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Chicago, IL – September 11, 2012 - Food Genius, which provides data-based restaurant insights to the food industry, has raised $1.2 million in venture capital. Chicago’s Hyde Park Venture Partners and Hyde Park Angels led the round; other investors include New World Ventures, IDEO, Amicus Capital, and the I2A Fund.
“With this funding, Food Genius is expanding the team in order to bring Food Genius Reports to market,” says founder & CEO Justin Massa. “Food Genius Reports is a leap forward for the food industry, providing intuitive and deep access to restaurant trends as they develop new products and craft marketing strategies.”
“Food Genius is direct evidence that Chicago has truly become a place where ideas evolve into viable businesses, creating jobs and economic growth in the City,” said Chicago’s Mayor Rahm Emanuel. “Entities like 1871 and Excelerate Labs play crucial roles in the development of these young companies, and I am pleased to see an environment developing that supports entrepreneurship and business expansion. I look forward to many more small businesses developing out of these facilities and programs and fueling Chicago’s economy in the coming years.”
“The food and restaurant industry is ripe for data disruption, and Food Genius offers astounding insights in this market where the consumers’ voice has been opaque,” says Guy Turner, managing director at Hyde Park Venture Partners. “We are excited to see them grow.”
The company is also announcing that Owen Shapiro of Leo J Shapiro & Associates and Hyde Park Angels as well as Brian Distelburger of Yext have joined Food Genius’ board of directors. Shapiro notes, “Food Genius brings a powerful combination of talent and tools to address the pressing need for better real time information on food sold through restaurants. Starting with a firm grasp of ‘big data’ techniques and building with a unique set of data sources and tools, Food Genius is quickly positioning itself to be a primary source for insights that can drive innovation and profitability for foodservice and CPG companies that depend on restaurants directly for sales and insights into emerging trends.” According to Distelburger, “As the breadth, depth, and quality of local business data grows, there is an enormous opportunity to build new business intelligence services on top – Food Genius is leading this charge in the food vertical.”
A core element of Food Genius’ approach is to acquire, normalize, and extend massive amounts of menu item-level restaurant data. Food Genius is partnering with GrubHub, which will be the primary source of menu data. “GrubHub has the most comprehensive and highest quality database of restaurant menus,” says Massa. “We’re incredibly excited to work with not only the best data set around but also a company that regularly brings us lunch and dinner.”
Food Genius is also partnering with CHD Expert, a leading provider of data for foodservice sales and marketing strategies, to pair deep menu-level data points with detailed operator information. This new level of detail will provide foodservice sales teams with unparalleled insight into how specific locations use ingredients and preparation techniques.
About Food Genius
Food Genius is big data for the food industry. By tracking more than 16.3 million restaurant menu items and how consumers interact with them, Food Genius leverages the social web to generate high quality and incredibly granular data for an array of commercial and consumer uses. They provide manufacturers, distributors, operators, and CPG brands with actionable data on consumer behavior and restaurant trends. Their signature product Food Genius Reports, a robust restaurant trends dashboard for the food industry, will launch in early winter 2013.
Food Genius is a graduate of Excelerate Labs (class of ‘11), was the first-ever Startup-in-Residence at IDEO’s Chicago studio, and was the first graduate of 1871. For more information, visit http://www.getfoodgenius.com
About Hyde Park Angels
Hyde Park Angels (HPA) is an organization that provides a forum for entrepreneurial-minded members to invest in seed and early stage businesses, primarily located in the Midwest. HPA is a group of current and former executives, entrepreneurs, and venture capitalists who are interested in investing their time and money into outstanding startups. HPA also provides domain expertise, strategic advice and coaching to its companies. The Chicago-based Hyde Park Angel Network was founded in 2006 by a group of classmates from the University of Chicago Booth School of Business Executive MBA Program. For more information, visit http://www.hydeparkangels.com/
About Hyde Park Venture Partners
Hyde Park Venture Partners (HPVP) is a venture capital fund investing in early stage technology companies in the Midwest, with particular focus in Chicago. HPVP invests in technology-enabled business and consumer services and healthcare IT companies raising their first or second round of institutional capital. HPVP draws on its strategic relationship with Hyde Park Angels (HPA) to provide industry and business expertise to its portfolio companies through a network of more than 90 seasoned business executives, entrepreneurs and service professionals. HPVP’s principals and the HPA network take an active role in mentoring and guiding portfolio companies in product development, business strategy, financing and exit through both formal director roles and informal mentorship relationships.
