Season 4, Post 13: Feed the world, better
Humans need to eat. Their well-being depends on it. The issues of security of food supply and the need to diversify away from conventional food sources have been brought to the fore by the recent tragic events in Ukraine. It is a topic we discussed in more detail in our recent thematic piece, Rubicon Revisited. Rather than just focus on the problem, however, it is perhaps more constructive to consider possible solutions. A read of AgFunder’s most recent AgriFoodTech investment report is therefore a must.
In terms of headlines, the industry saw a record $51.7bn invested in it last year, equivalent to an 85% increase versus 2020. Over 3,000 deals occurred within the sector. Much of this sum flowed into currently hot verticals such as eGrocery and cloud retail infrastructure (where capital committed rose 188% and 98%, respectively). The former represents online stores and marketplaces for the sale and delivery of food products, while the latter category includes enabling technologies for ghost kitchens, last-mile delivery, robots and other services.
We were impressed to see though that the innovative food category also witnessed substantial growth in funding, up 103% year-on-year, albeit from a lower base. Close on $5bn was raised in 2021. Innovation is occurring at a rapid pace across multiple categories within this segment including alt-meat and dairy (using plant-based solutions) as well as in cellular and in fermentation. The largest capital raisers were Impossible Foods, Nature’s Fynd and Perfect Day Foods. Interestingly, while much of the original innovation within the area originated from the United States, start-ups from a range of other countries have now also entered the fray.
This Blog post is being written from Israel, where your author is currently on an investor marketing trip. While the country has a well-documented tech scene and proven strength in areas such as cybersecurity, what is perhaps less well-known is Israel’s growing prominence within food tech. Two of the top-ten capital raisers within the overall innovative food category were Future Meat Technologies and Aleph Farms (ranking at #4 and #7 respectively). Both businesses are focused on developing cultivated meats from animal cells under laboratory conditions. We were unfortunately unable to meet with either on this trip, but have a call booked with Aleph for next month. One other business with whom we will shortly be speaking is SavorEat, another exciting Israeli start-up pioneering ‘robot chefs’ that use 3D-printing technology to develop alternative meats. Watch this space.
30 March 2022
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
Alex Gunz, Fund Manager
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