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The FoodTech Revolution

By July 18, 2023No Comments

Over the last decade, one such powerful trend, FoodTech, has been captivating attention and capital, proving to be more than just a passing wave. This article will give a brief introduction to the recent trends in the FoodTech sector.

Traditionally, investors have flocked to sectors that promise high and quick returns, but a shifting paradigm in the first quarter of 2023 brought some gloom to the FoodTech industry. Deal count declined by 39.6% from the previous quarter, with a total investment of $2.3 billion across 197 deals. This was primarily due to a downturn in funding and banking, which cooled investor confidence.

However, despite the decrease in the deal count, we see a significant increase in deal quality. According to Pitchbook, companies like YFood, a meal replacement provider, and Meati, a fermented protein provider, managed to secure hefty investments. YFood raised $230 million in a late-stage VC round and Meati attracted $172 million in Series C funding, demonstrating the resilience of the FoodTech sector and its appeal to shrewd investors.

We also see an increase in the median pre-money valuations, which shot up by 57.2% to reach $27.0 million. Interestingly, this development appeared in contrast to the volatile market conditions, suggesting that fewer but higher quality deals were attracting significant capital. This selective investment trend was further corroborated by the substantial 87.5% growth in median deal sizes, indicating a strategic focus on larger, less risky deals.

While the first quarter of 2023 painted a mixed picture in terms of deal flow and exits, the foodtech industry continued to demonstrate exciting advancements. It showed substantial growth in exciting sectors like fermented proteins, kitchentech & robotics, and functional foods. Furthermore, like in many other sectors, AI applications gained traction, with Instacart offering shoppable recipes, Wendy’s introducing AI-powered drive-thru tools, and Tastewise launching a consumer insights platform.

Overall, we see exciting developments in the FoodTech sector as it attracts more deals and reveals new technologies that also achieve sustainability. Looking at how the trend developed over the past few years, we expect to see higher returns and bigger deals.