual.

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Section 4: Create Your Product

Standards of Identity
In all aspects of food labeling, FDA prohibits
manufacturers from using false or misleading
information. The FDA requires that manufacturers
list a statement of identity (the name of the food)
and a net quantity statement (the amount of
product) on the principal display panel (the
primary surface of the package). The FDA establishes standards of identity for many foods, which
can be found in 21 CFR Parts 130 to 169. FDA
requires that if a food does not meet the requirements of a standard of identity, it may not bear the
name specified in the standard. Conversely, if a
food does meet the requirements of a standard of
identity, it must bear the name specified in the
standard. For example, the standard of identity for
“salad dressing” can be found in 21 CFR Part
169—any product that does not meet this standard
may not be labeled as “salad dressing,” and any
product that meets this standard must be labeled
as “salad dressing.”
If a standard of identity does not exist for a particular food, the FDA requires that manufacturers use
the common or usual name of the food, which can
be established by regulation or cultural use. For
example, tempeh does not have a standard of
identity, but tempeh manufacturers use “tempeh”
as their statement of identity because it is the
common name for the food. For products that have
neither a standard of identity nor a common or
usual name, the FDA requires an appropriately
descriptive term be used as the statement of

identity. For example, according to the FDA’s food
labeling guide, an appropriately descriptive term
for a hydrolyzed protein made from a blend of corn
and soy protein would be “hydrolyzed corn and soy
protein.” North Dakota State University provides
additional information about regulations regarding
standards of identity.
When deciding how to label products, plant-based
manufacturers should understand the risks related
to using a term that has a standard of identity that
refers to a dead animal, such as chunk tuna (which
talks about retaining the “original muscle structure”). GFI’s position is that compound names
(such as “plant-based tuna,” “soy-based chicken,”
or “almond milk”) are protected speech under the
First Amendment, even where part of the name
corresponds to a term with a standard of identity,
so long as the meaning is clear to consumers. Thus,
regulatory agencies should not restrict the rights of
manufacturers to use compound names on
product labels. Indeed, these terms are commonly
used in the marketplace—usually without any
negative consequences.
If FDA found that a product were mislabeled, it
would likely send the company a warning letter.
The agency routinely posts these letters to its
website. FDA might then decide to bring an
enforcement action, which could result in a recall
of the product (see the Recalls section of this
manual for more information). Even if the agency
decided not to pursue further action, the existence
of a warning letter would make the product an
attractive target for a class action lawsuit alleging
that consumers were misled.

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The cost of defense varies considerably.
Washington, DC, attorney Nigel Barrella estimates
that responding to a warning letter that only
alleged misbranding would take 5 hours (approximately $1,250); that amount could double if much
follow-up correspondence with FDA were required.
Litigation would likely run from $10,000 to
$30,000, depending on complexity. Risk may be
minimized by using a modifier before the potentially problematic term, consistent with the
approach GFI outlines in our petition to the FDA.

While costs vary, a study by the Food Marketing
Institute and the Grocery Manufacturers
Association (GMA) found that a recall costs an
average of $10 million in direct costs alone. In
addition to direct costs, companies can also face
indirect costs related to brand damage and lost
sales. To minimize these damages, manufacturers
must be able to respond quickly and efficiently in
the event of a recall. To do this, manufacturers
should have a written recall plan in place as
required by FSMA.

In 2018, the FDA suggested that it might revisit its
approach to standards of identity for dairy terms
like “milk.” GFI’s position is that this is an ideal
opportunity to address our petition for rulemaking
that requests that the agency issue a regulation
that would make clear that manufacturers can use
non-misleading compound names to describe their
products, which would greatly reduce their risk.
However, there is a risk that the agency will
attempt to prohibit the use of terms like “almond
milk,” which GFI would vigorously oppose. In
the meantime, GFI’s policy department is available
to answer questions about standards of identity
and implications for plant-based manufacturers.

Your recall plan should identify steps that will be
taken in the event of a recall, including procedures
to notify consignees (i.e., recipients of the product),
notify the public when necessary (i.e., if there is a
food safety risk), conduct effectiveness checks to
confirm that the product was removed successfully,
and to appropriately repurpose, divert, or safely
dispose of the recalled product. The recall plan
should also identify who is responsible for carrying
out each step.

Recalls

A recall is the removal of a product from the
market. While the FDA has the authority to issue
mandatory recalls, recalls are almost always
voluntarily issued and executed by companies.
While food safety issues are one reason why a
recall may occur, recalls can also be issued due to
noncompliance with FDA labeling or manufacturing
laws such as packaging defects or improper
labeling. FDA provides information on recalls,
including guidance for industry.

The Food Safety Preventive Controls Alliance
provides a recall plan template that can be customized to meet your company’s needs. The
Specialty Food Association’s post on how to
develop your written recall plan walks through this
template and provides other tips. Food Decision
Software also provides information on how to build
a recall plan, including free templates.
In addition to having a well-prepared recall plan,
manufacturers should investigate recall insurance,
which is discussed in the Business Insurance
section of this manual.

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Traceability
An important component of any recall plan is
traceability. Traceability is the ability to track food
through all stages of production, processing, and
distribution. Traceability is important for being able
to determine which products need to be recalled.
If the affected products cannot be identified, you
might have to broaden the scope of your recall,
which could result in greater financial losses.
Lot Codes

As outlined in this article from Safe Food Alliance
on the fundamental requirements of traceability,
the first step in traceability is identification. You
should have a unique identifier called a lot code for
each product in your facility, including raw materials, finished products, and cases of raw materials
and finished products.
On finished products, lot codes indicate the date/
time of manufacture, the production facility
location, and the equipment line that was used.
Rather than listing the date of manufacture in the
lot code (which might turn off consumers if the
product has a long shelf life), manufacturers
usually list the expiration date and use the product’s shelf-life to calculate back to the production
date. For example, a lot code of EXP030518A2
could be used to indicate that the product
expires on 3/5/18 and was made at Facility A on
Production Line 2. In this example, if the product
has a shelf life of two months, the manufacturer
would know that it was produced on 1/5/18.

While expiration date labeling is not required by
law (except for infant formula), it is expected by
retailers, distributors, and consumers, so we
recommend using it. For more information on
expiration date labeling, see the USDA’s FAQ on
Food Product Dating.
In addition to using lot codes on final consumer
packaging, you should also use lot codes on cases
of the product. This is important for ease of
traceability (so downstream buyers don’t need to
open every case to check the lot code) but also for
inventory management (e.g., first-in first-out
(FIFO), expirations).
Lot codes should also be used to label raw materials (e.g., ingredients, packaging). This is important
because if you find out that a raw material is
contaminated or defective, you need to be able to
determine which products it was incorporated into
and where they were distributed. Raw materials
will arrive to your facility already labeled with the
supplier’s lot code on the case and the bin. In
other words, the supplier’s finished product lot
code will be your raw material lot code.

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Barcodes

Barcodes are another tracking tool that are not
required by any federal regulations, but are usually
expected by retailers and distributors. Barcodes
identify the type of product, but unlike lot codes,
they do not provide any information about where/
when/how the product was made. In other words,
two different packages of the same type of product
will share the same barcode, but they may not
share the same lot code.
GS1 is a nonprofit organization that develops and
maintains barcodes, and GS1 US is the GS1
Member Organization for the US. GS1 US has a Get
Started Guide to help you understand the steps for
obtaining barcodes (for products sold in stores)
and product identifiers (for products sold online).
Keep in mind that you might need to obtain more
than one type of identifier. For example, you might
need a UPC-A barcode for identifying your individually packaged retail product, and a ITF-14 or
GS1-128 barcode for identifying cases or pallets of
your product during warehousing and distribution.
These distinctions are explained in the Determine
Barcode Type step of the Get Started Guide. GS1
also provides more traceability information and
resources on its website.

Recordkeeping

In addition to assigning and labeling products with
lot codes and barcodes, you also need to implement recordkeeping procedures to keep track of all
this information. ERP software or inventory management software may be used to keep track of lot
codes. Before you’re ready to implement one of
these systems, you might use a simple spreadsheet. Information that’s tracked includes ingredient lot codes that go into each finished product
lot, finished product lot codes, how much product
of each lot code was produced, and where it was
shipped (distributors, supermarkets, restaurants)
so they can all be notified in case of a recall and
advised to return or destroy the product. North
Dakota State University provides additional information about regulatory requirements related
to recordkeeping.

Determining the Regulatory Status
of Novel Food Ingredients
If you are using a novel food ingredient within your
product (e.g., Impossible Foods’ leghemoglobin or
JUST’s mung bean protein isolate), you should take
steps to determine the regulatory status of that
food ingredient. In addition to food ingredients,
any novel substance intended for use in producing,
manufacturing, packing, processing, preparing,
treating, packaging, transporting, or holding food
should be considered if it becomes a component of
or otherwise affects the characteristics of the food.
The FDA provides guidance on how to determine
the regulatory status of a food ingredient, including
the Generally Recognized as Safe (GRAS) process.

Section 5

SELL YOUR
PRODUCT
XXVI. Developing Your Marketing Plan
XXVII. Marketing Mix

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Section 5: Sell Your Product

Even if you developed the best product in the
world, it isn’t going to sell itself. Marketing encompasses all aspects of creating and selling your
product, and you will need a solid marketing plan
to take your product from the production line to
consumers’ plates.
Let’s start by defining the differences between
goals, strategy, and tactics. Your marketing goals
define what you’d like to accomplish; your strategy
is a high-level idea of how those goals might be
achieved; and your tactics are the specific actions
you could take to implement that strategy. This
blog post from BNBranding contains a helpful
analogy: if your goal is to “win the war,” then your
strategy is to “divide and conquer,” and your tactics
are: “CIA spies gather intelligence,” “Navy Seals
knock out enemy communications,” “Paratroopers
secure the airports,” etc. When building your
marketing plan, you first develop your goals, then
your strategy, then your tactics.
Thus, the first step in building your marketing
plan is to set your marketing goals. Once
you’ve defined what you’d like your marketing
to accomplish, you can move on to defining your
marketing strategy, which includes conducting
a situation analysis and defining your competitive
positioning and brand strategy. Then, you’re ready
to choose the specific tactics (e.g., social media,
writing news releases, product sampling) that will
make up the promotion component of your marketing mix. You can then compile all of this information into a written marketing plan that will help
guide all your marketing decisions.

XXVI. Developing Your Marketing Plan

This section includes steps for developing your
marketing plan and implementing that plan to sell
your product in the real world. Note that different
companies will decide to outsource different aspects
of this process. For example, some companies might
decide to outsource their social media management,
while others will do this in-house. Most companies
will outsource things like logo and packaging
design. Depending on your level of comfort with
brand building, you might also want to outsource
the process of defining your brand strategy, though
it’s always a good idea to think through all these
steps in-house before hiring someone.
Since you’ll likely need to hire outside creative
talent for at least some aspects of the marketing
process, the question is not whether but when to
hire a creative agency. In making this decision,
there are three tiers of support you might consider:
•• Tier 3: A freelancing service like 99designs, Upwork,

or Fiverr that produces a specific deliverable
(e.g., logo, package design) on a one-time basis.
Brand strategy support is not usually provided.
This is a low-cost option, but is only recommended
if you have a clearly defined brand strategy and
vision for the end result. Quality of results may vary.

