Put it down, in part, to the training received — and the analytical skills honed — when Jonathan Ferrari and Neil Cuggy were both investment bankers at RBC Capital Markets.
Add in a determination to succeed as an entrepreneur in an emerging market segment and what results is Montreal–based Goodfood, a company that provides all the ingredients — and the recipes — for individuals or families to cook at home. The service, which builds on the consumer-supported agricultural movement — whereby farmers deliver boxes of vegetables to consumers — is available in Quebec and Ontario but plans are to roll it out elsewhere over the next 12 months.
“You need to have a passion for food and technology,” said Ferrari, who noted that while orders are received through the company’s website, ensuring that they are processed properly requires more spending on back-end technology.
Goodfood (makegoodfood.ca), formerly Culiniste, has won the attention of edo Capital, which recently invested $1.1 million. Montreal-based edo defines itself as “an early stage private equity firm supporting sustainable food innovators and entrepreneurs in the good food space by helping them grow and scale to achieve their business goals.”
Food e-commerce company Culiniste emerges from search fund’s pivot
Ferrari said the capital infusion will be used “to invest in our people (it has 50 employees), in our supply chain. It will help us scale the company.”
That process to prepare ready-to-cook meal kits starts with Goodfood’s in-house chefs who each week prepare a series of recipes. The ingredients — the vegetables and/or meats, fish and spices — are put in a box, and then shipped out from its Montreal distribution centre. “We represent a large portion of our members’ weekly grocery bill,” said Ferrari, when noting that members join, and pay $65 to $150 for four weekday dinners. (There are no deliveries on Wednesday.)
The two are a “good fit,” Ferrari says, because “we understand how business can be a force for good in the communities they serve.” As part of the investment, Goodfood will now donate one meal to a child in need for each food box purchased. It expects to deliver 75,000 meals this year.
When Ferrari and Cuggy became partners almost three and a half years back, the plan was to create a search fund, a form of organization that had been popular in the U.S. for many years, but relatively new in Canada. Their fund was known as MTL Capital and the idea was to raise enough capital from institutional investors — enough to keep the lights on — while the two searched for a target.
Once the target was identified, the search fund with the help of the institutional backers, which provided the necessary capital, would make the acquisition and the individuals would then run it.
Ferrari and Cuggy tried that approach but switched gears because the terms of making an acquisition became too great. So they repaid what was left to the original backers and started Goodfood. “We got to know the food space, uncovered some interesting opportunities, but realized if we wanted to be disruptive in the grocery industry, we had to start from scratch.”
In Ferrari’s view, basing a business on meals being cooked at home (with supplied ingredients) rather than elsewhere and then delivered, makes sense because their are similar economics (the so-called price points are the same) but consumers perceive a difference.
“Society has never been more focused than it is today on food,” he said.