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Food tech venture capital is burgeoning

31 August 2018 #Information Technology #Food and Restaurants


From meal delivery kit businesses to meat substitutes, investors are accelerating their bets on the food tech sector. According to Pitchbook, investors in the US have poured a record-breaking $2 billion into the sector so far this year, relative to $1.5 billion in each of the previous two years.

This comes as no surprise given that the food landscape is due to undergo major structural shifts driven by evolving consumer preferences and supply and demand challenges. These are global challenges with vast markets, which suggests that capital will continue to be deployed into the sector. Both themes can and of course are being tackled using technology.

Over and above the numerous meal kit and grocery delivery businesses which have raised staggering amounts of capital in the last couple of years, perhaps the more interesting crop of businesses are tackling the themes of food waste, healthy eating, the ecological impacts of our food habits and the use of technology to introduce efficiencies into existing supply chains.

The likes of Imperfect Produce and Full Harvest, for example, are tackling the problem of agricultural food waste. Huge quantities of fresh produce end up in landfill because it does not conform to the aesthetic requirements of retailers, which in part is driven by consumers. Full Harvest is tackling the problem with a marketplace for farmers who have excess (albeit aesthetically imperfect) produce and potential buyers. Imperfect Produce, on the other hand, buys produce from farmers and then sells it on to consumers as a subscription box offering. According to Crunchbase, the former has raised $8.5m whilst the latter $23.5m in venture funding. Here in Europe, Karma, a marketplace for restaurants to sell discounted unsold meals to consumers, has raised $16.7m.

Other examples include the likes of Soylent and Beyond Meat, solutions targeting meat-free nutrition claimed to be healthier whilst also having a reduced environmental footprint relative to meat. Furthermore, the likes of StreetDots have developed a platform to help landlords monetise unused space by providing temporary trading spaces for food trucks and mobile retailers. 

Funds exclusively targeting this sector are now also being established, as evidenced by the recent launch of Five Seasons Ventures, a €60m European early stage fund. Given the breadth of examples on offer, opportunities in this sector are bountiful, both from the perspective of the investor as well as for prospective entrepreneurs. 

Article by 

Zafar Kanani, CFA
Manager
Forbury Investment Network 

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