Food fund with Minnesota ties leads $50 million investment in granola brand

A Twin Cities trend-spotter with a keen eye for food businesses is leading a $50 million investment in Purely Elizabeth, a fast-growing granola company in Colorado.

John Haugen, the former head and founder of General Mills' venture fund 301 Inc., is now a managing partner at the newly formed SEMCAP Food & Nutrition, which focuses on boosting emerging brands.

The group debuted Monday, simultaneously announcing it led a Series B funding round for Purely Elizabeth in November. It's a second helping of the brand for Haugen, who was still at General Mills when it led a $3 million 301 Inc. investment into Purely Elizabeth in 2017.

"We are looking for a brand or business that has truly remarkable products — no one goes to an average restaurant and is excited to tell anyone about it," Haugen said in an interview. "Purely Elizabeth is a great example of the kind of brand we're excited about."

The investment will help the Boulder, Colo., company grow sales and production of its natural granola, oatmeal and pancake mixes, which were in 15,000 stores in 2021.

"We share the same vision and values for the brand, which were our most important aspects when choosing an investment partner. We are beyond lucky," founder Elizabeth Stein said in a news release.

Seminal Capital Holdings LLC, or SEMCAP, is a private equity company based in Pennsylvania, which also has investment arms dedicated to health care and education. The Food & Nutrition unit is in search of brands that have proven themselves in the market and are ready to scale up, Haugen said.

Despite Minnesota's outsized impact on what the world eats, venture capital has favored such growth-ready food companies in places like Boulder; Austin, Texas; New York and Los Angeles. Haugen hopes his fund can help increase Minnesota's reputation nationally as a food hub.

"Every single element is in place here for Minneapolis to be a great food town. It is a great food town," Haugen said. "The efforts in some of these cities are probably a bit more coordinated."

Gather Venture Group, a Twin Cities food investment and management company, also sees potential here. It has backed both Minnesota and out-of-state food firms and sees big opportunities for Minnesota's food scene.

"We've seen medical technology in Minnesota flourish – we'd like to see that happen with food," said Gather co-founder Greg Hoyt. "Medical Alley has brought talent here specifically to build up an ecosystem, and we have the talent and expertise already; our time is now."

Haugen said SEMCAP Food & Nutrition has its eyes on "foods that are nutrient-dense and have a clear functional benefit for the consumer" as it tracks a generational shift in food preferences.

"As much as things are changing, there are some old standbys in food that will never go away," he said. "Consumers will continue to demand taste, and it has to be satisfying."