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As the New Year begins, what does 2024 hold for food-tech investments?
Investors may be more cautious amid the current market reset and value corrections, but which of the hottest food-tech trends are still exciting them? What are they looking for to unlock that dry powder?
We asked investors across the upcoming Future Food-Tech San Francisco program to tackle these burning questions and share their outlook on the investment landscape for 2024.
Projections & Predictions
While overall sector investments will remain selective, there’s continued buzz around exciting technologies that provide cost-effective solutions in areas from bio-manufacturing to metabolic health, and innovative applications of AI across the value chain.
Richie Gray, Vice President and Global Head of SnackFutures, MONDELĒZ INTERNATIONAL reveals: “I suspect founders will need to remain realistic on valuations but at the same time there may well be strong capital flows into the industry as investors look to take advantage of those lower valuations. Of course much will depend on how interest rates develop.”
Steven Winegar, Head of Science, MCWIN CAPITAL PARTNERS: “Investors will remain cautious, particularly in segments where headlines have validated the negative sentiment. The most compelling companies will still get funded, albeit at conservative valuations. The opportunities we are pursuing most aggressively this quarter are ones where the path to profitability is relatively short, capital needs are limited, and our potential to add unique value as a large-scale restaurant operator is clear.”
Ashley Hartman, Managing Partner, BLUESTEIN VENTURES: “We’re hopeful that the depths of the food-tech winter are behind us. However, the funding market will remain tight, with investors prioritizing a differentiated vision that’s coupled with strong unit economics and a disciplined, capital-efficient plan for execution – as well as realistic valuation expectations. That said, the food industry will continue to be compelling, as it drives our economy and there’s a growing need for innovation across the supply chain. There is ample capital available, so attractive companies with the right fundamentals will get funded.”
Alex Davisson, Ventures Associate, PLUG AND PLAY: “The early stage ecosystem in food is optimistic for 2024, with many interesting and exciting technologies emerging that are solving real pain points in several sectors, especially within bio-manufacturing. We have not seen much of a slowdown in these technologies being funded and they are often oversubscribed rounds. Raising a Series A will remain difficult, we have seen an uptick in seed stage start-ups raising bridge or extension rounds to prove out their technology or traction to differentiate themselves going into an A round. I do not see this changing in the near future, and unfortunately expect to see an increase in start-ups closing down before reaching Series A. Lastly, I think 2024 will be a very interesting year for later stage companies who have raised substantial funding, but have yet to prove their offerings in market. I do not expect to see any new “headline worthy” rounds being closed until the existing players prove out their traction with customers and consumers. I believe we’ll see more success with later stage companies who are focused on B2B sales as opposed to B2C.”
Hadar Sutovsky, VP External Innovation, ICL GROUP & GM, ICL PLANET STARTUP HUB: “Looking forward to 2024, our food system has been negatively affected by uncertainties regarded to unstable climate, inflation in food price, geopolitical risks, particularly the impacts of war, this will bring new challenges on the global venture capital and specifically food-tech investments. This is hardly favorable for companies looking to raise cash since investors will be more selective in what they invest in, in H01 of 2024 we will keep seeing decline in venture-growth-stage funding and a considerable backlog of start-ups will continue to wait for IPOs.”
Hottest Trends in Food-Tech
Which ruling trends will emerge top in 2024? Our investors detail the ones to watch.
Ashley Hartman, BLUESTEIN VENTURES cites three key pillars: metabolic health, sustainability and waste reduction, and cold-chain solutions:
“1) Metabolic Health: Metabolic health will come increasingly into focus, driving consumers toward nutrition that reduces inflammation, supports balanced blood sugar levels, and promotes a healthy gut.
2) Sustainability & Waste Reduction: Sustainability & waste reduction will require further innovation across the supply chain, opening the door for disruptive technology to enable attractive unit economics.
3) Cold-Chain Solutions: Increasing consumer demand for fresher, more nutritious food is creating pressure on already overworked supply chains. Technology that drives a safer, cheaper and more efficient (read: sustainable) cold supply chain is vital.”
Whilst Richie Gray, MONDELĒZ INTERNATIONAL names the top three as “Personalization, Better for You and Sustainability.”
David Welch, Co-founder and Chief Scientific Officer, SYNTHESIS CAPITAL: “With the current speed of innovation in AI and synbio, I’m particularly excited by what we will see in cell line engineering for food ingredient production. Equally, as companies progress to pilot and commercial stages, the need for specialized scale-up and automation technologies is growing ever more critical.”