For more information, visit http://www.hydeparkvp.com/
from this week’s Crain’s Chicago Business
By Lisa Leiter March 12, 2012
Chicago’s startup revolution is in full swing. And that is causing some concern about whether the city will see déjà vu all over again from the dot-com boom and bust at the end of the last century.
Last year, Chicago companies raised $654.1 million in venture capital, according to Dow Jones VentureSource, more than any year since the peak of the dot-com bubble in 2000, when nearly $1.8 billion was raised. The number of investments: 70, the most since 2001.
Whether history will repeat itself in another boom-and-bust cycle is anyone’s guess, but—Groupon Inc.’s famous profitability challenges aside—there are key differences between the dot-com glory days and now.
Chicago investors, already more conservative than their coastal counterparts, are asking about business plans, revenue and profits earlier and in more detail than ever before.
Some Chicago entrepreneurs are responding to those investor demands, as evidenced by a presentation at one of last summer’s key startup events, incubator Excelerate Labs’ Demo Day. Food Genius co-founder Justin Massa started his pitch to the audience with this: “All right, you’re saying to yourself, ‘Food Genius, this is kind of cool. I get it. Dishes. But how in the world is it going to make money?’ “
It’s a question Mr. Massa, 33, started answering during Excelerate’s summer program. Food Genius collects data on restaurant dishes, data he plans to repackage and sell to the grocery and restaurant industry. Mr. Massa, unlike some other early-stage entrepreneurs, says developing a revenue model before pitching investors was important to him. He initially started the process of raising $700,000 to $1 million at the end of the summer but says he pulled back last fall to refine his model.
“When I do go back out to raise money a few months from now, we will have the potential to be a company that generates money, and that gives us the opportunity to raise money from the right partners for us and give us a great valuation,” he says.
What was the initial insight behind the food genius idea?
The initial concept for FoodGenius was that people eat dishes not restaurants.
Every review site on the web allows you to sort by restaurants but not dishes. We wanted to help people discover and share their next favorite restaurant dish in a similar way to how they search for individual music tracks.
What changed, when and why? What was it that your customers told you or your team discovered that prompted the pivot?
Well, we entered Excelerate knowing that we had to figure out our business model – to either focus on consumer advertising or leverage the underlying data we collected. By mid-summer it became clear that the time and energy involved in scaling the consumer side of the business just wasn’t paying off and we decided to refocus on the the data instead. We spent the subsequent months building an API and rewriting the code to reposition the data we’d gathered to date. It then became clear that our target customers were really food services businesses looking to better understand consumer dining habits.
How did you adapt the business plan?
It was an incremental process. We always knew we were going to leverage data about restaurants, the challenge was figuring out the “how”. I like to say that there’s a notable difference between a pivot and a jump – your core strategy remains the same, or rather you keep one foot grounded and pivot around with the other to find how you’re going to make your thesis work.
What did you ultimately learn about pursuing path B over path A?
Simply put, you have to focus on what you’re good at. We had to choose between being a data driven company and a consumer design company, and we were hands down better at the data part of that equation. If we had been a bigger company, we could have probably gone out and hired the requisite design talent. As a start up, you’re forced to choose the path where you know you have the most edge and for us that lay in interpreting the data.
Could you have done anything else initially to foresee the need for this change?
I don’t think so, no. If we had never tried both paths then we would never have known which would work better.
Someone once said that “a start up is a series of discrete experiments” – you want to be continually removing risk and refocusing your efforts where you have the most traction. Had we come in day one saying we were going to focus on data then I think the idea behind FoodGenius would have been a lot less compelling.
What advice would you offer other entrepreneurs facing the need to pivot?
I’m a big believer in the idea of strong opinions weakly held – push forward aggressively but don’t be so invested in one way of doing things that you can’t shift gears when the facts change. This philosophy speaks to the belief that small businesses should be nimble; this is often their greatest advantage. Others should look to capitalize on that ability to be flexible.
What do you think has enabled you to be successful in making the transition?
We were very direct about asking people for advice. Throughout the process at Excelerate, and even since then, we continuously asked for targeted feedback. We leveraged the mentors, as well as the broader community, and this really helped us make better decisions along the way.
Is there anything you would have done differently? More quickly?
Hindsight is always 20/20. I think having a plan for 3 months and sticking to that before reevaluating and setting the plan for the next 3 months is really a good way to go about things. I equate it a bit to parenting! You have to be flexible and ok with some uncertainty. I’d advise others to have a plan but to be constantly reevaluating as the facts change.