Startup Spotlight: Ten Acre Organics

Startup Spotlight: Ten Acre Organics

Urban farming is a hot topic in food production right now, but creating a profitable farm in the middle of a city is a hard field to plow. We caught up with 2015 Food+City Prize winner Ten Acre Organics to find out how they did it.

Ten Acre Organics (TAO) co-founders Michael Hanan and Lloyd Minick have been working on their urban aquaponic farm since 2013. Since then they have been through several iterations of products, processes and procedures. Thanks to determination and their perfect-looking, colorful variety of Bibb, Romaine, Oak Leaf and Red and Green Leaf lettuces that have attracted Austin’s top chefs, TAO became profitable in early 2018. Their five-year journey has required patience and persistence — qualities that are emblematic of every entrepreneur.

Bootstrapping the capital to get started via a Kickstarter campaign, they stayed afloat in the early years with grant money and the support of friends and family. Ten acres of land, Hanan and Minick thought, “was the ‘just-right’ size for a diversified farm to achieve economies of scale and profitability while still being able to distribute 100 percent of its produce locally,” Minick says.

Working on the farm as a “garage project” for the first year, they painstakingly developed about one-tenth of an acre from scratch in their backyard in north Austin, consuming most of what they produced. At that point the co-founders faced a question all entrepreneurs must address: How do I quit my job and work on this full time?

Raising a seed investment round is a good way for startup founders to earn the ability to work on their company full time. It’s also validation that other people see value and promise in your idea. TAO was looking for both. Then, in 2015, a panel of industry expert judges named Ten Acre Organics the Grand Prize winner of the inaugural Food+City Challenge Prize, which came with $10,000 in prize money. While the money helped them float the operation for a few months while they continued to raise money, the more important thing, according to Lloyd, was the validation.

“Winning the Food+City Challenge Prize proved to us that we had a good idea, and that investors recognized the opportunity. It really helped in terms of our reputation,” he says. Later that year, TAO closed their seed investment round with $500,000.

Receiving validation and investment are big milestones for startups. But the work doesn’t end there. With big milestones come big expectations. Scaling a business from working prototype to profitable company is often more difficult than drumming up initial success. And in the farming business, where margins are notoriously thin, economies of scale are the only way to have financial success.

But expanding an urban farm can be challenging because city land is expensive. Hanan and Minick could have moved a few miles outside of town to save on land and utilities, but their dream was to grow a community, not just food. Creating a place for community workshops, think-tank style dinners and private events is their way to help people understand and appreciate where our food comes from, how it’s grown and by whom.

“We want to make an a place that is not just a farm but a community center as a change agent, where people who feel disconnected and alienated by the modern industrial food system can experience social cohesion,” Micinic says.

With the community in mind, they stayed true to their dream and in 2016 purchased an existing urban farm just a few miles from downtown Austin. Hanan and Minick saw potential in an urban farm that was struggling operationally and financially. They decided that they could improve upon the business with things like better system design and engineering, better staffing and personnel management, improved horticultural practices to maintain product quality and consistency, and an increased focus on sales and customer development.  With these improvements, they thought, Agua Dulce farm could be the model profitable urban community farm. In early 2018, they celebrated their first profitable month. Their certified organic, aquaponically grown leafy greens are the opposite of ugly produce, and the quality of the product is one of their most significant accomplishments. It’s also a differentiator that helped them catch the attention of some of the most high-profile restaurants in Austin.

All it took was four years of back-breaking labor, day in and day out. And that’s just on the farming side. There are also business duties and decisions to be made regarding human resource management, accounting, sales and marketing, and disaster control. While he stops short of telling people not to build more urban farms, Minick has a strong warning for the folks who think urban farming is more romantic than rigor.

“Farming is hard. Starting a business is hard. And starting a farming business is just insane,” Minick says. But if you’re insane enough to work long hours in the Texas heat for several years, you just might end up with a successful business.

A variety of lettuces growing at Agua Dulce farm in Austin.
Ten Acre Organic co-founder Lloyd Minick in front of their aquaponic system at Agua Dulce farm in Austin.
 Watch the recap video of the 2015 Food+City Challenge Prize featuring Ten Acre Organics as the Grand Prize winner.
Agua Dulce farm in Austin

Startup Spotlight: Bento Picnic

Startup Spotlight: Bento Picnic

It’s not easy or cheap to open a restaurant in a growing city, and entrepreneurs are coming up with creative ways to realize their dreams of a traditional storefront restaurant. We caught up with Leanne Valenti, founder of 2016 Food+City Challenge Prize participant Bento Picnic to find out how she did it.

