2020 witnessed many successful investment rounds and new partnerships for ambitious food-tech innovators.
Future Food-Tech spoke to 18 active investors and accelerators committed to driving forward investment and partnerships in food-tech. Here we share their predictions and priorities for the year ahead.
Where will see the most growth in 2021? Which trends has Covid-19 accelerated? Which new investment opportunities are investors looking for?
Personalized nutrition is a trend that had been gaining momentum pre-Covid-19, but now we are seeing nutrition and immunity play an increasingly important role in consumers’ decisions and diets.
“We have seen a rapid increase in addressing consumer needs to support their immune system. In addition, we have supported and will continue to support important developments in personalized nutrition enabled by digital technologies and new sensors. Consumers want to take their destiny in their own hands to the greatest extent possible. We believe that these trends will continue to be relevant in 2021 and beyond,” shares Rob Beudeker, Investment Director at DSM VENTURING.
Health and Mood
There is growing interest in foods with health-related benefits, as consumers take a proactive approach to improve their mental and physical wellbeing.
“We invest in health and happiness and food couldn’t be more central to that vision. I’m very pleased to see that this year, with all its trials, brought increased focus to food and its importance in regulating health and mood. I expect 2021 to bring even greater scrutiny to how we grow (e.g. Hamama), manufacture (e.g. Finless) and package (e.g. Curie Co.) food. I also expect to see a bit of a domino effect in lab grown meat with the most recent Singapore announcement,” notes Holly Jacobus, Investment Partner at JOYANCE PARTNERS.
Novel Food Ingredients
This year has the potential to accelerate commercial viability for novel food ingredients as we connect the dots between innovation, investment and collaboration.
“In 2021, I’m excited to see partnerships between large food companies and technology start-ups bring novel food ingredients into the mainstream. We’ve seen co-development and investment partnerships of this type accelerate in recent years. These efforts will soon bring about the intersection of technology advancement with large-scale production that will deliver commercial viability. We’ve been talking about it for years, and are closer than ever.” says Dan Philips, Managing Director at Cultivian Sandbox.
Data, Biotech and Innovative Foods
Despite the challenges of 2020, there have been many positive outcomes and lessons learned. Reflecting on the past year, what priorities are most urgent now?
Nadav Berger, Founder and Managing Director at PeakBridge Partners, says “I believe that the Covid-19 pandemic has taught us a few lessons. The first would be how working together, as a global community, can bring us to science-based and proven solutions. This happened with the vaccines and hopefully we’ll see the same with smart, science-based better ingredients and foods. The second lesson is about how fragile the supply chain and food security are, and to manage it better we need to use more data. Therefore, at PeakBridge, we have decided to focus on these 3 domains: data, biotech and innovative foods.”
Precision or microbial fermentation involves designing, programing and cultivating microbial hosts to express and secrete precise target molecules. It is a manufacturing system that can sustainably produce a number of human or animal health and nutrition as well as sustainable material products.
“This technology utilizes much of ADM’s existing assets such as feedstock, enzymes, fermentation, and expertise,” says Darren Streiler, Managing Director at ADM Ventures, the CVC arm of ADM. “In 2020, ADM saw the creation and early capital raises for many start-ups that are using precision fermentation to produce food ingredients such as alternative proteins, sweeteners, colors, flavors, fats and oils, in addition to a number of health and wellness ingredients. 2020 also experienced a few later-stage start-ups receiving FDA approvals and going to market at a small commercial scale.” Darren predicts, “for 2021, a number of these precision fermentation start-ups will begin to form partnerships with established industry players as these technologies advance to a stage where production costs can justify large commercial volumes.”
Alternatives to Animals
As consumer demand accelerates towards more sustainable options and reduced environmental impact, so too does the need for alternatives to animal-derived products.
“We’re excited to support founders replacing every aspect of the ‘animal agriculture stack’. Humanity is currently using animals as pieces of production technology to convert plant-protein inputs into outputs we like to eat, drink, or wear. This is 4,000 year-old technology!” explains Ela Madej, Co-Founder and Partner at Fifty Years. She continues: “2021 will bring an acceleration of using biology or other methods to make the same animal-derived products people love, but without the animals.”
Deena Shakir, Partner at Lux Capital is also positive about the move away from animals: “I’m so excited to see the applications of innovation in the software space to food, and I believe we’re only at the precipice of innovation here. While there has been much focus on consumer 1:1 replacement products, I’m also bullish on the B2B investment opportunity to enable F500 companies to keep up with changing consumer and environmental pressures from over-consumption of animal-based products,” she notes.
When Eat Just unveiled their regulatory approval with Singapore Food Agency at the end of 2020, the global food industry celebrated this milestone with them. This achievement could kickstart a succession of announcements from cell ag pioneers and regulators this year.
“Food industry participants will need to identify which trends – food delivery, sustainability, transparency – will continue post-COVID, and which will revert to pre-pandemic levels. As cultured meat progresses towards regulatory approval and consumer acceptance, we are excited about the platform technologies that will enable delivery of these proteins, sustainably and cost-effectively,” shares Rahul Ray, Director at Tyson Ventures.
“I hope to see the role of cellular agriculture grow significantly to help humanity reduce animal farming. We all know that this source can offer a more sustainable and healthier proteins and it is up to technology to solve the cost challenges we face. I am most excited about new ways to reduce media cost – the ‘feed’ we use to grow the cells – that will result in affordable scale up,” states Jonathan Berger, CEO at The Kitchen FoodTech Hub
Cellular aquaculture is an emerging industry heading for significant growth and expansion in 2021. Product launches later this year from leaders such as BlueNalu promise to shake up the future of seafood and offer new choices to consumers.
