Foodtech Trends: A mid-year review on biggest takeaways and predictions

Foodtech Trends: A mid-year review on biggest takeaways and predictions

By
Sam Panzer
July 5, 2021

FoodTech Trends: A Mid-Year Review

2021 is in the books, and what a doozy it was. Record-smashing investment, future-tech hitting supermarket shelves, and, oh yeah, a pandemic. And so as we raise our champagne at midnight to–– what’s that? It’s only July? Oh boy.

Anyways, it’s been a banner year with more money and more hype than ever. So this week, we’re reflecting on the biggest takeaways of the year (so far), looking back at our 2021 predictions we made in January, and thinking ahead to what we assume will bloom before year’s end 🌼

So, what’s happened this year? Here's a few highlights.

💰 Valuations have boomed.

Across the foodtech board, investment and valuations boomed. 2021 investment is almost 90% of all of 2020's activity, through June alone. That’s a mix of traditional VCs willing to look beyond high-margin software products, AND an ever-growing cohort of specialist VCs with deep industry experience.

Foodtech Investment activity. Source: Pitch Book

🔥 eGrocery is HOT.

No sector has been hotter than grocery delivery, with Xinsheng Selected topping the charts with a $3B round on an $8B valuation. Not far behind are Gopuff’s $1.2B round or Glovo’s $528M in April. Just last week, Rohlik raised a $119M round, though they focus on a larger product selection and basket size than the “convenience” players like Gorillas or Flin

🥬 Indoor Farming is growing, fast.

Indoor farming company Local Bounti is preparing to go public (via SPAC) on a > $1B valuation. And that’s just one indicator of how quickly this space is maturing. Berlin’s Infarm (who's co-founder and CTO is speaking at this years FoodHack Summitis likewise exploring a SPAC IPO with help of Goldman Sachs. San Francisco’s Plenty, with over $500M in funding, is rapidly expanding their indoor lettuce and veg farms through the US. The future of grocery clearly involves herbs, greens, and vegetables grown indoors miles away from your home, thanks to advancements in vertical farming tech and investors willing to fund the high overhead to deploy urban farms. Yes, please.

Source: Infarm

👀 Where we’re bullish

So what do we think is in store before we toast our way into 2022? Here are our top 5 picks.

1. eGrocery Consolidation

M&A is in the air, with Getir picking up Blok this week to expand into Italy and Spain. UK-based Dija is also said to be seeking a sale to a competitor. Amazon is likely to seek acquisitions to grow their grocery business (they’ve looked at Flink), and may be able to muscle their way into dominance in many markets. We expect that by this time next year, eGrocery will look a lot like restaurant delivery: a few huge conglomerates (Delivery Hero, Just Eat Takeaway, Uber Eats) dominating the space (while struggling to earn a profit).

2. Pivots into eGrocery

Restaurant delivery platforms are slowly creeping into the eGrocery space. It’s a different business than restaurants, but the scent of a new (profitable?) revenue stream will blur the line between restaurant and food delivery platforms. One early launch includes Delivery Hero’s mjam market in Austria. Just Eat Takeaway appears to be focusing on delivering from brick-and-mortar grocery stores, but we expect all the big delivery players are exploring a dark store model and at least a few takes will launch in Q3/Q4.

An overview of eGrocery contenders. Full database here

3. Big Brands, Big Data

Big brands will continue to invest heavily in online, direct-to-consumer sales. Cutting out the middleman saves a bit of cash, yes, but more importantly: it lets the brand collect data on who consumers are and what they like. Early leaders like Heinz, Nespresso, M&M’s, and PepsiCo will be joined by many more big players providing their products online at a bargain price.

4. Alt Protein Tech

It’s been almost two years since Beyond’s blockbuster IPO, and the state of alt-meat is pretty good. We think new entrants will find it hard to compete with low-cost products from big producers, but those selling “shovels to goldminers” are maturing with a great year ahead. That’s especially true for cost-reducing technologies like fats and stabilizers, take Epogee (plant-based oils, USA) or 77 FOODS (vegetable fats, France).

5. Low-/No-Alcohol Segments

Cooped up at home, lots of folks increased their alcohol consumption during lockdown. We’re now seeing the health effects of that, with alcoholic liver disease in young people increasing as much as 30% in the US. We also know that Gen Z drinks less than prior generations, including around 20% less than Millennials.