•• Tier 2: A marketing agency that helps define

brand strategy and provides specific services but
not the full breadth of services that a full-service
creative agency would provide. For example,
Nucleus Maximus and Interact are marketing firms
that focus on packaging design. There are also
marketing firms that focus on different aspects of
digital marketing. For example, ChuckJoe focuses
on website, social media, and email marketing,
while Heart Creative Culinary Agency focuses on
promotional photos and videos.

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•• Tier 1: A full-service creative agency that helps

The segmentation process
involves dividing the market into
groups of consumers that have
important features in common.
The four main types of market
segmentation are:
•• Demographic
•• Geographic

•• Psychographic
•• Behavioral

build the entire brand, from defining brand strategy
to designing packaging, website, social media,
print collateral, videos, etc. This is the most
expensive route, but the benefit is that it does not
require coordination between different agencies
and can often lead to a more unified brand.
Some examples are VMG Creative, D+i Creative,
and The Inlay.
Luke Raymond of VMG Creative (Ripple’s creative
agency) presented on a past GFIdeas call
about how to build a brand and when to engage
a creative agency—here is the slide deck.

Step 1: Set Your Marketing Goals and Objectives

The first step in developing your marketing strategy
is to define your marketing goals. This blog post
from Smarta Marketing provides overview of
different types of marketing goals, including
creating brand awareness and preference, inducing product trials, encouraging repeat business,
and growing sales. Marketing goals are very
high-level, but defining them at the onset can help
inform all of your marketing decisions. After you’ve
defined your goals, you should define measurable
and time-bound objectives that can be used to
gauge whether you’ve achieved your goals.

Step 2: Conduct a Situation Analysis
With your goals and objectives in place, you’re on
your way to developing your marketing strategy.
The next step is to conduct a situation analysis.
The purpose of a situation analysis is to evaluate
the current state of the market, including its size,
projected growth, and consumer trends. You
should also identify internal and external factors
that might affect your company’s ability to succeed
in that market. The Balance provides this overview

of situational analysis. Another helpful resource is
Cleverism’s guide to market situation analysis.
One useful tool for conducting a situation analysis
is the 3 C’s (company, customer, and competition).
In some models, the 3 C’s have been expanded to
5 C’s to include collaborators and climate. Volusion
provides this overview of 5 C’s analysis.
Another useful tool for situation analysis is SWOT
analysis, which evaluates your company’s
Strengths, Weaknesses, Opportunities, and
Threats. The Balance and Volusion each provide an
overview of SWOT analysis.

Step 3: Define Your Competitive Positioning
and Brand Strategy
After you conduct your situation analysis, your next
step should be to develop your competitive
positioning and brand strategy.
Competitive Positioning and Segmentation
Competitive positioning defines how you will
differentiate your product in the eyes of consumers
in your target market. Your situation analysis
should inform your competitive positioning.
However, there is additional pre-work involved
before you can develop your competitive positioning, which includes segmenting your market and
determining which market segments to target. To
accomplish this, the Segmentation, Targeting,
Positioning (STP) model uses three steps (you
guessed it): segmentation, targeting, and positioning. If performed correctly, these steps will allow
you to more effectively reach the consumers who
are most likely to purchase your product.

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There are a variety of new and old
tools you can use to segment your
market, from interviewing consumers to using advanced data
analytics tools. You can also use
techniques like consumer profiling and persona development to
better understand each of the
segments you identify. Medium
provides a list of market segmentation tools, and The Bridge
provides more information on how
to segment your market. Formilla
also provides this guide to psychographic segmentation, and
Fieldboom provides this guide to
behavioral segmentation.

Section 5: Sell Your Product

The idea behind market segmentation is that
consumers respond better to direct, targeted
communication compared to vague and generic
messages, and consumers who share traits
such as interests, needs, or qualities are likely
to respond similarly to marketing messages.
By identifying groups of consumers that are
most likely to buy your product and developing
messaging that appeals to each of these
groups individually, you’ll get more out of your
marketing dollars to increase your marketing
return on investment (ROI). In other words,
market segmentation allows you to personalize
your marketing campaigns toward your target
market in a cost-effective manner.
When segmenting your market, your goal is to
find a good balance between being too broad and
too specific. If you focus your marketing efforts
on too few or too specific consumer segments,
you might be missing out on entire markets.
For example, if you market your plant-based
cheese exclusively to vegans but fail to target
lactose-intolerant, health-conscious, or flexitarian
consumers, you could be severely limiting your
potential market. In contrast, if you try to include
too many segments or make your segments too
broad, you could be wasting marketing dollars
on people who are not likely to be interested in
your product. To state it simply, if you’re trying to
target everybody, you’re going to have a difficult
time reaching anybody.

Targeting

The targeting process involves evaluating market
segments to determine which ones you would
like to target. In other words, targeting involves
identifying the specific segments that are most
likely to become your next customers, and equally
important, determining which segments you
should not focus your efforts on. Market segments
should be evaluated according to their potential
for profitability, including segment size and growth,
as well as their accessibility. For example, will
consumers in this segment be receptive toward
your marketing messages? Will a large financial
investment be required to educate consumers in
this segment or otherwise make them receptive to
your messages? Are your competitors already
targeting this segment?
There are various tools you can use to target ads
to your desired consumer segments. Most social
media platforms have built-in functions that
utilize user and third-party data for ad targeting.
For example, Facebook ads allows you to target
ads based on demographic, geographic, psychographic, and behavioral data. Instagram, LinkedIn,
Twitter and other social media platforms offer
similar functionality. Search engines also provide
ad targeting abilities. For example, Google Ads
provides various targeting features, including
remarketing, i.e., targeting users who have interacted with your ads before.

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For
Target Audience
we are the
Competitive Frame
of Reference
who does
Unique Value
because
Reasons to Believe

Postioning

Positioning
Market position is the consumer’s perception
of a brand or product relative to its competitors.
While you can’t entirely control your brand’s
position since it ultimately lies in the eyes of the
consumer, you can influence how consumers
perceive your brand or product. This act of establishing the image or identity of a brand or product
so that consumers perceive it in a certain way is
called positioning. Cult Branding and CFI each
provide more information on how to develop your
market positioning.
You should define your brand’s positioning in a
concise positioning statement. There is a helpful
formula for developing your brand’s positioning
statement: For X, we are the A who does B,
because C. X=target audience, A=competitive
frame of reference, B=unique value you offer,
and C = reasons to believe. Or you could simplify it
to: For [target audience], we offer [unique value],
because [reasons to believe]. EquiBrand describes
how to use this formula and offers a free positioning template.
To craft a compelling and differentiated positioning,
you want to find the sweet spot where what
matters most to your target consumers intersects
with your unique brand attributes. When considering your brand’s attributes, keep in mind that there
are points of parity and points of difference. In
general, your positioning, messaging, and marketing should focus on your points of difference, since
these will differentiate your product and brand
from its competitors.

In the food industry, since price, taste, convenience
are key factors that consumers consider when
choosing what to eat, it’s essential that your brand
be at least at parity with the category on these
attributes. However, if you develop a product that,
for example, tastes significantly better than the
competition, then exceptional taste could actually
be a point a difference. Points of difference
should be closely associated with your brand in
consumers’ minds and set it apart from competitors. One way to test the “ownability” of the
positioning is to use the brand substitution test. If
your brand could be replaced by a competitive
brand in any marketing tactic, such as an ad
campaign, and work just as well, then the positioning is not distinctive enough.
A concept that is closely related to positioning is
your unique selling proposition (also known as
unique value proposition), which Entrepreneur
defines as “The factor or consideration presented
by a seller as the reason that one product or
service is different from and better than that of
the competition.” In defining your unique selling
proposition, it can be helpful to think in terms
of jobs to be done. For example, what job is that
product doing for the consumer? Or what problem
is it solving?

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While a unique selling proposition is broad, a
positioning statement is more specific in that it
communicates to a particular customer segment
the aspects of the value proposition that are
most important to that audience. Depending on
which attributes are most important to consumers
in each target market, you might position your
products by specific attributes, benefits, usage
occasion, or more. Since different consumer
segments might value different things, you
should develop messaging for each targeted
consumer segment.
Perceptual mapping (also known as competitive
mapping) is a useful tool for visually depicting your
brand’s positioning relative to its competitors.
It can also be used to map the competitive landscape in a category to determine white spaces
for your brand to fill. A similar tool is a competitive
matrix. While a perceptual map uses an X-Y axis
to compare brands across two features, and a
competitive matrix uses a table with check marks
to compare brands across more than two features.
The competitive matrix is a particularly useful
visual for the Competition slide of your pitch deck.

Brand Strategy

Once you’ve developed your competitive positioning, you’re ready to start developing your brand
strategy. But first, let’s define what a brand is. Most
people associate the term “brand” with things like
logos, fonts, color schemes, brand names, and
slogans. A brand includes all of these things, but it
also consists of much more. A brand encompasses
the entire experience your consumers and cust
omers have with your company and product.
It’s not just a one-way communication with your
audience—it also includes how your audience
perceives and engages with you.

A strong brand strategy will help you to create
brand equity, or the value created by consumer
perception of your brand. Your brand strategy can
also be used internally to guide strategic business
decisions. For example, Volvo’s brand is all about
safety, so every decision the company makes,
from engineering to messaging to imagery, needs
to consider safety. Marketing MO provides this
guide on how to create your brand strategy. Here,
we’ve covered some of the key topics to consider
when developing your brand strategy.

Naming
One aspect of defining your brand strategy is
selecting a name. Your company name is an
important aspect of your brand identity. As such,
your company name (and names for specific
products and product lines) should be selected
to fit in with your overall marketing strategy.
Igor, a naming agency based in California, uses the
following process for choosing a name:
•• Competitive analysis
•• Brand positioning

•• Name/brand development

•• Trademark screening and domain search

In addition to the steps above, GFI also recommends using consumer testing to determine how
consumers respond to the name. Marketing MO
provides a guide on how to select a brand name.

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Logo Design
After you’ve developed your brand strategy and
selected your name, you’re ready to develop
your logo and brand identity (e.g., business
cards, letterheads). Because good logo design is
fundamental to a successful brand launch, we
recommend consulting with an individual graphic
designer or design firm. If you have a clear
concept but limited budget, you might consider
using a freelancing service like Upwork, 99designs,
or Fiverr.
A few questions to consider when you’re having
a logo designed include:
•• You want a logo for the long-haul. Will it be as

relevant in 10 years as it is today?

•• Have you considered color symbolism carefully?
•• Have you chosen a font that expresses

your company’s personality?

•• Does the logo reproduce well at small scale

(on a business card) or large (a billboard)?

•• Does the logo work in black and white? Can it be

“knocked out” in white?

•• Does it work well in digital as well as print?

A vector-based program such as Adobe Illustrator
should be used to create your logo. Be sure to ask
for your logo in three formats: .EPS (this is the
source file with vector-based artwork), .JPG (for
use digitally), and .PNG (for use digitally where a
transparent background is required).