“Transforming global food systems to feed our growing population while staying within the planet’s boundaries, which are under tremendous threat, is one of the biggest challenges the world faces. The burgeoning field of cultivated seafood will surely have a profound impact on meeting this challenge. With nominal land or water requirements and created in a completely clean environment – without the need for antibiotics or counterproductive supply chain inputs – the potential for this food sector is exceptional in its promise to provide food security for our planet of 11 billion people,” shares Marisa Drew, CSO and Global Head of Sustainability Strategy, Advisory and Finance (SSAF) at Credit Suisse.
Bennett Cohen, Partner at Piva Capital also predicts rapid growth: “Due to continued traction in plant-based meat alternatives for pork, chicken and beef, it will become increasingly hard for start-ups to differentiate from an already packed shelf and stand out of a crowded market. However, there is still white space for new food-tech entrants in the seafood sector, where start-ups have more opportunities to own a product category, such as shrimp, salmon, or crab. Alternative seafood will be the next wave in the clean meat movement, which will attract increasing investment in 2021 and years to come.”
Through collaboration, partnerships and investment, this year we hope to see an acceleration of solutions focused on sustainability.
“What we eat is one of the single largest contributors to global emissions. This is a major challenge for the food industry, but also humankind. However, with challenges come opportunities. I believe 2021 will see a number of breakthrough events, where innovative food technologies will make real strides towards scaling up solutions to help the world feed itself sustainably,” predicts David Huggins, VP, Nutrition Fund Manager at BlackRock.
José Luis Cabañero, CEO and Founder at Eatable Adventures witnessed mission-driven start-ups breaking into the food-tech space with bold new ideas and fresh technologies: “The food segment is at an inflection point where technology is transforming the industry towards a more efficient, highly productive industry with a leaner resource impact. We expect 2021 will consolidate several emerging technologies that will aid the transition to this more efficient food system.”
Costa Yiannoulis, Co-Founder and Managing Partner at Synthesis Capital adds his predictions: “2020 has seen some major milestones for the food tech sector, from record levels of investment in alternative proteins, to the first regulatory approval for cell cultured meat. I expect 2021 to build on this with strong acceleration in both innovation and investment. The COVID crisis has only served to highlight the need to build a more resilient food supply chain and we are now at the foothills of a major shift in this sector. We expect to see more opportunities across the value chain, but particularly upstream in the supply chain to enable more nutritious and more sustainable products.”
An Irreversible Move to D2C
Innovators are rising to the challenge of an acceleration in D2C consumption, launching new ideas, developing new solutions in 2021 as we witness “the emergence of new and fast-growing food brands, born digital, made by millennials, for millennials,” Niccolo Manzoni, Founder and Managing Partner, Five Seasons Ventures explains.
“At Five Seasons Ventures, we witnessed enormous growth in direct-to-consumer food brands in 2020. Covid-19 accelerated a trend that was already in the making in the past years. We believe that consumers’ online shopping behavior has reached a major inflection point, and a point of no-return,” he details.
Supply Chain Traceability
Food traceability systems are increasingly seen as invaluable to all stakeholders from across the agri-food supply chain, including the end-consumer.
“With climate change increasingly top priority, consumers will demand more sustainable products – especially from our food and agriculture industries. More insight and traceability will be called for on everything from how food gets produced, to how it was picked and transported. Because of this demand, new technology companies with advanced smart tracking and data analytics capabilities will bubble to the surface, working with farmers and providing direct food intelligence to consumers, restaurants, and grocery stores,” predicts Julia Reichelstein, Investor at Piva Capital.
“New innovative solutions such as edible bio-tracing could bring breakthroughs, driving cost down and usage up. Expect to see an increase in funding to those start-ups that can solve this challenge of food traceability on a larger scale in 2021,” says Julia.
Larry Page, Principal at Lewis & Clark AgriFood agrees with the focus on supply chain traceability: “The pandemic has permanently altered the world’s food system. Food companies recognize, now more than ever, that a secure, adaptable supply chain is essential for delivering food to where it will be consumed. I think the food sector will continue to set investment records in 2021, and supply chain safety and security will be a key area of focus.”
The role of technology in tackling food waste will also be high on the agenda this year for many investors and technology innovators.
“Food waste is a massive problem and Covid-19 has only exacerbated this further. Luckily, there are numerous technologies that exist today to address food waste, but we need both capital and consumer pressure to help them scale. I’m excited to see more innovation in the food supply chain, especially in the form of AI-powered software solutions,” says Priti Youssef Choksi, Partner at Norwest Venture Partners
Full of Optimism for 2021
Throughout our discussions with these 18 food-tech investors and accelerators, there was no doubt that they are entering 2021 with fresh optimism, increased excitement and a renewed sense of urgency to support transformative technologies that can solve the critical issues facing our food system.
More than 100 high-profile agri-food investors will join the virtual Future Food-Tech Summit on March 11-12, host roundtables, join plenary sessions and connect with other delegates through 1-1 video meetings.
Are you an active investor within the food industry, looking for new collaboration and investment opportunities? Or are you a start-up looking to partner, scale or raise your next round?
Contact Elliot Wood to discuss your participation at the summit.
Hear from 18 investors and accelerators as they share their predictions for 2021.