What does this mean? As we return to in-person celebrations, low- and no-alcohol options will boom –– especially delicious options that align with consumers’ values. Many of these are simply “distillates” of herbs and wood, for a balanced and bitter booze-free booze –– not “dealcoholized” products. Australia’s Lyre’s sells their 12+ 0% spirits imitating gin, whiskey, and herbal liquors globally. Other trendsetters include the UK’s Seedlip or Berlin’s Easip. Big players are also in the space, like Gordon’s 0.0% gin.

It’s a CPG niche with high margins and a huge growth opportunity –– up from $930B and growing fast, so we expect to see more activity here in the coming months.


Let's talk trends at the FoodHack Summit

In-person events are back. It's time we meet again 👋

The FoodHack Summit is 2-days of networking, idea generation and talks with some of the best and brightest minds in foodtech.

From scrappy startups, big name VC funds, established multinationals - and everything in between. All taking place in the beautiful Lausanne, Switzerland. In short, where you want to be this October 5-6th.

Use code NEWSLETTER-10 when reserving an attendee or startup booth ticket here. p.s. ticket prices increase every 2 weeks 🏃‍♂️


⛰️ Long-term plays

🧫 Cultured Meat

There’s an un-sexy little problem in cultured meat called fetal bovine serum (FBS). It’s extracted from unborn calves and used to grow cell-based meat. We’re just now seeing the first innovators crack this issue open. Canada’s Future Fields shipped their first run of a FBS replacement protein this year, and Eat Just claims upcoming products will be free of FBS. It’s the earliest validation stage for FBS alternatives, and it’ll take a few quarters to ramp up production.

We’re bullish on cultured meat in the long run, but it’s a long and complicated road that won’t put cultured meat on our plates this year. But next year? It’s go-time, with a few planned launches like Cubiq Foodscultured fats and Eat Just’s planned cultured chicken retail rollout (after their rumoured $3B IPO).

♻️ Food Sharing

There’s a flock of food delivery startups looking to connect diners with small-scale home cooks and “chefs without a restaurant.” See San Francisco’s Shef, NYC’s WoodSpoon, or Berlin’s HomeMealDeal, with modest seed + Series A financing (headlined by Shef’s $20M round in June). 

Investment here is slow given the regulatory minefield for food service out of non-commercial kitchens, and it’s still a tricky business. The good news? Such platforms are less dependent on major investment anyways. My favorite lockdown meal was Jollof rice from a Nigerian woman I message on Instagram whenever the craving hits. These businesses aren’t on the path to unicorn status, but they’ll slowly grow into a meaningful channel. 

My usual order of Jollof Rice from Berlin Naija Foodie

🤔 Closing Thoughts and a Bu… Bubb… Bubble?

There’s plenty more we’re looking forward to this year. Several Cloud Kitchens are scaling up fast, like Sweetheart Kitchen in the Middle East or Dubai-based Kitopi who just raised a $415M series C last week. A whole flock of AgTech startups are bringing crop monitoring, robotic weeding, and methane capture to the fields. And there’s a big year ahead for food BI tools like Journey Foods. We’ll be covering a lot of these themes in the coming weeks –– stay tuned.

And now the elephant (or bear) in the room. The economy has been rippin’ hot for years, and some valuations are, well, hard to wrap your head around (see Getir’s 10x valuation increase from January to July, now over $7.5B). Is it time for a correction?

Nobody knows. I’ve been holding my breath waiting for a downturn for 2 years. And in that time, this hot market has pumped tons of cash into brilliant technology that might not have received R&D funding in a “normal” market. This crazy economy might be the reason we get cultured meat, weed-picking robots, and zero-footprint lettuce in circulation now instead of 5+ years from now. That’s huge.

We’re in a boom moment across the foodtech universe, with plenty of change (and a bit of chaos) ahead. 

Just a thought, wouldn’t it be great if we could get together with fellow bright minds in foodtech to look at what’s coming next? Well, I’ll just leave this link here.

---

Boring disclaimer: This is not financial or investment advice and should not be taken as such. This is not intended to serve as the basis for any investment decision, and doing further due diligence on a potential investment is highly recommended. Invest (or don't) into startups at your own risk.

