The fund is called California FreshWorks and is supported by 18 non-profits, health providers and banks.
The California Endowment helped spearhead the initiative.
They say research shows four million people in California live in areas that need more affordable nutritious food.
Tina Castro of the Endowment says they want to create healthy choices and jobs.
CASTRO: We're hoping that there are some entrepreneurs out there that we can challenge to really come up with some really interesting innovative ideas, and then provide them with the financing and the capital to really pursue those.
OBAMA: We can talk all we want about calorie counts and recipes, and how to serve balanced meals...
First Lady Michelle Obama applauds the fund. She says it's part of a nationwide effort to help families put fresh food on the table.
OBAMA:... If their only options for groceries are at the corner gas station or the local mini-mart, then all of that is just talk.
Funders hope California FreshWorks will generate 6,000 jobs throughout the state.