Brand Architecture

After you develop your brand name and logo,
you should focus on building out your brand
architecture, which includes your brand story,
brand personality, and brand messaging.

When considering these elements, remember that
it is essential to create an emotional connection
with the consumer. As an entrepreneur, you’re in
a position to deliver something that the big food
companies can’t fabricate: authenticity. Make sure
you’re taking advantage of your story by letting
it shine through in your brand. Lean Labs provides
a list of questions to consider when creating your
brand identity.
One aspect of your brand messaging is your
elevator pitch. This presentation and exercise from
Adam Spriggs of Nucleus Maximus, a CPG marketing and packaging design company, is useful for
developing an elevator pitch that can be used
at trade shows, in your pitches to wholesale
customers like retailers, foodservice outlets, and
distributors, as well as in other B2B contexts.

Step 4: Develop Your Marketing Mix

After you develop your competitive positioning and
brand strategy, you should determine the marketing mix that will be most effective for reaching your
targeted consumers in each segment. Marketing
mix refers to all of the marketing tools and tactics
that a company uses to elicit a desired response
in its target audience. Your marketing mix should
be informed by your situation analysis, competitive
positioning, and brand strategy.
The original model for conceptualizing the marketing mix is known as the 4 P’s (product, price, place,
and promotion). More recently, some models
have added more P’s, like people and process, to
account for changes in the marketing landscape.
Cleverism and Fieldboom each provide an overview of marketing mix. Refer to the Marketing Mix
section of this manual for additional information
about each of the “main” 4 P’s.

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Step 5: Build Your Marketing Plan
After thinking through your marketing strategy,
you’re ready to write a marketing plan that details
how you will implement it, including the specific
tactics you will employ. It should also outline
how resources will be allocated between different
aspects of your marketing mix, and more specifically, how you will divide resources between
different types of promotions to create your
promotional mix. This includes creating a marketing budget and calculating return on investment
(ROI) for all activities identified.
Cleverism provides this guide to creating a marketing plan. The Balance provides additional advice on
how to write a marketing plan.

XXVII. Marketing Mix

Your marketing mix is a key component of your
marketing plan, and it’s important to understand
how the marketing mix fits into the rest of the
marketing process. In this section, we’ll take a
more detailed look at the four main components
of a company’s marketing mix: product, price,
place, and promotion.
These 4 P’s are often conceptualized as how you
get the right offer in front of the right person at
the right place and time. By carefully crafting your
marketing mix, you can help make this “right”
scenario happen to achieve your marketing goals.

Product

Product is one of the main four aspects of the
marketing mix. Product refers to the product or
service that your company delivers to customers.
Needless to say, the nature of your product
will have an impact on your overall marketing

strategy. Fieldboom provides a list of questions
to consider about your product to help shape
your marketing mix.

Price
Price is one of the main four aspects of the marketing mix. Price includes the cost that consumers pay
for your product, as well as the cost your wholesale
customers like retailers, foodservice operators,
and distributors pay for your product. Your price
should be aligned with other aspects of your
marketing mix. For example, if your product is a
B2B commodity, it needs to be priced competitively with similar commodity products. In contrast,
if your product is a specialty good with strong
brand equity, consumers will likely be willing to pay
more compared to other items in your product
category. Your distribution and promotional
strategies should be informed by these differences
in product and pricing strategy.
So how should you go about setting a price for your
product? Most broadly, there are three types of
pricing strategies, succinctly described in
ProfitWell’s Price Intelligently blog:
•• Cost plus pricing

•• Competitor-based pricing
•• Value-based pricing

In order to ensure that your product is appropriately priced, you should utilize aspects of all three
of these pricing strategies. Shelf Life’s four part
series on pricing walks through a framework that
incorporates each of these strategies. This process
can help you arrive at your manufacturer’s suggested retail price (MSRP), which is the price at
which you would like your product to be sold to
consumers. Your MSRP should cover your cost of
goods sold (COGS) (including ingredients,

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“Most food product entrepreneurs
assume that selling their item
as a packaged product in brick
and mortar stores is the only
way to go. While it is a popular
business model, it’s not the only
one. You should consider the
pros and cons of each business
model and which is the best fit
for your product and goals before
you launch.”
David Benzaquen,
Founder & CEO of PlantBased
Solutions; CEO of Ocean
Hugger Foods

Section 5: Sell Your Product

packaging, labor), overhead costs (both fixed and
variable), a margin for you, and margins for brokers,
distributors, redistributors, retailers, and any other
downstream business partners as required.
The Balance provides more information on how to
calculate COGS. Note that margin is different from
markup, and the food industry generally speaks in
terms of margins. Be sure to be meticulous about
accounting for all of your costs in your pricing—
including trade promotions, taxes, travel, and more.
Any operating expenses that you don’t account for
in your pricing will end up coming out of your profit.
Gredio provides insight into how to price food
products and Marketing MO provides this guide on
developing a pricing strategy.
Keep in mind that since the MSRP is a suggested
price, retailers may choose to sell your product for
more or less than the MSRP. However, you should
take steps to ensure that your product is sold for
relatively the same price across sales channels. If
you undercut your retailers by selling your product
for $3.99 on your eCommerce website when it’s
sold for its MSRP of $5.99 through retailers, you
could not only damage your sales relationship with
those retailers, but you could also confuse consumers about the value of your product and
disincentive them from purchasing at its appropriate retail price. To prevent this from happening,
you should make an informed decision about your
MSRP and commit to selling your product at that
MSRP in any direct to consumer channels.
When pricing your products, discussing the market,
determining incentive discounts, and talking to
suppliers, you should avoid conversations and
actions that could lead to antitrust concerns,
even as an early-stage startup. Antitrust violations
can lead to civil and criminal liability. You must

always comply with all relevant federal and state
antitrust law requirements, and steer clear of
actions that could be the basis for practices such
as price fixing, deceptive pricing, price discrimination, and predatory pricing. The National Institute
of Standards and Technology (NIST) provides this
Guide to U.S. Retail Pricing Laws and Regulations,
including applicable laws in each state.

Place

Place is one of the main four aspects of the marketing mix. Place refers not only to the place (either
physical or digital) where your consumers purchase your product, but the entire logistical supply
chain that gets your product to the end consumer.

Channel Strategy
The highest-level decision that you’ll have to make
about the place aspect of your marketing mix is
determining your channel strategy. Your channel
strategy determines which sales channels (sometimes called distribution channels) you will use to
sell your products and how much of your overall sales
volume you expect to move through those channels.
There are four main sales channels in the food
industry—retail, foodservice, direct to consumer,
and business to business. In determining your
channel strategy, you should consider the pros and
cons in the next table, as well as the behavior of
consumers in your target market. Where do they
tend to do their shopping, and where are they most
likely to purchase your product? Note that due to
the demands of introducing a product into a new
channel, manufacturers often find it best to focus
on one sector (e.g., foodservice) or even one subsector (e.g., university foodservice) while starting
out, then expand into other sectors if desired.

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Model

Description

Segments

Pros

Cons

Retail

CPG products are
sold through brick
and mortar retailers
to be eaten by the
consumer at home.

Grocery stores, big box stores, natural
markets, convenience stores, drug
stores, dollar stores, club stores. Note
that products may either be branded or
unbranded, the latter of which is known
as white label or private label.

• Established sales and distribution
infrastructure
• Access to retailer’s audience for
customer base
• Opportunity to build brand loyalty
since branding is consumer-facing

• High trade costs (e.g., slotting fees,
trade shows)
• High marketing costs (e.g., packaging
design, advertising, brand building,
distributors’ marketing programs)
• Low margins due to markup
by retailers, distributors, and
redistributors

Foodservice

Products are served
at foodservice
establishments;
includes all “food
away from home.”

Non-commercial (institutions such as
schools, universities, business &
industry, hospitals, prisons) and
commercial (restaurants, hospitality,
grocers serving prepared foods).

• Established sales and distribution
infrastructure
• Access to foodservice establishment’s
audience for customer base
• Lower marketing and trade costs
compared to retail

• Low margins due to low price points
(especially in non-commercial
foodservice), markup by retailers,
distributors, and redistributors
• Little opportunity to build brand
loyalty since branding is usually not
consumer-facing (the exception would
be brands like Impossible Foods,
featured prominently in restaurants,
though this requires investing in
marketing)

eCommerce/
Direct to consumer
(D2C)

Products are sold
online and delivered
to consumers.

Third-party eCommerce websites like
Thrive and Amazon; self-controlled
eCommerce websites such as Miyoko’s
Kitchen or Califia Farms.

• Opportunity to test new products
before launching in other market
segments
• High margins due to lack of
middlemen
• Opportunity to build brand loyalty
through direct interaction with
consumers
• No trade costs

• No established sales or distribution
infrastructure (unless selling through
a third-party website)
• No established customer acquisition
methods (unless selling through a
third-party website)
• High investment in marketing is
required to build customer base

Business to
business (B2B)

Products are sold
to other businesses
to be used as
ingredients within
other products.

Sell through B2B suppliers or directly to
other manufacturers.

• Very low marketing and trade costs
• Fewer customers are needed since
purchase volumes are usually high

• No established customer acquisition
methods (unless selling products
through an existing supplier)
• No established sales or distribution
infrastructure (unless selling products
through an existing supplier)
• If product is a commodity, margins
will be low and competition will
be high

Source: Food Business Models and Channel Strategies presentation by David Benzaquen of PlantBased Solutions, delivered to the GFIdeas community in December 2017.

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Distribution
This section primarily refers to distribution in the
retail and foodservice sales channels. If you are
selling direct to consumer, you will likely not
interact with the distribution partners described
here. Refer to the Selling via eCommerce section
of this manual for more information about eCommerce distribution.
Manufacturers who are just getting started might
choose to deliver their products to retailers or
foodservice operators directly. In retail, this system
is called direct store delivery (DSD). DSD can be
an economical way to get your products into
distribution in a local area, but you will outgrow
it pretty quickly if you want your products to be
widely available. Eventually, you will likely need to
work with distributors. To help manufacturers
identify potential distribution partners, GFI has
compiled a directory of distributors, redistributors,
wholesalers, and import/export companies.

Distributors
The role of distributors in the food industry is to
warehouse products, take orders, and deliver
products from multiple manufacturers to retailers
and foodservice outlets where these products will
be sold to consumers. Distributors often also
perform merchandising functions on behalf of
retailers, such as restocking and resetting shelves,
managing POP materials, and monitoring inventory
quantity and quality. Distributors also simplify the
invoicing process on behalf of retailers by compiling invoices from multiple manufacturers. Without
this service, manufacturers would be responsible

for processing orders and billing each retailer
separately, rather than simply sending invoices to
the relatively small number of distributors they
work with. Similarly, retailers would be responsible
for paying separate invoices from each manufacturer whose products they carry.
Overall, distributors provide valuable services
to manufacturers and retailers. However, it’s
important to account for the costs associated
with these services. According to the Specialty
Foods Association, retail distributors usually take
a 20-30% margin, and foodservice distributors
usually take a 10-12% margin. Distributors also
usually expect trade promotions like free fill
(i.e., free product), as well as separate allowances
for slotting fees, spoilage, and promotional
activities. These costs need to be accounted for
in your P&L/income statement and should be
reflected in your product’s price.
There are many different types of distributors.
Broadline distributors offer products across
multiple categories and all three temperature
zones (ambient, refrigerated, and frozen), while
other distributors focus on specific food categories
such as produce or “center of plate.” Another
distinction is that nationwide distributors operate
on a national or even international scale, while
regional distributors focus on a particular region
or even a single metropolitan area.

