CEI receives $300K to support equity investment in early-stage food business
Coastal Enterprises Inc. received a $300,000 grant to support equity investment in early-stage food businesses.
The grant came from the U.S. Department of Commerce’s Economic Development Administration Office of Innovation and Entrepreneurship and will go into CEI’s Catalyst Fund, according to a news release.
The fund is a pool of capital for equity investments to be deployed by CEI’s lending and investment team in collaboration with its food systems program.
The fund is designed to grow Maine’s food economy by offering early-stage, patient equity investments paired with business advice and technical support.
CEI originated the Catalyst Fund in 2017, recognizing that the limited availability of early-stage equity investment presents a bottleneck for business growth.
CEI’s goal for the fund is to grow Maine’s food economy by providing catalytic capital for food businesses with the potential for high growth, job creation and positive environmental and social impacts aligned with CEI’s mission.
The EDA award for the Catalyst Fund follows a $565,000 award from the Community Development Financial Institutions Fund at the U.S. Treasury in November 2019.
Heritage grain and eels
To date, CEI’s Catalyst Fund has invested $1.09 million in eight businesses, three of them women-led, engaged in a diverse array of food production including heritage grain milling, eel aquaculture, growing exotic mushrooms and kelp processing.
The businesses have created or retained 75 jobs and leveraged another $4.82 million in additional investments.
From the time of CEI’s initial investment through May of this year, revenue at the eight companies has grown, on average, 22% per year and cumulative revenue has grown from $5.92 million to $9.78 million, or 65%.
The new grant allows CEI to staff the fund in order to source a compelling pipeline of investment-ready businesses and connect them with business consulting and technical assistance, develop and implement innovative investment structures, and host investor forums to introduce Catalyst Fund investees to sources of additional growth capital.
CEI also plans to raise $2 million for investments in an additional 10 to 12 new food sector businesses, which CEI expects will create or retain 150 jobs.
“The EDA award allows us to move forward with our vision to scale the Catalyst Fund,” Gray Harris, senior vice president of food system strategies at CEI, said in the release. “There are many creative, innovative entrepreneurs building food businesses that directly support Maine’s agriculture and marine economies, which have defined Maine’s working landscapes and coastlines for generations. These entrepreneurs are ready to take big risks to build companies that create jobs in their communities and in our iconic industries.”
A new generation of entrepreneurs is stewarding and leveraging the state’s natural resource base in farming and fishing, creating businesses that capitalize on the surging interest in local foods. Atlantic Sea Farms, American Unagi, Maine Grains, Oyster Tracker and Bluet are some of the next-generation companies that have received equity investments from CEI.
“Entrepreneurs need investors willing to invest in infrastructure,” said Briana Warner, CEO of Atlantic Sea Farms. “That’s where CEI comes in. The Catalyst Fund is giving us the flexibility and time to scale up our value-added products, helping to grow the impact and health of seaweed farming along the coast, with the objective of building a diversified income stream for coastal fishermen in the off season.”
“CEI played a number of different roles with Crown O’Maine and the financing needs that we've had,” said Marada Cook, general manager of Crown O’Maine. “When we were a cooperative, the Catalyst Fund provided high-risk, patient investments in the form of non-voting Class B shares, an important model of capital that cooperatives need. When we decided to shift from a cooperative to a Benefit Corporation, the flexibility of CEI’s capital was critical to the success of the transition. As a Benefit Corporation, we have a more expanded vision, including aspects of worker ownership and environmental responsibility.”
“Some investors have pretty stringent guidelines,” said Amber Lambke, CEO and founder of Maine Grains. “Sometimes, that has prevented us from getting financing. CEI is prepared to take more risks, particularly in food businesses.”
Businesses eligible for future investment will be new (generally less than three years old) and/or positioned to scale up significantly and demonstrate the potential for high growth, profitability, and job creation. The fund aims to serve diverse Maine entrepreneurs, including populations with lower representation in our business economy, including women, people of color, new Americans, and people who have low incomes or few assets and face systemic barriers.
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