Iowa City trio starts company to produce fresh tofu

Three young Iowa City entrepreneurs hope to create a new market using one of the state's biggest resources: soybeans.

Ethan Brown, 22; Jake Gratzon, 26; and Matthew Mesaros, 28, have teamed up to create the Old Capitol Food Co. The trio plans to take advantage of Iowa's soybean industry to produce fresh tofu, a fairly unfamiliar product in a state that harvested more than 9 millions acres of soybeans in 2013, according to the Iowa Department of Agriculture.

"The concept for starting this company was (because) we have abundant access to soybeans to the point we're actually distributing a lot our goods — quality soybeans — over to Japan for them to make in their tofu and soy products," Gratzon said.

Gratzon grew up around natural and health foods in Fairfield, so for him tofu is a personal passion. A goal of the company, he said, is to popularize tofu in Iowa, saying it is a relatively simple product that everyone should know about.

"Tofu should not be a secret. It should be something everyone understands," he said. "It is a product that people think of as foreign and strange, but it's just so incredibly simple. It's just three ingredients: soybeans, water and magnesium chloride, commonly known as Epsom salt."

The process for creating tofu is relatively simple. It involves soaking soybeans in water for about eight hours and then grinding them up into what Gratzon describes as a "soy slurry." This mixture is then boiled and strained to separate the solids (mashed soybeans) from the liquids (soy milk). Epsom salt — which acts as a coagulant — is then added to the soy milk, separating the curds and the whey. The curds are then pressed and the result is tofu.

They plan to use a reverse osmosis water purifying system to create the highest-quality product possible.

"With tofu being only three ingredients, any corner you cut is a big corner, and we're not cutting any corners. We're making sure the product is always the freshest it can possibly be," Gratzon said.

In an effort to be as efficient as possible, the guys hope to create additional food items using the mashed-up soybean byproduct known as okara. Gratzon said that tofu producers often either throw away or compost the okara, but he and his colleagues have been experimenting with recipes that would utilize it.

"We have some recipes and ideas in the works that we're thinking about using because we want to be really efficient in every aspect of this company," he said. "Even though it can be, quote-unqoute, profitable to just throw that stuff away, that's not what we're about."

While the idea of eating mashed-up soybeans might seem unappetizing to some, okara has nutritional benefits.

"Okara is really high in protein and fiber, so we're thinking of doing some kind of cracker or energy bar using a part of the plant that usually gets thrown away," Brown said. "It's just a really healthy food item that would be good to get into people's diets."

The idea for creating a local tofu company was conceived in February 2014 when Gratzon and Mesaros were students at the University of Iowa. The two took part in the UI's Business Model Competition, winning third place and a $3,500 award that they used as seed money to launch their company. That summer, they participated in Venture School through the UI's John Pappajohn Entrepreneurial Center to further develop their idea and were awarded an additional $3,000 in seed money.

By July, they were able to rent kitchen space at Public Space One where they began cooking test batches of tofu. Then in September, Brown joined the team, bringing the experience of having worked in local restaurants such as The Red Avocado and Trumpet Blossom Cafe.

However, the guys needed more money to be able to expand their operation so they turned to Mike Finlayson, second vice president with MidwestOne Bank, for financial assistance. Finlayson specializes in working with start-up companies and said that he saw potential in their idea.

"What I liked about working with Matt, Ethan and Jake was how thorough they were," Finlayson said. "They obviously have a lot of passion and conviction about this."

Finlayson has served as more than just a banker. The guys describe him as a mentor, having worked closely with him in the months leading up to applying for the loan. Finlayson said part of the reason he thinks they can succeed is because of the chemistry between them.

"They all have a different offering to the group, and I think that's where you need to have balance," he said. "They complemented each other and that's a big part."

Three months after moving into Public Space One, they were ready to expand their operation. They rented and relocated to a 1,250-square-foot facility just east of Iowa City off of Herbert Hoover Highway. Since then, they have been working around the clock to construct a kitchen and workshop in the loft where they plan to do their own packaging. They have been handling most of the construction on their own with some assistance from professional plumbers and electricians, as well as their friend Tim Schuett, who has served as the construction foreman.

The company will screen print its own logo, which Mesaros, who has a background in graphic design, created. Mesaros said he thinks a distinct logo will help establish the company as a recognized brand.

"None of these (other tofu) brands are invested a lot in their identity. They're just like, 'Here's the product, take it or leave it,' " he said. "One way we can (engage customers) is with unique packaging."

Eventually they hope to experiment with different flavors of tofu.

Tofu originated in ancient China, so the guys hope to try traditional Asian flavors, such as toasted sesame seed and ginger-soy-garlic. However, they are also receptive to trying non-traditional flavors such as Cajun. In an effort to be more connected to the community and to build a strong business model, the guys will rely on customer feedback to come up with other potential flavors.

"We want to make the flavors that people want to eat, so ideally we'll be able to do some demos and taste tests to see what works well and see what people want to buy," Brown said.

They made a few test batches during their time at Public Space One, but have yet to sell any tofu to the public. Part of the reason has been challenges with local food regulations and codes.

"Some of the codes are indeed encumbering, even stifling, to entrepreneurship in this area, but we understand that many of them have evolved over time to deal with numerous business configurations," Mesaros said. "We can't expect any set of rules to be tailored to exactly what we're trying to do. We simply comply and find the most equitable solution to any problem that arises."

Aside from these regulations and the occasional squabble over creative differences, the group said most of the hurdles they've faced have been manageable. They said they've been encouraged by the amount of support they've received from UI and the rest of the community.

"I guess the biggest hurdle is that there is only so many hours in a day and so many days in a week," Brown said. "There's a lot of time that we wish that we could just do more, but then we realize we're doing as much as we can."

The guys also experienced a slight delay in the installation of a ventilation system for the kitchen. However, they hope to have it completed by this weekend and will begin cooking their first batches to sell after that.

In addition to constructing their kitchen and workshop, the guys have also been busy establishing rapport with area businesses. They said they hope to work with a soybean distributor in Linn County to purchase USDA-certified organic, non-GMO soybeans. They've also reached out to local grocery stores such as Hy-Vee and New Pioneer Co-op as outlets to potentially sell their product. The guys said they also plan to handle distribution, which might mean making multiple runs to stores each week to ensure the freshest product possible.

Brown — an Iowa City native and graduate of Tate High School — said he hopes Old Capitol Food co. will put his hometown on the map as the producer of the best tofu, not just in Iowa but on the entire continent.

"I'm just personally really excited to make the best tofu in North America, and I know we can do that," he said. "I'm also just really excited to produce a really quality product for the community."​

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