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Manufacturer

Redistributor

Distributor

Retailer or
Foodservice Operator

Consumer

Regional distributors typically serve small and
independent grocery stores due to their lower
order minimums. However, regional distributors
often don’t serve large accounts like natural or
grocery store chains. Yet another difference is
whether the distributor serves the retail or foodservice channel. The top nationwide distributors
of natural products in the retail channel are UNFI
and KeHe. These distributors serve national
natural chains (like Whole Foods and Sprouts)
as well as grocery stores that carry natural items
(like Wegmans, Kroger, and Stop & Shop).
On the foodservice side, the top broadline distributors are Sysco, US Foods, and Performance Food
Group (PFG). UniPro is the largest foodservice
distribution cooperative in the US and is comprised
of independently-owned distributors that pay
membership fees for access to UniPro’s collective
purchasing power. In addition to the third-party
distributors that have been discussed so far, it’s
important to note that many retailers (e.g., Walmart)
use a self-distribution model, meaning they
have their own distribution infrastructure rather
than working with external distributors.
Between product line, regionality, segments
served, and sales capacity, there’s a lot to consider
when selecting a distribution partner. Perhaps the
easiest way to narrow the field and decide which
distributors might be the best fit for you is to think
about which retailers and foodservice operators
you’d like to sell your products through, and
determine which distributors they use. For example, if you want to get into Whole Foods, UNFI and
KeHe would likely be good distribution partners. If
you’re aiming for independent stores, a regional
distributor might be a better fit.

Redistributors

To ensure that they are maintaining a certain
turnover rate, most distributors have case minimums for how many cases their customers
must order per week in order to continue stocking
any particular product. Case minimums of five
to ten cases per week are common for regional
distributors and are usually higher for national
distributors, except if they have an introductory
program for new brands.
If a manufacturer wants to get into a distributor
but doesn’t have the sales volume to meet the
case minimums, redistribution might be a good
option. Redistributors specialize in compiling
less-than-truckload (LTL) quantities from multiple
manufacturers into truckload shipments to distributors. That way, distributors don’t have to use up
valuable inventory space on slow-moving items.
Instead, these items are warehoused by redistributors and transported to distributors as necessary
along with products from other manufacturers.
Redistributors allow distributors to carry a wider
variety of products and make these products
available to their customer network.
Dot Foods is the largest redistributor in the US,
with nine distribution centers serving all 50
states and over 25 countries. Dot Foods is used
by Beyond Meat, Gardein, Daiya, and other plantbased companies. You can read more about Dot
Foods in this brochure, as well as this guide for
manufacturers. Alpine Foods is an example of a
regional redistributor that serves the western US.

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International Distribution
If you feel that international markets are a
good fit for your product—and you’re not already
overwhelmed by selling in the US—there are
various ways to sell your product internationally:
through exporting, setting up a production facility
abroad, or licensing your technology for someone
else to produce it abroad. There are various
considerations for exporting, including taxes,
tariffs, currency risk, logistics, and more.
North Dakota State University provides an overview
of the regulatory considerations for importing/
exporting food products in the US. Organizations
such as WUSATA (for the Western US), SUSTA
(for the Southern US), and Food Export (for the
Northeast and Midwest) can help you navigate the
exporting process and may even provide financial
support. For example, WUSATA reimburses US
companies 50% for international marketing
expenses and trade shows. Refer to the Consumer
Testing section of this manual for additional
considerations about naming and branding products for sale in international markets.

Promotion

Promotion is one of the main four aspects of the
marketing mix. Promotion encompasses all the
ways that a company communicates with its target
audience to achieve its marketing goals. Cornell
University provides an overview of promotion for
food companies.
The promotional mix (also known as marketing
communications mix) is the combination of various
communication elements that a company uses to
reach its target audience. Within each of these
promotional elements, there are a variety of
specific marketing tactics you may use. The five
main promotional elements are:

•• Advertising

•• Public relations

•• Sales promotion

•• Direct marketing
•• Personal selling

Since you won’t have unlimited marketing dollars,
you must decide how to divide limited resources
between these different promotional elements
to create your promotional mix. This decision
should be informed by your promotional goals and
overall marketing strategy. The Balance and Udemy
both provide overviews of the promotional mix.
It’s important to note that promotions can be
directed toward consumers or customers as the
target audience. The consumer is the person
who consumes your product. Depending on your
channel strategy, the consumer might purchase
your product in a retail store, a foodservice
establishment, or through an eCommerce website.
The customer (also known as account or wholesale
partner) is a business that purchases your product
at a wholesale price and resells it to make a
profit. In other words, customers are businesses
in your downstream supply chain (e.g., distributors,
redistributors, retailers, foodservice outlets).
Some types of promotions will be more effective
at reaching customers, while others will be more
effective at reaching consumers. Unless you’re
using a purely direct-to-consumer channel strategy,
reaching your marketing goals will require that
you use various methods to reach your target
consumers and customers. One relevant example
is shopper marketing, which involves leveraging
insights into how consumers shop at retail to
inform your marketing plan and in-store tactics,
thus growing sales both for yourself and your
retail customers.

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This section includes information on the five main
promotional elements and specific channels within
each of those promotional elements. This should
not be interpreted as an exhaustive list of marketing channels—rather, we’ve highlighted some that
might be of particular interest to entrepreneurs.
Storm81 provides this extended list of marketing
channels, but keep in mind that no list can be
completely comprehensive, since marketing
strategies are limited only by creativity. For example, this article from WordStream Blog provides
some examples of unconventional and unexpected
marketing campaigns, sometimes referred to as
guerilla marketing. Depending on its level of
complexity, a marketing campaign might include
one channel or multiple channels; however, it’s
important to consider the holistic plan.

Advertising
Advertising is a form of promotion that involves
paying for space to promote your product or
brand. At one point, advertising was thought of
as a highly impersonal, mass marketed approach.
Today, most advertising methods are highly
targeted based on consumer data.
Most broadly, advertising can be broken down into
traditional and digital approaches. The Balance
describes the differences between traditional and
digital marketing, as well as pros and cons of each.

Traditional Advertising
Traditional advertising channels include broadcast
(e.g., TV, radio, cinema), print (e.g., newspaper,
magazine, and industry publications), and public
channels (e.g., billboards, posters). In this day and
age, few food startups choose to devote significant
resources to traditional advertising channels since
digital advertising simply gets you more bang for
your buck in terms of reaching your target audience.

Digital Advertising
Digital advertising includes all forms of advertising
on the internet. As mentioned previously, digital
advertising is highly targeted, meaning that you
can choose with a high degree of specificity which
types of users you would like to see your ads based
on who you think will be most likely to purchase
your product. Sprout Social provides this list of
digital marketing tools that can help you more
effectively reach your target audience.
There are three main pricing models for digital
advertising:
•• Cost Per Mille (CPM) – The publisher is paid based

on how many times the ad is viewed.

•• Cost Per Click (CPC), also known as Pay Per Click

(PPC) – The publisher is paid based on how many
times the ad is clicked on.

•• Cost Per Action (CPA) – The publisher is paid

based on how many times the ad is clicked on AND
some additional action is taken (e.g., completing a
transaction, signing up for a newsletter).

This article from BluAgile explains how these three
main pricing models work, as well as a few less
commonly used models. Wordstream also takes
a deep dive into the cost of digital advertising
on various platforms, including Google, Facebook,
and Instagram.
Here, we’ve outlined a few different digital
advertising channels, including search
engine optimization, search engine marketing,
display advertising, email marketing, content
marketing, social media, and website.

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Search Engine Optimization (SEO)
When you use a search engine like Google, Yahoo,
and Bing, you’ll see two types of results: organic
(unpaid) results and sponsored ads that appear
at the top of the search results. Search engine
optimization (SEO) is the methodology of obtaining
a high-ranking placement in the organic search
results. If your website link is high on the list
of organic search results for keywords associated
with your product, you’ll receive a greater amount
of unpaid visitors through search. This type
of organic (unpaid) traffic is considered highly
valuable, as the person searching for your search
terms is more likely to be interested in your
product and further along the purchasing funnel.
StartupResources.io provides a list of SEO tools,
and Moz provides a Beginner’s Guide to SEO.

Display Advertising
Display advertising is another paid form of advertising that appears throughout the web and mobile
platforms. Ads exist in many different formats—
text, images, flash, video, audio, and more. The
main purpose of display advertising is to deliver
general ads and brand messages to site visitors
and to drive web traffic and brand growth. Display
advertising can also be used to drive consumers
in-store, and even highlight specific retailers where
your product is available, or be geo-targeted based
on regional availability. Adding a digital coupon
to a display ad is another way to help drive consumers to retailers to purchase. Facebook, Twitter,
and Google Ads represent a significant portion
of all display ads online. Google Ads provides more
information on display advertising.

Search Engine Marketing (SEM)

Email Marketing
Email marketing is the act of sending emails,
typically to groups of people, for commercial
purposes. In its broadest sense, every email sent
to a potential or current customer can be considered email marketing, whether the message
aims to build trust, promote a purchase, share
third-party services, etc. Messages usually
deliver advertisements, requests for business,
solicitation of sales or donations, and are meant
to build loyalty, trust, or brand awareness.
Email addresses are often acquired through your
website, at events, and through content marketing.
Kissmetrics provides a guide to email marketing.

In contrast to SEO, which involves optimizing
to get to the top of organic (unpaid) search results,
search engine marketing (SEM) is the process of
purchasing the sponsored ads that appear at the
top of the search results. The most commonly
used paid search platform is Google Ads (formerly
Google Adwords), which is used to serve ads on
the Google search results. Neil Patel provides this
guide to using Google Ads. Like unpaid traffic, paid
traffic is also considered valuable as the person
searching for the desired search terms is likely to
be further along the purchasing funnel.