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FoodTech Trends: A Mid-Year Review

2021 is in the books, and what a doozy it was. Record-smashing investment, future-tech hitting supermarket shelves, and, oh yeah, a pandemic. And so as we raise our champagne at midnight to–– what’s that? It’s only July? Oh boy.

Anyways, it’s been a banner year with more money and more hype than ever. So this week, we’re reflecting on the biggest takeaways of the year (so far), looking back at our 2021 predictions we made in January, and thinking ahead to what we assume will bloom before year’s end 🌼

So, what’s happened this year? Here's a few highlights.

💰 Valuations have boomed.

Across the foodtech board, investment and valuations boomed. 2021 investment is almost 90% of all of 2020's activity, through June alone. That’s a mix of traditional VCs willing to look beyond high-margin software products, AND an ever-growing cohort of specialist VCs with deep industry experience.

Foodtech Investment activity. Source: Pitch Book

🔥 eGrocery is HOT.

No sector has been hotter than grocery delivery, with Xinsheng Selected topping the charts with a $3B round on an $8B valuation. Not far behind are Gopuff’s $1.2B round or Glovo’s $528M in April. Just last week, Rohlik raised a $119M round, though they focus on a larger product selection and basket size than the “convenience” players like Gorillas or Flin

🥬 Indoor Farming is growing, fast.

Indoor farming company Local Bounti is preparing to go public (via SPAC) on a > $1B valuation. And that’s just one indicator of how quickly this space is maturing. Berlin’s Infarm (who's co-founder and CTO is speaking at this years FoodHack Summitis likewise exploring a SPAC IPO with help of Goldman Sachs. San Francisco’s Plenty, with over $500M in funding, is rapidly expanding their indoor lettuce and veg farms through the US. The future of grocery clearly involves herbs, greens, and vegetables grown indoors miles away from your home, thanks to advancements in vertical farming tech and investors willing to fund the high overhead to deploy urban farms. Yes, please.

Source: Infarm

👀 Where we’re bullish

So what do we think is in store before we toast our way into 2022? Here are our top 5 picks.

1. eGrocery Consolidation

M&A is in the air, with Getir picking up Blok this week to expand into Italy and Spain. UK-based Dija is also said to be seeking a sale to a competitor. Amazon is likely to seek acquisitions to grow their grocery business (they’ve looked at Flink), and may be able to muscle their way into dominance in many markets. We expect that by this time next year, eGrocery will look a lot like restaurant delivery: a few huge conglomerates (Delivery Hero, Just Eat Takeaway, Uber Eats) dominating the space (while struggling to earn a profit).

2. Pivots into eGrocery

Restaurant delivery platforms are slowly creeping into the eGrocery space. It’s a different business than restaurants, but the scent of a new (profitable?) revenue stream will blur the line between restaurant and food delivery platforms. One early launch includes Delivery Hero’s mjam market in Austria. Just Eat Takeaway appears to be focusing on delivering from brick-and-mortar grocery stores, but we expect all the big delivery players are exploring a dark store model and at least a few takes will launch in Q3/Q4.

An overview of eGrocery contenders. Full database here

3. Big Brands, Big Data

Big brands will continue to invest heavily in online, direct-to-consumer sales. Cutting out the middleman saves a bit of cash, yes, but more importantly: it lets the brand collect data on who consumers are and what they like. Early leaders like Heinz, Nespresso, M&M’s, and PepsiCo will be joined by many more big players providing their products online at a bargain price.

4. Alt Protein Tech

It’s been almost two years since Beyond’s blockbuster IPO, and the state of alt-meat is pretty good. We think new entrants will find it hard to compete with low-cost products from big producers, but those selling “shovels to goldminers” are maturing with a great year ahead. That’s especially true for cost-reducing technologies like fats and stabilizers, take Epogee (plant-based oils, USA) or 77 FOODS (vegetable fats, France).

5. Low-/No-Alcohol Segments

Cooped up at home, lots of folks increased their alcohol consumption during lockdown. We’re now seeing the health effects of that, with alcoholic liver disease in young people increasing as much as 30% in the US. We also know that Gen Z drinks less than prior generations, including around 20% less than Millennials.

