Why Leawood's Stray Dog Capital likes investing in the underdog – Kansas City Business Journal – The Business Journals

Leawood-based Stray Dog Capital is an early-stage venture capital firm that likes to “invest away from the pack,” and it likens many of its portfolio companies to the underdog that’s ready to seize a win. (One portfolio company developed a plant-based egg that cooks and looks like an egg, complete with the yellow yolk and white membrane.)
When Stray Dog Capital entered the food space in 2015, it wasn’t considered a “sexy or a cool place to invest,” Managing Partner and CEO Lisa Feria said.
“We ended up having this different approach to investing, which was we believed that these macro trends we were observing were going to result in a really fantastic financial opportunity for those that invested in it early,” she said.
Its investment buckets include plant-based food and beverage, cellular agriculture, food technology and new frontiers. To date, it has invested in 46 companies and participates in pre-seed, seed and Series A rounds. Investments range from $1 million to $2 million.
“Our focus is where food meets technology,” she said. “That’s where we thrive and that’s what we love to go into.”
With current farming practices negatively affecting the environment, the food system needs an overhaul. The best way for tackling the challenges is scouting new companies focused on delicious, yet sustainable, options, she said. They’re also using technology to propel growth.
“We look for a significant competitive advantage that is grounded in technology,” Feria said.
Portfolio company YoEgg, which developed the plant-based egg, offers a product with the same nutrition as a real egg, but without the cholesterol.
“It’s one of the most incredible products we’ve ever tasted. … They use manufacturing technology to make these products incredibly cheaply, so they’re able to quickly scale and to quickly impact the market in a way that hasn’t been seen before.”
Also topping Stray Dog’s checklist is the team, especially those with more than one co-founder. Having multiple founders brings complementary skill sets, she said. Stray Dog also wants founders who are open to feedback and can sell others on their vision, including prospective employees.
The companies that haven’t performed well in Stray Dog’s portfolio had a strong, impressive product but a weak team, she said.  
“They couldn’t hire. They couldn’t inspire. They were not reflective of their own weaknesses and opportunities. They were not open to feedback,” she said.
Sometimes a stellar team can overcome a product that still needs work. When Stray Dog invested in Beyond Meat, the startup had chicken strips, which weren’t the best the team had tasted. But the team was top-notch, she said.
“We’re like, ‘OK. This is going to work,’ and obviously, we’ve seen how it’s done.”
Food technologies are getting more complex — and that’s a good thing. Precision fermentation, for example, can create more realistic textures and flavors for plant-based meat.
“Two years ago, the closest I got to tasting a product that mimicked steak was made out of tomatoes,” she said. “It was not remotely close. … Now, we’ve frequently been trying ‘steak’ products that are mycelium based or use precision fermentation. The texture in it is mind blowing. The technology continues to enable more complex products that aren’t just a burger. We’re really excited about that.”
Portfolio company MyForest Foods, for example, developed a mushroom-based product using precision fermentation that mimics bacon.
“It tastes like bacon. It looks like bacon. It cooks like bacon, but it doesn’t have the laundry list of sulfites and preservatives that typical bacon have. It’s actually good for you.”
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