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Content Marketing
Content marketing is a strategic marketing
approach focused on creating and distributing
valuable, relevant, and consistent content to
attract and retain a clearly defined audience
and ultimately to drive profitable customer action.
Content does not explicitly promote a brand but
is intended to stimulate interest in its products
or services, build brand equity and trust, and
grow a community of brand followers, among
other things. Relevant content includes blog posts,
videos, podcasts, ebooks, and social media (see
section below.) Neil Patel offers a guide to content
marketing. Shopify’s collection of eCommerce
guides, which we’ve linked elsewhere in this
document, is an example of content marketing.
Social Media
Social platforms have resulted in new and creative
approaches that allow brands to interact directly
with their consumer base and enact their corporate “personality,” in real time in the public
sphere. This technology provides a critical tool for
receiving immediate and actionable feedback on
messaging and products, activating early adopters
and influencers, and learning more about the
motivations and purchasing habits of your core
consumers. Ideally, your company’s social media
is seamlessly interwoven into your marketing
approach, encompassing media relations, PR,
customer service, and more.
To determine your tone and social media platform(s) of choice, consider the demographics and
interests of your target consumer. You can use
demographic data sets on social media use
to explore where your customers are likely to be
spending their time online. Once you’ve identified
your medium, it’s your job to deliver content that
not only communicates your brand ethos, but

speaks to your customers and mirrors their story
and desires. When creating and/or curating content
for social media, consider making your primary
goal to clarify the purpose of your content for your
consumer, not for you.
By considering this first principle, your marketing
efforts on social media can create brand ambassadors that will market for you and amplify your
own efforts. In addition to the less tangible benefit
of feeling like they are a part of your brand’s
mission, you can support your online fan base with
loyalty rewards like discounts, giveaways, and
advance access to products and company news.
But you don’t need to confine your online presence
to your own channels: You can also leverage part
nerships with online influencers that your customers already follow and trust in order to increase
your reach and credibility. On a past GFIdeas call,
CJ Bruce of Chuck Joe, a natural foods digital
marketing agency, presented on how to engage
with social influencers and provided a variety of
influencer marketing tools. Additionally, many
journalists turn to social media to keep track of the
latest news and find unique stories. Engaging with
journalists’ work directly on their preferred platform is a low-cost and high-value way to cultivate
media relationships that could lead to story
placement in mainstream outlets.
While optimal social media use requires realtime attention, tools like HootSuite and Crowdfire
allow you to easily create and schedule content
while monitoring your online channels. Moz,
SproutSocial, and HootSuite’s blog are good
sources of information on best practices to optimize your business’s social media presence.

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Section 5: Sell Your Product

Website
Before creating one, it is important to consider the
intended purpose of your website. When you first
create your website as an early-stage startup, the
purpose might simply be to professionally represent your brand to target audiences like consumers,
wholesale customers, and investors. In this case, a
simple landing page and contact field might suffice.
You can always build out additional features later.
Depending on your budget and overall strategy,
you might also decide that you want your website
to serve different purposes, like generating
sales leads or selling products. Once you decide
what you want your website to achieve, you
can build a site that optimizes for the conversions
relevant to that purpose (e.g., an eCommerce
website would want to optimize for conversions
such as purchasing a product or adding a
product to the cart). Moz and Neil Patel both
offer guides to conversion optimization.
There are a number of services that can help you
build a business or eCommerce website, such
as Shopify, Weebly, Wix, and Squarespace. If
you’d like to add a further layer of customization,
you might benefit from hiring a UI/UX designer
to design a custom website. Web designers and
marketing agencies can be found through your
personal network, through online research, and
through freelancing services like Upwork.
Once you have your website up and running, you
should use tools like Google Analytics to understand who is visiting your website, how users are
finding your website, what content resonates most
with users, and more. Since Google Analytics can

provide you with demographic and psychographic
information about your website users, it’s an
important tool for segmenting your market. Moz
provides this beginner’s guide to Google Analytics.

Public Relations (PR)

In order to understand how PR fits into the rest
of your promotional mix, it’s helpful to understand
the difference between owned, earned, and
paid media:
•• Owned media includes original content that is

created on channels your company controls
such as your website or social media platforms.
Companies often use content marketing to create
owned media content like articles, e-books,
videos, and webinars.

•• Paid media includes paid advertisements

like search engine marketing or promoted social
media posts.

•• Earned media includes content and conversation

that has been voluntarily created by others.
Examples of earned media include reviews, testimonials, social media engagement (e.g., likes,
shares, mentions, retweets), media coverage, and
word-of-mouth.

Owned, paid, and earned media can often be
combined to create better results. For example,
you might write a blog post (owned), share it
on Facebook to generate engagement (earned),
and make it a sponsored post to increase its
reach (paid).

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To determine your company’s
publics, consider these
five required characteristics:
•• They must be distinguishable

in some way (a recognizable
grouping of individuals),
•• They must be homogeneous
(share common traits
and features),
•• They must be important (can
significantly impact your
company, brand, or product),
•• They must be large enough to
warrant strategic attention, and
•• They must be accessible,
meaning they are a group with
which you are able to interact
and communicate.
One disgruntled customer is not a
public. One disgruntled customer
who gets a lot of other people
upset with your company starts
to become a public.

Section 5: Sell Your Product

One way to conceptualize PR is as the practice of
monitoring and managing earned media. In other
words, PR is a form of promotion that manages the
spread of information between an organization and
the public. Your public relations strategy should
aim to identify and influence how key stakeholders
feel about your brand/product.
Why is PR important? For one, consumers view
earned media as the most authentic form of
marketing. Thus, earned media is a powerful tool
for building trust and credibility among consumers
and other key audiences. Reviews, testimonials,
media coverage, and word-of-mouth recommendations are influential forms of social proof that
can help advance consumers down the purchasing
funnel. Due to the ubiquity of social media in
our society, earned media is an important way
to expand your reach and brand awareness. It
can also lead to better conversion rates and ROI
compared to paid forms of marketing.
Besides the benefits that good PR can bring to
your company, it’s also worth noting the negative
effects that bad PR can have on your company.
For all these reasons, it’s worth devoting time
and resources to developing a PR strategy, which
should be outlined in your marketing plan. You
should also develop a strategic plan for each
PR campaign you plan to implement, including
identifying how the success of the campaign will
be evaluated.

When it comes to PR, you have two choices: hire
a PR firm or do it in-house. As a startup, there
are a number of compelling reasons for doing PR
in-house. The obvious benefit is that it saves
money, but it also can lead to better outcomes in
the long run. No matter how informed they are, a
third-party PR firm can’t authentically represent
your story as well as you can, and authenticity goes
a long way when trying to engage reporters and
consumers. Fortunately, there are a lot of tools that
can help you learn how to do your own PR. For
example, Neil Patel provides this guide to startup
PR and list of PR tools.
When managing your PR, it can be daunting
and abstract to think about your company’s
relationship with the public in general. Just like
the act of segmenting your market, you should
segment the public into groups of publics, or
stakeholder groups. Consumers are only one of
many “publics” (i.e., groups of people) to be
considered. Other publics might include investors,
retailers, foodservice operators, and the media.
Identifying your publics will help you tailor your
messaging to resonate with each of these groups.
Bright Network explains the different types of PR,
and we’ve provided some additional context below.
Note that social media is both a form of digital
advertising and a form of PR due to its paid and
earned media components. Refer to the Social
Media section of this manual for more information
on social media.

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You can use PR metrics to conduct
ongoing monitoring activities
like social listening, or you can use
them to evaluate the success
of specific marketing campaigns.
Molly Borchers provides insight
into how you can use PR metrics
to measure ROI on PR activities,
and Heidi Cohen provides
this list of earned media metrics.
For more information, refer
to Onboardly’s overview of
PR metrics, the list of PR metrics
from Marx Communications,
and Brandwatch’s tips for
measuring owned, earned, and
paid media.

Section 5: Sell Your Product

PR Monitoring
Across all types of PR, you should have a focus
on monitoring and evaluation. Monitoring
what’s being said about you on social media, in
the news, and in other outlets serves a number
of purposes, including providing insight into
what types of messaging and content resonates
best with your target audience, gathering consumer feedback about your product and brand
to inform future product development, and
staying on top of issues that if left unchecked
could turn into full-blown PR crises.
There are various metrics you can use for PR
monitoring, but the Public Relations Society of
America (PRSA) defines these five key metrics:
•• Engagement
•• Impressions
•• Item

•• Mention
•• Reach

These are just a few of the quantitative metrics
that allow you to measure earned media. However,
remember that more is not always better. For
example, if a particular social media post generates lots of engagements but the content within
the reactions or comments is largely negative,
you need to be able to understand what’s
making people upset so you can take steps to
fix it. Thus, in conjunction with quantitative metrics,
you’ll also need to use qualitative metrics like
sentiment—the attitudes, emotions, and opinions
your audience expresses about your product
or brand.

Social listening involves monitoring online conversations to understand what consumers and other
audiences are saying about your brand. Hootsuite
provides this guide to social listening. Additionally,
iProspect provides this overview of sentiment
analysis tools that can help you capture and
analyze these metrics, and Hootsuite offers a list of
tools specific to social media sentiment analysis.
Since Google Alerts is free, you should at the very
least set up alerts for your company (including
common misspellings and abbreviations), your key
competitors, and key words that describe your
market. Then, you can determine what additional
paid tools you might need for PR monitoring.

Media Relations

One type of PR is media relations, which involves
activities like writing news releases, building
relationships, pitching stories, guest blogging,
conducting interviews with journalists, and participating in events like pitch competitions that are
likely to generate news coverage. As a form of
earned media, press coverage is important for
getting on consumers’ radar and earning their trust,
as well as demonstrating traction to key stakeholders like investors.
Dmitry Dragilev provides this 10-step process
for startups to get news coverage, Beckah Grant
provides tips for pitching reporters about your
startup, and Neil Patel offers this guide to startup
PR. GFI also has expertise in PR strategy and can
help you think through your approach.

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Section 5: Sell Your Product

Corporate Social Responsibility (CSR)
CSR is the act of assessing the company’s social,
economic, and environmental impacts, and taking
steps to reduce negative impacts and increase
positive impacts. CSR is considered a type of PR
because it doesn’t occur in a vacuum—consumers
take notice of brands’ ethical practices, and are
increasingly factoring this information into their
purchasing decisions.
A Deloitte report commissioned by FMI and GMA
found that evolving value drivers, including health
& wellness, safety, social impact, experience,
and transparency, are becoming more important
drivers of consumer behavior. Additional research
from Nielsen shows that two-thirds of consumers
globally are willing to pay more for sustainable
goods, and this number jumps to nearly
three-quarters among millennials. Conversely,
research from Mintel shows that 56 percent
of US consumers stop buying from companies
they believe are unethical.
Successfully implemented CSR efforts can help
raise brand awareness, build trust with consumers,
increase your competitive advantage, and ultimately improve your bottom line. A report from
Unilever found the global market for sustainable
goods is $2.7 trillion, and more than one in five
(21%) consumers said they would actively choose
brands if they made their sustainability credentials
clearer on their packaging and in their marketing.

For most plant-based and clean meat companies,
having a strong focus on CSR is a natural fit.
However, your CSR efforts must be implemented in
a way that’s smart. For example, if you go overboard with environmental messaging or imagery,
you could end up being perceived as a niche,
“hippie” product and alienate more mainstream,
flexitarian consumers.
Ripple is an example of a plant-based brand that
has a strong focus on CSR. This focus is a core
component of their brand identity—their website,
social media, and overall messaging strongly
reflect their intent to improve sustainability. They
even commissioned a life cycle assessment to
determine the environmental effects of Ripple
compared to other plant milks. However, notice
that the environmental information is presented in
a way that is well-balanced with other attributes.
For example, the product description for Ripple
Original uses environmental language in combination with indulgent words like “rich,” “creamy,” and
“satisfying.” In other words, good CSR is a core part
of their strategy, but it’s not the only thing they
bring to the table.
There are various strategies that food companies
might use in their CSR programs, such as
building a sustainable and transparent supply
chain, donating surplus goods and services,
and building a diverse workforce with a responsible business culture. For additional guidance
on how you can implement a CSR program for
your company, refer to Silicon Valley Community
Foundation’s guide on how startups can use
CSR to deliver purpose and profit.