Prince Khaled bin Alwaleed, Founder & CEO, KBW VENTURES: “KBW Ventures is interested in broader approach DTC food companies; we just invested in a start-up that is already on the market and is currently working to scale. There’s too much of a singleminded approach in food technology circles; different people need different nutrition solutions. I’m keen on seeing more of the personalized nutrition angle as well, with the ‘food as medicine’ movement gaining traction. Whether that’s in functional beverages or foods, or from the ingredients side, I think personalization will continue to grow over the next few years. Finally, food waste management and transformation looks like it will gather steam after what we saw during COP28.”
Hadar Sutovsky, ICL GROUP & ICL PLANET STARTUP HUB: “AI in Food, from restaurants utilizing technologies that use generative AI (GenAI), automatic speech recognition, natural language processing (NLP), and other tools to improve operations efficiency to AI-based functional protein ingredients. Inputs for cultivated meat value chain, like cell culture media, ingredients optimization, scaffolding and scaffolding materials. And the most exciting trend in my point of view, carbon utilization technologies, has the potential to create positive environmental impacts by enabling a more sustainable lifecycle for captured carbon.”
Alex Davisson, PLUG AND PLAY: “I think it is pretty clear that the bioeconomy will become one of the main pillars in the food value chain (although whether that is by 2030 or 2050 is definitely up for debate), regardless I think technologies that meaningfully progress this industry forward are a pretty safe bet as they will grow with the industry. What I am most excited about in food right now is functional ingredients, specifically platforms that identify compounds or microorganisms that provide beneficial effects to the human microbiome. This trend is top of mind for consumers, they seem willing to pay a premium for these products, and marketers want to add claims to the front of the pack. Lastly, I am excited to see innovative applications of AI to the food industry whether in product development, supply chain, optimizing a manufacturing process, or consumer insights/marketing. With the amount of excitement around AI in 2023 I expect an explosion in startups applying the technology to food, and hope to see real progress in large CPGs adopting innovative technologies internally.”
How To Stand Out From The Crowd
When growing their portfolios, what are investors looking for in a start-up?
Ashley Hartman, BLUESTEIN VENTURES: “For our portfolio, we look for a differentiated go-to-market strategy. What excites us is the combination of an innovative vision, a robust playbook (i.e. product / technology, marketing / sales, and unit economics), and the strongest team that can bring it to life. We’re particularly compelled by companies with founder-opportunity fit, where founders have deep industry expertise and/or lived experience with the problem they’re solving.”
Alex Davisson, PLUG AND PLAY: “As a strategic investor we always look for how a start-up can integrate with our large corporate partners whether as a novel ingredient supplier, tech enabler, etc. We always look for a strong founding team that complements each other well, and especially within the DeepTech space where we operate, a clear vision for how their technology will turn into a successful business is paramount. Lastly, we are looking for truly exceptional technologies, companies who have technology that provide significant value to their customers immediately, differentiated so that it is not easily duplicated, and advanced to where it is providing significant step change improvements over existing technologies.”
Hadar Sutovsky, ICL GROUP & ICL PLANET STARTUP HUB: “ICL Planet is a corporate entity, its model is hybrid with elements of a CVC an accelerator and an incubator, meaning our priority is bringing strategic value to ICL growth and tackle it’s unmet needs. We look for great passionate teams with good managerial skills and track record, who have a tech that is solving a MUST HAVE problem in a major market segment within specific areas of interest that are in the core business of ICL.”
Richie Gray, MONDELĒZ INTERNATIONAL: “Firstly we like to be confident that they have the potential to address a large scalable market and ultimately reach a scale that can be a strong contributor to Mondelez growth; we like a business to have a strong moat in terms of protectability; and we want to work with founders who have big ambitions, strong management teams and a good cultural fit to Mondelez SnackFutures.”
Despite turbulent times for some, positivity remains for the investors speaking on the program at Future Food-Tech. They’re excited to meet groundbreaking start-ups and to explore new solutions at the summit in San Francisco this March 21-22.
Join Future Food-Tech San Francisco to hear further insights, where investors will be sharing more of their perspectives in panel discussions, in an interactive Investor Q&A, and at the pre-summit workshop.
The Early Bird rate expires in just a few days on January 25, secure your place now and save $500: www.futurefoodtechsf.com/register.