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The future of food may be increasingly developed in a lab or distributed through an app, but investors are getting more selective about the bets they take on food technology companies.
The total value of venture capital deals for food tech companies fell by half for the second year in a row, according to a report released today by Pitchbook. Overall, global VC funding for food tech fell to $9.2 billion in 2023 from $22.5 billion in 2022--and well off the high of $39 billion in 2021. The number of deals in 2023 dropped to 1,393, from 2,052 the year before.
The report attributes the drop to difficult market conditions, including inflation and high interest rates, as well as limited options for exits through acquisitions or initial public offerings. The environment might be particularly challenging for newcomers, with an increasing share of deals happening at the late and venture-growth stages.
The most successful segment was e-commerce, with companies bringing in $478 million in investment during the fourth quarter alone. Among the top performers was Marc Lore's delivery and ghost kitchen startup Wonder, which received a reported $100 million from Nestlé in November. Many other ghost kitchen startups have folded or are struggling.
The report also noted promising trends for future forms of food, including fermented foods, alternative proteins, and products made from algae. Plant-based protein companies have seen sales plateau as customers question the health value or don't like the flavor of meat alternatives. But overall, Pitchbook expects demand to grow, especially as products improve: The US Army, the report notes, recently began offering Impossible Foods plant-based products in its dining facilities.
The report highlighted Lisa Dyson's Air Protein, which uses fermentation to transform carbon dioxide into protein. The San Leandro-based company has reportedly raised just over $100 million to date and is developing products that will mimic the flavor and nutrition profile of meat and seafood. "The company's production process is highly scalable and adaptable to diverse geographic regions and climates," the report says. "By harnessing renewable energy sources and leveraging bioreactors, Air Protein has the potential to produce protein efficiently and cost-effectively, addressing the global demand for protein while minimizing resource inputs."
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Investors Are Souring of Food Tech Companies. Here's Why
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19.03.2024
How 3 First-Time Founders Secured Funding for This Consumer Electronics Business -- With Just a Prototype
Middle-Market Companies Expect AI to Help Them Weather an Economic Downturn
3 Companies Share Their Winning Formula for Retaining Top Talent
Inside Bethenny Frankel's Investment in Mingle Mocktails
Shake Shack Founder Danny Meyer's Latest Venture? Indoor Golf, With Booze
How a Fintech Investor Picks Future Unicorns Out of the Crowd
Airbnb Co-Founder Joe Gebbia on Why You Need to Make It Easy for Customers to Buy Your Product
The future of food may be increasingly developed in a lab or distributed through an app, but investors are getting more selective about the bets they take on........
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