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Section 5: Sell Your Product

Public Affairs
Public affairs is a type of PR that involves managing
the company’s relationship with politicians, governments and other public decision-makers. Public
affairs strategies might include building relationships with government officials, and conducting
lobbying activities around particular issues.
Key stakeholders such as trade organizations,
think tanks, and nonprofits often engage in public
affairs activities in conjunction with or on behalf
of companies or industry sectors. For example, GFI
is currently working on a number of issues relevant
to startups, such as labeling of plant-based and
clean meats and the inclusion of plant-based
foods in child nutrition programs. It can be helpful
for companies to build relationships with these
partner organizations to help strengthen engagement with policymakers.

Crisis Management
Crisis management is public relations that
involves strategically managing issues that have
the potential to seriously impact your business.
Examples of situations that might require crisis
management include regulatory hurdles or scrutiny,
food safety issues, product flaws, product avail
ability issues, lawsuits, valuation cuts, leadership
departures or scandals, attacks from issue
groups (e.g. anti-GMO activists criticizing the way
a company’s product is produced, human rights
activists calling out issues in a company’s supply
chain, or vegans calling for a boycott after a
company’s acquisition by a non-vegan company
or after featuring photos of the company’s product
served alongside animal-derived foods), or anything that could be viewed negatively by the public.

Jonathan Bernstein outlines the 10 steps of crisis
management. Since prevention is always better
than damage control, the first step in crisis management is to take steps to anticipate crises before
they happen. This includes using PR monitoring
tools like social listening to constantly monitor
online conversations and sentiment and assess
risk to your product or brand, ideally catching a
potential PR crisis before it escalates. Other steps
in the process include establishing a crisis management team, training spokespeople, determining
how information will be disseminated, and identifying key stakeholders.
For additional information, refer to Forbes’ guidelines for crisis management. If crisis management
is executed well, you may even be able to turn a
potential crisis into an opportunity to connect with
your consumers and encourage brand loyalty.

Employee Relations
Employee relations is a type of PR that involves
managing the relationship between a company and
its employees. Maintaining open and honest
communication with employees is critical for
ensuring staff happiness, retention, and peak
performance. However, employee relations isn’t
just about making sure things run smoothly
internally. It’s also a powerful tool for reaching your

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Section 5: Sell Your Product

other audiences through your employees. By
training employees to be true ambassadors of your
brand, you can help strengthen consumer perception of your brand and avoid customer service
issues that could drive customers away. Harvard
Business Review discusses how to create a living
brand to help ensure that your employees reflect
the brand’s core values in everything they do.

Sales Promotion

A sales promotion is used to promote a product
for a limited amount of time. While consumer sales
promotions are directed toward consumers, trade
promotions serve to motivate your retail, foodservice, and distribution partners to purchase and sell
your products.
Consumer sales promotions include price
promotions (also known as price discounting),
coupons, gift with purchase, samples, contests,
sweepstakes, money refunds (or rebates),
frequent shoppers or loyalty incentives, and
point of purchase (POP) materials.
Trade promotions include allowances and discounts,
cooperative advertising, sales force training, and
free goods (also known as free fill). Trade promotions may be introductory (to generate interest in
a new product), recurring (to stimulate the market
on a regular basis), or tied to a specific activity
(to encourage that activity). Marketing91 provides
an overview of trade promotions, and Retail Path
provides a great overview of trade promotions
in retail. Nielsen also provides insight into how
your product’s category and other features might
affect the effectiveness of different types of trade
promotions. The Specialty Food Association’s SFA
Basics textbook provides additional information
about trade promotions.

In retail, trade promotions—like cooperative
advertising allowances, in-store demos and
sampling, consumer promotions, coupons, and
POS materials—are often expected by buyers. Most
retailers also charge some sort of product introduction fee or recurring placement fee when food
manufacturers want to place products on their
shelves. These fees are often called slotting fees,
and can take the form of free fills (specific amount
of free product), buy-outs (paying to clear out other
products to make way for your own), favorable
payment terms, purchasing allowances, and more.
Many food retail chains use shelf placement
diagrams (often called planograms) to allocate
shelf space within categories. Large brands often
pay for the most prominent shelf space at eye level,
while private label brands from the store are often
highlighted as well, leaving cheaper and newer
brands the highest, lowest, or most hidden shelf
space. There are generally no slotting fees when
selling to foodservice customers.
You will need to develop a variety of printed and
digital sales materials to present your brand to
your wholesale customers (e.g., retailers, distributors), and in some cases, consumers. It’s important
that your sales materials appear professional and
reflect positively on your brand. Therefore, we
recommend hiring a professional photographer to
take high-quality photos of your product, as well as
hiring a graphic designer to design the materials.
Shelf Life provides this overview of sales materials,
including some that we’ll cover in the next few
paragraphs: sell sheets, catalogs or brand books,
point-of-purchase materials, and samples packs.

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Section 5: Sell Your Product

Sell Sheet

A sell sheet (sometimes called a line sheet) is a
one-page (front and back) document that provides
information about your product line and ordering
procedures to potential buyers, including UPCs
and product specs. You should create a PDF
version of your sell sheet for sending via email,
and also bring printed copies to sales meetings,
trade shows, and anywhere else you might
encounter buyers. Gredio provides instructions
for how to make a sell sheet, including this example sell sheet from Green Mountain Mustard.

Catalog/Brand Book
Like your sell sheet, the intended audience for
your catalog/brand book will be buyers (not
consumers). While a sell sheet provides only the
necessary information for ordering your products,
your catalog provides a more in-depth look at
your brand. Not every company has a full-size
catalog—sometimes companies use alternative
formats like multi-fold cards that can be easily
handed out at trade shows or other events.
Shelf Life provides this overview of catalogs.
Point of Purchase (POP)

POP is collateral that is distributed or displayed at
the consumer’s point of purchase (usually in-store).
Shelf Life provides this overview of POP materials.
POP materials might include signage, tags, or
POP displays, which are standalone display units
that serve two functions: to stock your product
and serve as a prominent in-store advertisement
to consumers. This blog post from ProCorr (a
POP display company) provides an overview of
different types of POP displays. POP materials are
most commonly used in retail, but they can also
be used in foodservice. For example, Impossible
Foods and Beyond Meat have both been known to
serve their burgers with branded toothpick flags.

Product Sampling

Product sampling is an important type of sales
promotion, not only for building consumer
sales, but for gaining customers like retailers,
foodservice operators, and distributors, as well
as securing investment. It’s also a useful tool
for obtaining consumer feedback that you can
use to inform product development. For all these
reasons, you should have substantial sampling
budget in your marketing plan, even though
it may seem expensive.
You should always use good food safety practices
when sampling products. Food safety mistakes
like touching a product with your bare hands
or improper temperature control could easily turn
consumers off from your product or ruin an otherwise productive sales meeting with a buyer.
University of Minnesota Extension has a number
of resources on safe food sampling.

Sampling to Consumers

There are a few different types of consumer
product sampling strategies. In-person sampling
is the traditional method used by the food
industry. Opportunities for in-person sampling
include in-store sampling, events such as food
festivals, and donating products to groups or
organizations that represent your target consumers. One advantage of in-person sampling is
that it can be performed in locations where
consumers can purchase your product on site.
Supermarket News and New Hope Network
provide some best practices for in-store sampling.
Note that if you are conducting in-store sampling,
the retailer might require that you go through
their third-party sampling agency rather than hiring
your own sampling staff or using your preferred

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Section 5: Sell Your Product

sampling agency. In these cases, it is especially
important to provide clear written guidance on
how to cook and serve the product to avoid inconsistency in product preparation and help ensure
a better consumer experience.
Beyond in-person sampling, technology has
enabled innovative ways of reaching consumers
with product samples. Redpepper’s Guide to
Product Sampling in the Digital World includes
an overview of different types of sampling,
case studies of brands that have successfully
implemented digital sampling campaigns,
and an appendix of specific sampling tactics
with examples.
Regardless of what sampling strategy you’re using,
be sure to ask consumers for feedback whenever
you’re handing out products. Asking simple
questions, like “What do you think?” or “How do
you like it?” will likely lead to some helpful
responses. You can also ask more specific questions, like “What do you think of the texture?” or
“Is it too salty?” if you want to drill down into
specific features. You should then use this feedback to inform your product development.
You can even test different versions of the product
to answer questions, like “Does substituting X
ingredient with a less expensive alternative really
make a difference in the flavor?” or “Does X
processing step lead to better texture?” Using this
consumer feedback is a great way to get your
product market-ready in a short amount of time.
Gredio provides these tips for how to market-test
your product, and Accion also provides advice on
consumer testing.

Some examples of successful consumer product
sampling efforts include Beyond Meat’s sampling
event on Capitol Hill and partnership with the
Economist to provide free Beyond Burgers via the
Economist Food Truck. Increasingly, manufacturers are shifting toward offering full-size samples,
such as an 8-oz. bottle of Honest Tea or a full
Beyond Burger, rather than sip-size or bite-size
samples. While this type of sampling is more
expensive per consumer, it also creates a better
consumer experience of the product, and is likely
to inspire more social buzz if the samples are
presented in a visually appealing way. Nutpods
founder Madeline Haydon provides advice on how
to use targeting to make your sampling efforts
more effective.

Sampling to Wholesale Customers and Investors

You should always bring samples to sales meetings
with retailers, foodservice operators, distributors,
brokers, investors, or other business partners.
If these meetings occur digitally, you should
offer to send samples via mail prior to the meeting.
Whenever you send samples via mail, you
should include a set of materials along with the
product samples. This box of product samples
and sales materials is called a samples pack.
It should include your sell sheet, and you might
also include a catalog, handling information, a
product knowledge sheet, and display information
as applicable. Shelf Life provides an overview
of samples packs. Aside from mailing samples
and bringing them to in-person meetings, another
opportunity for B2B sampling is to get a booth
at a trade show.

