Butterfly Locks In $1 Billion For Food-focused Investments
Private equity firm Butterfly announced today it has closed its sophomore fund, securing commitments from an undisclosed number of institutional investors, family offices, entrepreneurs, and food investors to invest a total of $1 billion in “seed to fork” food-focused entities. Compounded with its previous fund and co-investments, today’s announcement brings Butterfly’s total assets under management to nearly $4 billion.
“When we launched Butterfly, we knew the opportunity for a specialized focus in the food sector across the seed to fork spectrum was significant, but it has far surpassed what we expected in many ways, and this is just the beginning,” said Adam Waglay, co-founder and co-CEO of Butterfly, in a press release.
The news comes less than a week after the firm announced its plans to acquire fast-casual chain QDOBA and merge the restaurant with its existing portfolio company, Modern Restaurant Concepts (MRC) in order to form a fast-casual restaurant platform.
Launched in 2016 by Waglay, a former KKR executive, and Dustin Beck, a former Vista Equity Partners and Riot Games executive, Butterfly has invested in a number of mission-driven food companies including avocado oil maker Chosen Foods and Pete & Gerry’s Organic Eggs. The fund launched when the firm was founded, with the goal of supporting innovative food companies spanning the value chain and supporting the pursuit of B-Corp certifications for its investments and the firm itself, according to Beck.
The firm has focused on vertically integrated businesses, where it can have greater control over inputs such as crops and manufacturing processes. It sees investments in such companies as a way to provide an advantage as other CPG brands struggle with supply chains and getting copacker line time during the COVID-19 pandemic and amidst inflationary pressure. Its QSR brands — Lemonade, Modern Market Eatery and QDOBA — also provide the firm’s packaged food and beverage brands an easy entrance into the foodservice channel.
“We’ve been able to bring a set of intangibles to the table beyond traditional capital partners, particularly around our operational and technological capabilities, to help our underlying companies realize their full potential,” said Beck in the release. “Consumers around the globe care more today than ever before about doing business the right way. Across our portfolio, we have a vigorous focus on leading by example in the food system, both with our philanthropic efforts and our commitment to making a positive impact.”
According to the release, Butterfly aims to transform businesses through its operational resources, led by another former KKR exec, Derick Prelle, partner and head of portfolio operations. The company said it also works with a range of nonprofits to “provide nutrition security and promote healthy, affordable food retail in neighborhoods with low access.” In addition to outside donors, Butterfly’s general partners support its Equity Foundation by contributing 10% of their net profits.
“Through these uncertain times, the food sector has emerged as one of the most important sectors for investing and we are humbled to be at the edge of this new frontier as a partner of choice working with such incredible food industry leaders, innovators and disruptors to drive transformational change and growth where it matters the most,” said Waglay, in the release.
