Earlier this year we saw how easy it seemed for technology companies, including the earliest start-ups, to attract investors—often at stratospheric valuations.

Meanwhile entrepreneurs in the nutrition and health and wellness industry continue to find it difficult to attract equity investors. The fundamentals are sound. Sales of dietary supplements and functional foods continue to grow rapidly. Healthy eating is topical and the role of sound nutrition in improving the health of the nation is not in any doubt.

But while interest in nutrition has never been higher, the appetite for equity financing of nutraceutical businesses remains modest especially for earlier stage companies. What’s wrong? First, most investors think of food products and can’t conceive of the 10x returns they envision for their winners. Second, most companies in healthy foods are too early stage for professional investors whose concept of a proven business model has a much higher threshold than the entrepreneurs themselves.

Most nutraceutical companies self-fund their expansion, often resulting in slow growth. Unfortunately many such companies in our industry that are starved of capital often miss market opportunities altogether. So, what are the options for equity financing?

Angel investors can play a critical role in financing and advising early-stage companies. In cities such as San Francisco, CA and Boulder, CO, where angel investors have gathered, we see a small cluster of natural and organic companies flourishing. But overall this industry lacks both a critical mass of accredited investors and the geographical hubs for entrepreneurs and investors to interact, which was a major reason we founded Nutrition Capital Network.

In the last 10 years a few venture capital firms (VCs) have established funds to invest in health & wellness. These limited partnerships typically raise capital from institutions and then invest $2-5 million in early-stage (but very rarely start-up) companies. But there have been only a few follow-on funds so far, suggesting a more lackluster financial performance than envisioned.

The private equity funds that specialize in food, beverage and nutrition have been much more successful. Like the VCs, they raise capital mainly from financial institutions but focus on investing larger amounts ($10-$50 million) of growth capital in companies that are already profitable and need funds for expansion. They have been able to sell these businesses usually to multinational companies and raise additional capital for new funds.

Another bright spot is the number of large corporations that are engaging directly with entrepreneurs in the search for innovative new products. Some have set up corporate venture funds. Others are interested in R&D partnerships or acquiring or in-licensing new technologies. More than half of the investors at Nutrition Capital Network meetings are from corporations. They will partner with small companies, often making minority equity investments to gain access to novel products or ingredients.

Capital is a necessary fuel for enterprises to grow. Our industry needs more investors, especially to support early-stage companies. Perhaps we can take a lesson from the VCs that had capital but often lacked the category expertise necessary to succeed commercially in our industry. Imagine the power of teaming up the savviest investors with the smartest of our industry operators to back the best of our entrepreneurs.

A healthy return from healthy products is more than a dream, and it does require the work and commitment that any business does. However putting the pieces together in the broad and somewhat disparate world that is the nutrition and health & wellness industry is no simple task, but it does make it more rewarding in the