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“At Good Catch, when we first wanted to
spotlight our tuna products, we did not
get a booth. Instead we rented an Airbnb
near the shows (in our case, Natural
Products Expo West and Fancy Foods
Winter Show) and invited select guests
for private tastings. This gave us time for
private, one-on-one conversations and
allowed the guests to focus solely on our
products. We had enormous success
is doing this and plan to do it every few
years when new products are pre-launch
(buyers love an insider look). This whole
plan cost us about 1/5 compared to
getting a booth, and the results were
excellent. But make sure your rental is
within close walking distance to the event
or no one will show up.”
Chris Kerr,
Co-CEO of Good Catch Foods; Investment
Manager of New Crop Capital

Section 5: Sell Your Product

Trade Shows
Trade shows (also known as expos) bring together
virtually all the players in the food industry, from
food manufacturers like you, to buyers, investors,
brokers, distributors, co-packers, product developers, ingredient suppliers, investors—you name it.
Exhibiting at trade shows provides you with an
invaluable opportunity to meet these key players,
get your product in front of them, form partnerships, and drive sales. It can also help create buzz
around your products, especially if you win an
award or pitch competition during the event.
Another benefit is that most trade shows provide
educational sessions featuring key industry players
as speakers.
Trade shows are expensive, and costs can add
up quickly between the show fee, booth design,
product samples, printed materials, travel,
and more. When determining whether to attend a
trade show, it’s important to carefully weigh the
costs versus the potential benefits. You might not
immediately recoup your costs, but keep in mind
that just one key connection could make the entire
event worthwhile in the long-term. This blog post
from Gredio walks through the costs incurred
by a specialty mustard brand when they decided
to exhibit at the Summer Fancy Food Show.
When determining which event to attend, you
should consider your goals for the show and how
the audience for that event aligns with those goals.
In other words, you should select an event that
focuses on the market you seek. If you are targeting the foodservice market, then the National
Restaurant Association Show is a key event.

For the natural CPG market, Natural Products
Expo is excellent, and it has two shows: Expo West
and Expo East. Expo West is about triple the size
of East and is the biggest natural products trade
show in the world (the show fee is reflected in this).
Other big trade shows for specialty food CPG
brands are the Summer Fancy Food Show and
Winter Fancy Food Show, both hosted by the
Specialty Foods Association. Refer to GFI’s global
map of accelerators and incubators for a more
complete listing of expos that might be relevant
for plant-based manufacturers.
This article from Entrepreneur provides advice
for getting the most out of trade shows, as
does this blog from Both Sides of the Retail Table
about how to maximize your success at trade
shows. Expo West also provides some tips for
first-time exhibitors.

Direct Marketing
Direct marketing is a type of promotion that
involves communicating with consumers directly
through mail, email, or phone marketing. Direct
marketing is often used to send coupons and
other sales promotion materials directly to consumers. Shopify provides a guide to direct marketing, and The Balance provides more information
on direct marketing.

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Section 5: Sell Your Product

Personal Selling

Personal selling is a type of promotion in which
a salesperson proactively approaches customers
to make sales that would otherwise not have
been made. For early-stage startups, it’s often
the founder who takes on this salesperson role,
though as your company grows, you will likely
want to hire additional in-house sales staff or
brokers. In comparison to some of the other
promotion types, personal selling is time- and
resource-intensive since it involves researching
prospects (i.e., potential buyers), fostering oneon-one relationships with buyers, delivering sales
presentations, either virtually or in-person, and
performing follow-up as needed to close the sale
and continue the relationship.
Since it is expensive, personal selling is not
commonly used to sell products to consumers.
However, personal selling is an essential tool
for reaching high-volume customers like retailers,
foodservice outlets, and distributors, since the
return on investment can be worth it.
Boundless Marketing provides this overview of
personal selling, and Marketing Teacher provides
a five-step approach to personal selling.
Here, we discuss some considerations for
personal selling in the retail, foodservice, and
eCommerce channels.

Selling to Retail
Before we proceed, let’s define another term
from this glossary from Shelf Life. A buyer (also
known as purchaser) is a representative of a
wholesale customer (e.g., retailer, foodservice
operator, distributor) who is responsible for
purchasing within a specific product category.
Buyers can be classified by their sales channel—
for example, a buyer within retail might be
referred to as a retail buyer.
Retailers typically have individual buyers or teams
focused on particular food categories such as
dairy, eggs, pet food, etc. Retailers manage each
category as its own business unit, seeking to
maximize the profit from that category by finding
the ideal mix and placement of products. Most
stores will have a particular target for turnover
(how much of each product is sold per store on a
daily or weekly basis) per category.
Larger retail chains often have specific category
review periods once or twice per year, when
the category is evaluated and the product mix
and positioning strategies are adjusted. Be sure
to note when the retailers you want to sell to
are doing their relevant category reviews; if you
miss the review, you might have to wait months
before you have another chance to get your
product onto their shelves. Smaller retailers are
usually more flexible and may not even have
scheduled category reviews.

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This article from HAX provides insight
into how to pitch to a retail sales buyer,
including what information should be in
your retail sales pitch deck. Authors of
the Both Sides of the Retail Table blog
provides some helpful suggestions on
how to prepare for a retail sales pitch,
what to include in your retail sales pitch,
how to capture buyers’ attention, and
what not to do when pitching to a retail
buyer. The SFA Basics textbook includes
additional information about preparing
for a retail sales pitch. Make sure you
bring samples to your meeting with the
buyer, including prepared products for
tasting as well as packaged products for
viewing, holding, etc.

Section 5: Sell Your Product

Before you contact a potential retail buyer, it’s
important to do your research on them. You should
research the company as well as the individuals
who are the retail buyers for your product category.
Some questions to ask include: Who are their
distributors? What are their sales volume requirements? Who are their competitors, and what
makes them different? You should also visit their
stores to understand what products they carry in
your category and how your product fills a gap in
that lineup. You should also make sure you know
the answers to common questions that buyers ask
about products. For example, what is its wholesale
price, MSRP, and gross profit margin? What is its
shelf life? What is its sales history in other stores?
How many units do anticipate it will sell per week?
Gredio provides a list of other questions retail
buyers will likely ask.
The retail buyer’s job is to find products that will
lead to increased sales for their category as a
whole. If your product will only source sales from
competitive products, it doesn’t help the buyer
meet their goal to grow category sales. Thus, when
you meet with the prospective buyer, it’s your job
to convince them that your product will increase
total category sales. There are three main ways to
do this: bring new buyers into the category, get
existing category buyers to buy more, or increase
the average dollar ring of products in the category.
You should prepare a retail sales pitch deck for this
meeting (note that this is not the same as the
investor pitch deck).

If the retail buyer is impressed with your pitch
and product, you will move forward into negotiations. Retailers typically ask for trade promotions
like markdowns, exclusivity, and slotting fees,
which are usually negotiable. After you strike
a deal with the buyer and successfully obtain
shelf space, you need to make sure your product
stays on shelf. If your product isn’t selling
enough to meet the expectations of the retailer,
they will likely drop your product to make room
for something else. You need to have a strong
marketing plan in place to ensure that your
product turns at least as fast as other products in
the category. This data can be obtained by Nielsen,
IRI, or SPINs. If you see it’s not selling as fast
as it needs to, you can increase the consumption
focused tactics in your marketing plan.
Another risk is that your product sells too well and
you can’t keep up with out-of-stocks. This situation
will also likely result in your product being dropped,
since empty shelf space means lost sales for the
retailer. Before you even approach a retail buyer,
ensure that you have forecast accurately and have
sufficient production capacity to meet anticipated
demand. This article from the authors of Both
Sides of the Retail Table offers more advice on how
to keep your product on the shelf.

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Let’s provide some further insight into
Whole Foods since so many established
and growing plant-based brands have
gotten their starts there.
Whole Foods’ buying decisions are mostly
centralized in the company’s Austin,
Texas, headquarters, but like most
retailers, they allow companies to enter
solely into one local area (e.g., Metro
NYC) or region (e.g., Northeast) without
the expectations and demands of a
national rollout.
Miyoko’s Kitchen, Sweet & Sara, Sticky
Fingers, Kite Hill, and many other
plant-based brands launched locally
in Whole Foods prior to expanding
nationally. If you prove successful in one
area, Whole Foods will work with you
to expand into new regions, and even has
a loan program to help you scale
production. Meg Carlson, CEO of Melt
Organics, provides advice on how to get
into Whole Foods.

Section 5: Sell Your Product

Most major retailers provide information on
their website for potential suppliers. For example,
Whole Foods, Publix and Safeway share their
policies and guidelines for how to become
a supplier, including contact information, meeting
request procedures, and required forms. Be
sure to thoroughly review this information
before approaching the retailer and follow all
required procedures. You might also consider
signing up for a service like RangeMe, which
connects retail buyers with suppliers.

Selling to Foodservice
Before we jump into foodservice sales, let’s go
over the structure of the foodservice industry.
Most broadly, the foodservice industry is divided
into two sectors: commercial and non-commercial.
•• Commercial foodservice includes for-profit

ventures such as restaurants (full service and
limited service), bars, and retail foodservice, which
includes restaurants or prepared food counters
within grocery stores, convenience stores, and
other retailers.

•• Non-commercial foodservice includes venues

where food is served as a secondary function of
an organization. Non-commercial foodservice
includes segments like K-12, colleges and
universities, healthcare (e.g., hospitals, longterm care, senior living), business and industry
(e.g., corporate cafes), prisons, and military.

This presentation describes the key differences
between commercial and non-commercial foodservice. IFMA’s Foodservice Landscape report
provides an overview of different foodservice

channels, including their sales volume and other
metrics. Bill Stewart’s foodservice landscape
presentation also provides an overview of the
foodservice industry.
Now, on to sales. The process for personal selling
in foodservice is similar to retail. Start by doing
your research on the potential buyer. Study their
menu and come prepared with ideas on how your
product could fit into it. If the account is an independent restaurant, you should schedule a meeting with the chef or manager. Be prepared to
discuss the product, pricing, ordering, delivery, and
other logistics. As always, don’t forget to bring
product samples. If the buyer is a larger account
like a chain restaurant, stadium, resort, cruise line,
etc., you should find out who the food and beverage buyer is and schedule a meeting with them.
If the account is a non-commercial venue,
find out who manages operations at that institution.
Non-commercial foodservice establishments
can either be independently operated (referred
to as self-operated or self-op) or operated by
a third-party foodservice management company.
If a foodservice management company is
responsible for operations, you should follow
their procedures for scheduling a meeting to
pitch your product. The largest foodservice management companies are Compass, Aramark,
Sodexo, Delaware North, and Elior North America.
Bon Appetit is a subsidiary of Compass that
is particularly friendly toward plant-based foods
and serves universities and corporations. Food
Management’s Top 50 Report highlights the top 50
foodservice management companies each year.

STARTUP MANUAL

Some third-party eCommerce
websites include Amazon,
Instacart, Shipt, FreshDirect,
Peapod, Google Express, Direct
Eats, Thrive Market, and Walmart.
Here, we provide some additional
insight into selling food on
Amazon, since it is the current
leader in the online grocery
market with 18% market share.

Section 5: Sell Your Product

If you have the production capacity and demand,
partnering with a foodservice management company
can be a great way to expand your reach within
foodservice. For example, when Just (formerly
Hampton Creek) partnered with Compass in 2015,
it enabled the company to get into cafeterias,
restaurants, and other foodservice establishments
nationwide. At the time, CEO Josh Tetrick
called Compass “the most important partner
for us because of its scale and shared philosophy.”
Foodservice operators are increasingly using
online ordering platforms like BlueCart,
SimpleOrder, and Dine Market. Order management
platforms connect foodservice customers like
restaurants with multiple suppliers, allowing
multiple vendor relationships to be managed on
the same platform. From the buyer’s perspective,
these platforms make it easier to try new products
without having to fill out a new order form and
manage billing with a new supplier. From the
seller’s perspective, these platforms can help with
foodservice customer acquisition and simplify the
invoicing process. Thus, if your target customers
are using one of these platforms, you might benefit
from joining.