Leanne Valenti, founder of Bento Picnic, learned her craft from a master. Just after graduating from the Natural Epicurean culinary school in 2011, a close friend offered Valenti an opportunity she couldn’t pass up to move to Tokyo, live with her family and learn traditional Japanese cooking from everyone’s favorite chef: Mom.

During her time in Japan, Valenti became enthralled by the beautiful and healthy style of Japanese cuisine. She was particularly inspired by the bento box lunches that, according to a recent study, nearly half of the population of Japan eats each day. Seeing potential to serve delicious and healthy food to an increasingly on-the-go American market, she set a goal to provide healthy food at affordable prices.

“When I founded Bento Picnic in 2015, I did not have a storefront or a distribution plan,” she says. Undaunted, she dove right in, seeking opportunities to sell her products whenever possible. In addition to catering, she sold bentos at farmers markets and had pop-up shops, including one in a kids activity center and one in a rock-climbing gym that remains operational today. But she gained the most momentum from businesses who brought in lunches for their employees. With their compartmental style, Bento Boxes can be easily customized to fit many dietary preferences — which makes it easy for customer to order from one restaurant and please omnivores, vegans, vegetarians and gluten-free folks.

After a year of doing business in a variety of settings, she knew she had a product that people loved. Her challenge was finding “the best way to expand my footprint beyond farmers markets, pop-up pushcarts and catering.”

Prompted by a mentor, Valenti entered Bento Picnic into the Food+City Challenge Prize in 2016. She points to the competition as a time when she really started thinking more critically about how to grow and scale her business.

One piece of advice I received from a Food + City judge stuck with me, and it proved to be true,” she recalls. “He said that it is very difficult to bring a new product to market AND develop a new method of coming to market concurrently. Since I am first to market with homestyle (as opposed to sushi-restaurant-style) bento boxes in Austin, he suggested that I would have more luck if I could come to market in a more traditional way, like a storefront.” Good advice, but easier said than done.

Opening a restaurant in Austin is tricky business. Despite the city’s reputation as a destination for foodies, more than 70 restaurants and food trucks closed in 2017 alone. Meanwhile Austin’s growing population continues to drive up real estate prices for retail and residential properties. The competition from large restaurant groups and corporate chains is also increasing, and the actual number of viable restaurant properties is limited.

Because of this, many entrepreneurs start small, channeling their dreams of would-be restaurants into food trucks, food carts, pop-up stores, catering operations run from commercial kitchens and farmer’s market businesses. Their goal is to build momentum and secure enough capital and customers to scale up and enter the brick-and-mortar scene. It’s a model that has proved successful for some Austin’s restaurants, including places like Franklin Barbecue and Veracruz All Natural, which started as food trucks.

The two main things that kept me from launching a storefront from day one were the upfront capital investment required and the difficulty of acquiring a second-generation restaurant space in Austin,” Valenti says.

Focusing instead on catering and a pop-up kiosk model, Bento Picnic achieved slow but steady growth in 2016 and 2017. Renting a kitchen space in the back of a marketing firm’s office was a good way to keep overhead down and establish a customer base for its catering, pick-up and delivery business.

Leanne Valenti, founder of Bento Picnic, talks with a customer in their restaurant in East Austin.

Vegetarian Bento from Bento Picnic

 Watch the recap video of the 2016 Food+City Challenge Prize featuring Bento Picnic as a finalist.

Grab-and-go kiosk with a variety of Bento Boxes at Bento Picnic.

By the end of 2017, growing demand offered an opportunity to expand. That’s when a bit of serendipity occurred. When the marketing business decided it was time to move on, Valenti says she jumped at the opportunity to buy the place and open a bento shop storefront.

“We felt really lucky that the space became available, and it was too perfect to pass up,” she says.

The move is paying off. “So far, it has been a good move, with Bento Picnic seeing a noticeable increase in brand awareness, catering sales up 60 percent and the daily lunch business exceeding the sales that used to occur in a full week,” Valenti says.

While the jump to a brick-and-mortar establishment is never easy, most entrepreneurs know there’s a leap of faith that goes along with getting bigger. And for some, unlimited faith in their growing business comes naturally.

Valenti says she’s considered taking one of her original creations, “guacamame” (edamame guacamole), to market as a consumer-packaged-good (CPG) product. And having opened a storefront in the ultra-competitive Austin market, opening in other cities now seems achievable.

“Now that I’ve honed my business model and launched my brick-and-mortar space, I’m looking to expand Bento Picnic’s presence statewide,” Valenti says. It seems the scaling never ends for food startups.

Former accountant’s office turned into Bento Picnic restaurant.

“Guacamame” (edamame guacamole) with crudités from Bento Picnic