Success Story

Penn State Finds Collaborative Partner in Innovative Food, Beverage & Pet Scale-Up Company

Factory will support food, beverage and pet businesses as they scale.

Leaders from the Office of Industrial Partnerships are announcing a new, multi-element industry partnership between Penn State and Factory, a food, beverage, and pet scale-up company in Bethlehem, Pa. Extending from Penn State Lehigh Valley to the University Park Campus, the new collaboration has the potential to bring economic and intellectual value to the growing Pennsylvania-based company, while offering tangible benefits to Penn State students and the broader Penn State community.

Backed by $250 million in capital, Factory is a collaborative operating company that invests in small to mid-size food, beverage and pet brands, providing not only capital but also partnerships, resources and knowledge that can help those companies to scale more nimbly, with fewer mistakes. Factory targets businesses with existing annual revenues of $2M to $10M, businesses like Mikey’s, a gluten-free frozen foods company, initially founded in Scottsdale, Arizona, and Honey Stinger, which offers nutritional products for athletic endurance, founded in Steamboat Springs, Colorado.

Factory is in the midst of renovating a set of old Bethlehem Steel buildings in Bethlehem, Pa., which will result in an innovative 40,000 sq. ft. facility that can house 15-20 brands at a time working in a collaborative environment. The space, just 15 minutes from Penn State Lehigh Valley, includes converted shipping containers for offices, innovation kitchens, social media labs and more. It offers an entrepreneurial environment for the growing companies, with in-house experts in packaging design, consumer insights, product development, supply chain, sales, HR, among others.

The leadership team behind Factory has deep experience in the food, beverage and pet space. Leadership includes Rich Thompson, the former CEO of American Italian Pasta Company, The Meow Mix Company and Freshpet, as well as a strong group of strategists with expertise in the CPG space.

“We’re doing something no one has done before,” says Thompson, who notes that most private equity firms simply invest and provide a conference room, but, “Factory also provides the hands-on help, support, hard assets and ‘smart people’ in the room to really help these companies grow.”

The industry partnership between Factory and Penn State has just begun, but leaders from both organizations see significant future potential for student involvement, technology support, and research opportunities.

At the Lehigh Valley campus, several activities are already underway, for example Factory has identified several potential internships – hands-on positions for students working in marketing, business and engineering. One PSU Lehigh Valley student has been placed and is working on an entrepreneurship podcast developed by Factory.

“This is an opportunity to connect our students with a cutting-edge, innovative organization, from the bottom up,” says Michael Krajsa, assistant teaching professor of Business at Penn State Lehigh Valley. “Not only are they securing a position with Factory, but they can get exposure to all of the different companies growing there.”

Krajsa is also the faculty liaison for Lehigh Valley LaunchBox, the small business accelerator program and entrepreneurial co-working space that is one of 21 innovation hubs powered by Invent Penn State. An additional component of the Penn State partnership with Factory will include the opening of a second outpost for Lehigh Valley Launchbox – located at Factory itself. Not only will the space host interns and other entrepreneurial activities and events, but Krasja says that it will serve as a main point of contact between Penn State and any partnership-related activities at Factory.

Thompson sees that space as just one of the ways Factory will connect and collaborate with those who are passionate about entrepreneurship. “We’re very proud to be a part of this Pennsylvania community, and proud to be part of this partnership with Penn State.” He shares that Factory plans to host larger events at their facility, including “shark tank” type competitions that would be open to the public or even targeted directly at Penn State students or alumni. Thompson’s vision is to create the food, beverage and pet hub of the East Coast in the Lehigh Valley.

At the University Park campus, Factory has partnered with the Department of Food Science in the College of Agricultural Sciences to bring to life research projects that will help solve real-world challenges. Food science students working under Dr. Dan Azzara, the Alan R. Warehime professor of Food and Agribusiness, will have the opportunity to validate or develop research in partnership with Factory companies. In fact, there are two student projects related to food product development already in progress.

“Students benefit tremendously from working on real-world projects with food industry mentors, says Azzara, “Working with Factory over one semester will provide students not only an experience where they design and produce a new food product, but they are forced to make quick decisions, communicate regularly, and develop a network of external contacts to assist them.”

Factory also plans to sponsor an upcoming “innovation challenge” where all Penn State students can submit ideas related to food, beverage or pet products for a chance to develop their idea further.

Additional opportunities at University Park are still under consideration, including possible research work with faculty, graduate students and undergraduate students at the School of Hospitality Management in the College of Health and Human Development.

“The development of this partnership has really been a win-win between Penn State and a growing Pennsylvania company,” says Jeff Fortin, associate vice president for research and director, of the Office of Industrial Partnerships. “There is a lot of promise here, both to bring value to Factory, as well as to connect our students and the Penn State community with innovative, real-world opportunities.”

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