Selling via eCommerce
In eCommerce, most of your promotional mix will
likely consist of consumer-facing marketing
strategies such like digital advertising. However, if
you’re planning to sell your products on a thirdparty eCommerce website, you’ll need to perform
some personal selling to get that website to sell
your product.

First, let’s cover some eCommerce background.
eCommerce is the buying and selling of goods and
services online. eCommerce is becoming an
increasingly important channel as more consumers
are purchasing more food and beverage products
online. A study by Food Marketing Institute and
Nielsen predicts that by 2022-2024, online sales
of groceries could reach $100 billion, which is
equivalent to every US household spending $850
online annually for food and beverage. This same
study predicted that in five to seven years, 70%
of consumers will be grocery shopping online.
While some companies (e.g., Purple Carrot)
might choose to sell products exclusively through
eCommerce, others (e.g., Miyoko’s Kitchen) might
choose to sell online in addition to traditional
channels like retail and foodservice to help boost
sales. You can use different platforms for selling
your products online, including your own eCommerce website or third-party platforms. Some
third-party outlets purchase products wholesale
from manufacturers, while others never take
ownership of the inventory, but rather rely on
manufacturers to dropship orders to consumers.

Amazon
In the broadest sense, there two ways to sell your
products via Amazon. One option is to sell your
products on Amazon via Seller Central; the other
is to sell your products to Amazon via Vendor
Central. The main difference is who takes ownership of the product. In the Seller Central model,
you own the inventory until the customer receives
it, while in the Vendor Central model, Amazon
takes ownership of the product once they receive
it. Within the Seller Central model, you have the
option to choose between fulfillment by merchant
(FBM) or fulfillment by Amazon (FBA).

STARTUP MANUAL

Section 5: Sell Your Product

In the FBM model, you manage shipping, returns,
and customer service. In the FBA model, you
send the inventory to an Amazon Fulfillment Center
and they manage shipping and returns, but you
still own the inventory until the customer receives
it. In the FBA model, your product listing will
say, “Sold by [you] and Fulfilled by Amazon.”
Your products may be eligible for Amazon Prime
under the FBA model.
In the Vendor Central model, you sell your products
wholesale to Amazon. In this model, your product
listing will say, “Ships from and sold by Amazon.
com.” Vendor Central also gives you access to
Amazon Prime, as well as food-specific programs
such as Prime Pantry and AmazonFresh. This
article from CPC Strategy describes the difference
between Amazon Fresh and Prime Pantry. Unlike
Seller Central, Vendor Central is an invite-only
program. Note that Amazon previously offered an
option called Vendor Express that did not require
an invite, but it has been discontinued.
To get an invite to Vendor Central, sellers usually
have to have demonstrated success via Seller
Central. However, since it isn’t possible to sell
fresh and frozen products through Seller Central,
Amazon created an online application for
AmazonFresh. Amazon also has a program for
startups called Amazon Launchpad, to which you
can apply online. To get a better understanding
of the pros and cons of Seller Central and Vendor
Central, refer to this infographic from Bobsled
Marketing and this article from Ignite Visibility.

Shopify’s guide How to Sell Your Products on
Amazon is a useful resource for navigating
the process of selling via Amazon. Shopify also
offers a whole collection of guides that provide
insight into different aspects of eCommerce.

Selling to Distributors

As described in the Distributors section of this
manual, there are many different types of distributors, and you’ll need to decide which would make
the best strategic partners for your company. Once
you home in on a specific distributor you’d like to
approach for sales purposes, you should follow
their new supplier procedures, which are usually
posted to their website (e.g., UNFI’s New Supplier
portal, information for new suppliers, and list
of required forms and information). Once you’ve
filled out the appropriate forms, the buyer for your
product category will set up a meeting if they are
interested in learning more.
At this meeting, you will be expected to give a
presentation to the buying committee and/or sales
staff. Note that your distributor pitch deck will
be different from your investor pitch deck and your
retail sales pitch deck since it should contain the
most important information for distributors—e.g.,
information on your product line (including ingredients, certifications and distinguishing factors
from other products in the category), retail and
consumer demand, marketing and promotional
strategy, packaging, shelf life, minimum order
quantity, pricing, discounts, payment schedule,
and production capacity. Don’t forget to bring
product samples to the meeting. The SFA Basics
textbook contains additional information about
how to prepare for a meeting with a distributor.

STARTUP MANUAL

“Having a great product available
is not enough—suppliers need
a well thought out go-to-market
strategy and a knowledgeable
sales support team to be successful. Our Marketing Associates
can’t be experts on every one of
the thousands of products we
stock. We factor many aspects in
when we look at a company; we
also look at their production
capacity and make sure it’s
scalable. If our customers can’t
order a product due to manufacturing constraints, it looks bad for
both the supplier and us.”
Massimo Balacchi,
Director, Italian Segment,
Sysco Corporation

Section 5: Sell Your Product

While this might seem like a lot to cover, it’s
important to remember that distributors are
ultimately looking to carry products that will sell.
Their goal is to achieve a high level of inventory
turnover, also known as “turns,” which results
in a higher return on investment (ROI) on the cash
that is tied up in their inventory. During this meeting, it is your job to convince the buying committee
that your product will sell. Since retailers are
distributors’ customers, the strongest testament
that a product will sell is retailer interest in your
product and intent to buy. Thus, we usually
recommend that companies pitch to retailers first
then pitch to the interested retailer’s distributor
once they can prove that there is demand either
in the form of expressed interest or written commitments to purchase a certain amount (the same
is true in foodservice distribution).
Another way to convince the distributor that your
product will sell is to show that you have a strong
sales, marketing, and promotions strategy. While
distributors do have sales staff, their ability to drive
sales is limited, since they have so many different
manufacturers and products to represent. As
outlined in this article from Gredio, distributors
won’t sell your product for you.
If the distributor is interested in carrying your
product, you can negotiate terms, such as an
exclusivity period, trade promotions, and more.
The SFA Basics textbook also explains key terms of
the relationship that might be up for negotiation.
After you have an agreement in place, your job
is to ensure that the product sells and continues
to meet the sales expectations of your distribution
partner. Your other job is to ensure that you don’t

run out of stock. Before you start expanding your
distribution too much, it’s important to ensure you
have sufficient production capacity to meet
demand within your current points of distribution.
If distributors have empty room in their warehouses or retailers have empty space on their
shelves because you can’t keep up with demand,
they might end up dropping you.

Brokers

A food broker is an independent sales agent that
represents food manufacturers to sell products to
retail or foodservice customers. Brokers typically
operate within a defined geographic area and
specialize within specific segments of the retail
or foodservice markets. Brokers do not warehouse
or transport products—their role is simply to sell
products on your behalf.
If you are considering hiring a broker, there are a
few things to consider. For one, you should have
the production capacity to support increased sales
volumes prior to engaging a broker. The benefits
to working with a broker include their knowledge
of local markets, relationships with potential
buyers, and sales experience. The downside
of working with a broker (vs. hiring an in-house
sales representative) is that you’re not the
only brand they represent. Brokers represent
a variety of brands, though they typically do not
take on products that are direct competitors
with each other.

STARTUP MANUAL

UNFI’s broker directory can help
you find contact information for
brokers in the retail sector. The
Specialty Food Association has a
database of specialty food brokers
in their Learning Center, and the
Specialty Food Resource also has
a list of specialty food brokers.
GFI is not aware of a similar
database of foodservice brokers,
but some examples of national
foodservice brokers include
Acosta, Affinity Group, The CORE
Group, KeyImpact, Lakeland
Marketing, and Waypoint.

Section 5: Sell Your Product

Since brokers work on commission and small
manufacturers only represent a fraction of their
overall sales, you should not expect your broker
to devote as much time and attention to your
brand as an in-house sales representative would.
As such, manufacturers should not expect brokers
to replace in-house sales efforts, but rather to
supplement them. Even though brokers are not
part of your internal sales team, you should
provide training to enable them to be knowledgeable representatives of your product and brand.
Often, brokers provide the first impression of your
brand to your potential retail and foodservice
customers, so it is important that they represent
your product accurately and positively. The
Oklahoma State Food & Agricultural Products
Center has a guide on how to determine whether a
food broker is right for you. Oregon State University
also provides a guide for using food brokers.
Brokers are usually paid based on their performance
as a commission of their sales (for example, 4-6%).
It should raise red flags if a broker requests set
fees or retainers, except perhaps in new product
launches. Brokers might ask for set fees due to the
high time commitment and risk involved in taking
on an unproven product. In these specific cases,
manufacturers might agree to such fees for a
limited period of time or just opt for doing sales
in-house until the product is successful enough
to entice a broker.
When hiring a broker, ask for referrals within your
personal and professional networks. You might
consider asking your current retail and foodservice
customers for referrals, since they likely purchase
products from brokers and are familiar with those
who operate in the local area. It is important to

note that brokers that specialize in foodservice
likely are not productive in retail and vice versa.
Some things you should consider are what
market segments (e.g., retail, foodservice) and
sub-segments (e.g., supermarkets, natural stores,
quick service restaurants, K-12, etc.) they operate
in, whether they are familiar with your product
category, what geographic region they cover,
who their other accounts are (and whether any of
their products compete with or complement yours),
who their main buyers are, and what their key
accomplishments are.
When you are ready to move forward with a broker,
it is a good idea to create a written agreement to
set expectations and legally define the relationship
between the manufacturer and the broker. The SFA
Basics textbook provides additional information
about what should be part of this broker agreement, including a broker contract template. It also
highlights additional points you should discuss
with your broker that don’t necessarily need to be
in the formal agreement, such as the process for
how orders will be submitted and what kinds/
quantity of samples will be provided. After you
implement this agreement, it is important to hold
up your half of the deal, actively manage your
relationship with your broker, and recognize (and
reward) good performance.

Acknowledgments

Primary author

Brianna Cameron, Business Analyst

GFI team

Jessica Almy
Brad Barbera
Caroline Bushnell
Emily Byrd
Rose Convery
Annie Cull
Miranda Grizio
Cameron Meyer Shorb

External

Massimo Balacchi
David Benzaquen
Courtney Boyd Myers
Lisa Feria
Steve Jeffrey
Chris Kerr

Ana Orth
Erin Rees Clayton
Amy Shepherd
Liz Specht
Aylon Steinhart
Keri Szejda
Zak Weston

Mark Langley
Andy Levitt
Alex Lorestani
Linda Obregón
Craig Phillips
Magi Richani

Technical editing by Chris Thomas; Design by Paul Wong
We would like to thank the above individuals who graciously shared their expertise on the wide variety
of topics covered in this manual. We would not have been able to develop such a comprehensive
guide without their deep knowledge and experience.
This program is made possible thanks to generous donors. Philanthropic support is vital to our mission.
To discuss how you can be part of this transformative work with your gift or grant, please contact GFI
development director Clare Bland at clareb@gfi.org or 310.429.7162.

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