The Emerging Fund, a strategic firm looking to invest in the hottest emerging concepts and technology companies the food and beverage industry has to offer, prefers not to be compared to venture capital or private equity.
CEO and founder Mathew Focht says the company isn’t looking for “50 bets to win two or three.” It’s also not gunning for majority stakes in its invested concepts. Yes, capital is a portion of the agreement, but that’s what it truly is—a portion. Focht has been around long enough to know there isn’t a money issue in the industry today. Good concepts and tech companies get funded. What they don’t always have is a credible growth partner who understands the importance of strategy and mentorship and ensures a sustainable future.
“We see ourselves positioned to be better than anybody else,” Focht says. “And right now we’re obviously seeking to close out our fund and bring in some more strategic investors. So anybody that has affinity for the space, we’d love to talk to them.”
The Emerging Fund launched in March and has since raised roughly $56 million. The goal is to reach $100 million, which Focht estimates will happen sometime during Q2 of next year. Thus far, the company’s investment portfolio includes social entertainment concepts like Puttshack, Flight Club, and F1 Arcade, and technology firms such as Overproof, a business intelligence agency in the adult beverage segment, and Tablz, a 3D table booking solution.
The fund is years in the making. It gains strength from two verticals operated by Focht and his team—Buyer’s Edge Platform, a software platform assisting with supply chain logistics, and Emerging, a company well-versed in the real estate segment. Through these resources, the Emerging Fund is connected to a food and beverage network of more than 225,000 locations.
“These two verticals provide us a tremendous strategic advantage when it comes to data insights in the industry,” Focht says. “We aggregate purchasing data, point of sale data, a lot of mobile data. And then we ultimately help our operators make decisions on those data points.”
The information allows Focht and his executives to see where the market is going and what concepts are moving in the right direction at the earliest stages. That could be innovative technology that’s gaining momentum across multiple restaurants. The leadership team consults with operators weekly, giving it the benefit of truly hearing about what’s making a difference in the industry. And then for brands, they’re able to see which restaurateurs are bringing core customers back the most and which are delivering the best experiences because they have access to frequency and sales numbers.
The Emerging Fund is supported by a group of 30-plus CEOs and founders, including Twin Peaks and Velvet Taco founder Randy DeWitt, Puttshack, F1 Arcade, and Flight Club co-founder Adam Breeden, OneDine founder Rom Krupp, and Chowly co-founder Sterling Douglass.
The data tells Focht and the Emerging Fund that social entertainment brands are the wave of the future, particularly with customers eager to get out after three stuffy years of the COVID pandemic.
Puttshack, a brand signing several leases and developing a national footprint, fits that bill. The chain uses patented Trackaball technology that keeps score as customers play, removing the need for paper score cards. Courses are innovative, like the Prize Wheel, where customers have opportunities to win free drinks, games, and pizza, or the Beer Pong hole, which instructs guests to hit the ball off a ramp and aim for one of 10 cups. The chain currently has 11 U.S. locations and about a dozen more in development. Flight Club is another example. The brand revolutionizes the game of darts with technology that enables automatic scoring and multiplayer games for groups of up to 400 people.
“We see that’s what the market essentially wants today,” Focht says. “The demographic today doesn’t want to sit down for a two-hour meal. They’d much prefer to have an elevated food and beverage experience with some entertainment. So what’s happened in the evolution of entertainment over the years has gone from the Dave and Buster’s with no food or very little limited food to these elevated social entertainment concepts with great food and beverage programs and really patent-protecting technology. We look for patent-protecting technology with elevated food and beverage, which brings high frequency and also delivers with the market.”
In terms of technology, the Emerging Fund helps vendors find the best market fit and customers for their solutions. Many times, companies come out of the gate with a good product, but can’t determine the right way to position it.
Given the Emerging Fund’s relationships, Focht and his team can bridge a lot of gaps.
“What we want to identify is who are those early adopters and innovators that are also influencers in the business?” Focht says. “And so we match the tech with these companies that we have relationships with and then help them build the case studies. And then this industry naturally likes to see the leaders in the space work with the products, work with tech, and they know those more tech-forward companies out there. So if they’re adopting the tech and giving us good feedback, it gives us a lot of confidence for further investment and then ultimately hopefully the whole F&B community. Usually it’ll scale much quicker because of that.”
Because of Emerging Fund’s connections, leads on investment opportunities are usually inbound. It may be an account executive, a local market broker, or a real estate representative who’ve worked with Focht in the past that helps spread the word to potential brands.
“It’s not like we’re reaching out like a typical private equity or venture capital firm that says, ‘Hey, we want to put dollars to work,'” Focht says. “We don’t have that conversation. That’s not where we start. We start with, ‘What’s your plans for growth? What are you doing today?’ And usually they’re working with one of our operating companies. So we’re starting with a relationship already and then they’re like, ‘Well, I really want to get this here in three to five years,’ and then we talk about the best path to de-risk that and build them sustainable growth. And then by the way, we’d also like to write you a check.”