September 27, 2022

unic power

health life

Investors continue to seek disruptive opportunities in food and beverage

3 min read

Private investment in startup food and food technology companies surged to $13.1 billion in 2021, up from $6 billion in 2020, according to the consultancy Deloitte’s recently released “Road to next” report. Interest in health and wellness-oriented applications and developing technologies that contribute to the health of the environment helped fuel the trend, and it shows no signs of slowing in 2022.

Data provided to Deloitte by PitchBook show that while investment value more than doubled in 2021, the number of transactions also grew at a healthy rate. Food Business News regularly reports on the flood of capital targeting food and beverage startups. In the month of March alone, children’s nutrition company Once Upon a Farm raised $52 million in Series D funding, cell-cultured seafood company Finless Foods raised $34 million in a Series B round, non-alcoholic beer brand Partake Brewing raised $16.5 million in a Series B round, and artificial intelligence-based product development platform Tastewise raised $17 million.

But the volume of early- to mid-stage deals is only part of the story, according to Deloitte. Larger investments in maturing startups that have reached the expansion stage of development also fueled the trend. In 2021, such deals included $500 million in Impossible Foods, $350 million in Nature’s Fynd, $350 million in Perfect Day, $347 million in Future Meat Technologies and $226 million in Motif Foodworks.

“Among the many factors encouraging foodtech dealmaking, the proliferation and demonstrated maturation of key players in multiple foodtech segments are perhaps the most important,” the Deloitte report said. “Alternative and plant-based proteins continue to see companies debut and establish a market presence — whether with increased market share and geographic penetration or by expansion of brands and categories beyond meat replacements.”

The report also pointed to what it called “an important new trend in food and beverage startup investing” — the increase in nontraditional investor participation in some of the larger deals. Hedge and sovereign wealth funds participated in $5.9 billion worth of food technology deals in 2021, according to the report, up from more than $3 billion in 2020.

“Although the nontraditional investors have increased their overall venture activity in the past decade, the stark year-over-year increase in volume and aggregate value signals the maturation of multiple food technology companies, because such investors tend to focus on businesses at the expansion stage as opposed to true startups,” Deloitte said. “Much of the surge also is likely attributable to firms’ increasing support of sustainability via their portfolio companies.”

Investments in meat and dairy alternatives, healthier versions of some entree and snack applications, ingredient technologies, environmentally friendly products, and AI-driven technology platforms have fueled the recent wave of startup and expansion investment. The next wave may see advancement and investment in personalized nutrition, more sophisticated delivery and ecommerce programs, applications to improve crop yields, and specifically targeted climate change mitigation technologies.

Such robust investor sentiment around the food and beverage space points to almost feverish expectations of disruptive change across numerous segments of the food and beverage industry. The degree to which these increasingly large bets on innovative ideas translate into marketplace success and satisfactory returns on investment will be fascinating to track in the years ahead.

https://www.foodbusinessnews.net/articles/21036-investors-continue-to-seek-disruptive-opportunities-in-food-and-beverage

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