10/15/2012 06:48 pm ET Updated Oct 16, 2012

Revolution Foods Uses Impact Investing Funds To Help Kids Eat Healthy

First-grade students across the country are putting down the finger paint and picking up the crudite.

As part of "Iron Chef"-style competitions, K-12 students in places like Oakland, Calif. and Washington, D.C. have competed to craft the best wrap from around 30 fresh ingredients. The competitions, organized by impact-oriented food company Revolution Foods, ask students to slice, dice and garnish in teams of five -- before having their creations rated by panels of chef judges on taste, aesthetics and, most importantly, nutrition.

Revolution Foods aims to bring healthy, fresh, and affordable meals to students across the country. The Oakland, Calif.-based company also aims to educate and expose children to healthy eating habits through programs like health and wellness fairs, healthy snacking tips, tastings, focus groups, and the Iron Chef competitions. To fulfill its mission, Revolution Foods has received funding from backers within industry that has seen a recent surge in growth and exposure: impact investing.

In order to foster the type of scalable social impact Revolution Foods has experienced, co-founders Kristin Richmond and Kirsten Tobey knew they needed a different type of investor. With help from the W.K. Kellogg Foundation and a credit line from RSF Social Finance, an impact investing fund, Revolution Foods has been able to grow and thrive.

Richmond and Tobey started Revolution Foods in 2006 in order to address an urgent need the two witnessed in the American education system. "We both spent a lot of time with teachers, parents and administrators at schools all over," Richmond said. "We would go down to the lunch room, and meals were typically Cheetos and a taco pocket. Many teachers said they felt like hypocrites when they taught the kids one thing and then served them something completely different."

Richmond's experiences also brought back memories of her time spent helping open a school for children with learning disabilities in a city over 9,000 miles away from Oakland: Nairobi, Kenya. "The school was very diverse from a socioeconomic standpoint," she said. "I started seeing a real difference between the students who had a balanced breakfast, lunch, and snack and those who didn't. I realized that food was a huge lever to set our students up for success."

So Richmond and Tobey decided to create a business that would offer kids the chance to enjoy tasty and nutritious meals at school.

Since 2006, Revolution Foods has expanded from serving 300 lunches a day to students in Oakland to 200,000 meals a day to students all over the country. Revolution Foods operates seven "culinary centers" and serves 25 metro markets, including cities in New Jersey, Colorado, Texas, and Louisiana. The company has also helped create almost 1,000 healthy, sustainable jobs in these communities, Richmond said.

Though the company has yet to turn a profit, its rapid expansion reflects Revolution Foods' impact-first mentality and primary goal: provide healthy meals to as many students as possible.

The problem is that businesses like Revolution Foods don't fit the typical business model that attracts mainstream investors, and typical investors don't always provide the type of support social entrepreneurs like Richmond and Tobey need. It was also difficult for Revolution Foods to find local suppliers and compete for school contracts with much larger companies. The Kellogg Foundation and RSF helped make it happen.

"They're very focused on the same fundamentals that an ordinary financier would have," Richmond said. "But for us, we would much rather work with a mission-based funder that helps us complete the picture from a community standpoint."

In addition to funding, RSF helped Richmond and Tobey connect to supply chain partners, local farmers, and a portfolio of similarly minded companies. Such assistance is vital to a small, growing company like Revolution Foods. And as Richmond points out, companies like RSF are't necessarily opening themselves to unnecessary risk in order to do it.

"It's super critical to have funders who are focused on mission-based companies," Richmond said. "It's not like they're jeopardizing their financial sustainability. It's not that it's cheaper capital, it's capital that comes with additional benefits that help you build your company."

CORRECTION: A previous version of this article incorrectly stated that Revolution Foods serves 200,000 lunches daily. It is 200,000 meals -- including breakfast, lunch, snacks and dinner.



New School Lunch Guidelines Effective Fall 2012