What does this mean? As we return to in-person celebrations, low- and no-alcohol options will boom –– especially delicious options that align with consumers’ values. Many of these are simply “distillates” of herbs and wood, for a balanced and bitter booze-free booze –– not “dealcoholized” products. Australia’s Lyre’s sells their 12+ 0% spirits imitating gin, whiskey, and herbal liquors globally. Other trendsetters include the UK’s Seedlip or Berlin’s Easip. Big players are also in the space, like Gordon’s 0.0% gin.

It’s a CPG niche with high margins and a huge growth opportunity –– up from $930B and growing fast, so we expect to see more activity here in the coming months.


Let's talk trends at the FoodHack Summit

In-person events are back. It's time we meet again 👋

The FoodHack Summit is 2-days of networking, idea generation and talks with some of the best and brightest minds in foodtech.

From scrappy startups, big name VC funds, established multinationals - and everything in between. All taking place in the beautiful Lausanne, Switzerland. In short, where you want to be this October 5-6th.

Use code NEWSLETTER-10 when reserving an attendee or startup booth ticket here. p.s. ticket prices increase every 2 weeks 🏃‍♂️


⛰️ Long-term plays

🧫 Cultured Meat

There’s an un-sexy little problem in cultured meat called fetal bovine serum (FBS). It’s extracted from unborn calves and used to grow cell-based meat. We’re just now seeing the first innovators crack this issue open. Canada’s Future Fields shipped their first run of a FBS replacement protein this year, and Eat Just claims upcoming products will be free of FBS. It’s the earliest validation stage for FBS alternatives, and it’ll take a few quarters to ramp up production.

We’re bullish on cultured meat in the long run, but it’s a long and complicated road that won’t put cultured meat on our plates this year. But next year? It’s go-time, with a few planned launches like Cubiq Foodscultured fats and Eat Just’s planned cultured chicken retail rollout (after their rumoured $3B IPO).

♻️ Food Sharing

There’s a flock of food delivery startups looking to connect diners with small-scale home cooks and “chefs without a restaurant.” See San Francisco’s Shef, NYC’s WoodSpoon, or Berlin’s HomeMealDeal, with modest seed + Series A financing (headlined by Shef’s $20M round in June). 

Investment here is slow given the regulatory minefield for food service out of non-commercial kitchens, and it’s still a tricky business. The good news? Such platforms are less dependent on major investment anyways. My favorite lockdown meal was Jollof rice from a Nigerian woman I message on Instagram whenever the craving hits. These businesses aren’t on the path to unicorn status, but they’ll slowly grow into a meaningful channel. 

My usual order of Jollof Rice from Berlin Naija Foodie

🤔 Closing Thoughts and a Bu… Bubb… Bubble?

There’s plenty more we’re looking forward to this year. Several Cloud Kitchens are scaling up fast, like Sweetheart Kitchen in the Middle East or Dubai-based Kitopi who just raised a $415M series C last week. A whole flock of AgTech startups are bringing crop monitoring, robotic weeding, and methane capture to the fields. And there’s a big year ahead for food BI tools like Journey Foods. We’ll be covering a lot of these themes in the coming weeks –– stay tuned.

And now the elephant (or bear) in the room. The economy has been rippin’ hot for years, and some valuations are, well, hard to wrap your head around (see Getir’s 10x valuation increase from January to July, now over $7.5B). Is it time for a correction?

Nobody knows. I’ve been holding my breath waiting for a downturn for 2 years. And in that time, this hot market has pumped tons of cash into brilliant technology that might not have received R&D funding in a “normal” market. This crazy economy might be the reason we get cultured meat, weed-picking robots, and zero-footprint lettuce in circulation now instead of 5+ years from now. That’s huge.

We’re in a boom moment across the foodtech universe, with plenty of change (and a bit of chaos) ahead. 

Just a thought, wouldn’t it be great if we could get together with fellow bright minds in foodtech to look at what’s coming next? Well, I’ll just leave this link here.

---

Boring disclaimer: This is not financial or investment advice and should not be taken as such. This is not intended to serve as the basis for any investment decision, and doing further due diligence on a potential investment is highly recommended. Invest (or don't) into startups at your own risk.

FoodTech Trends: A Mid-Year Review

2021 is in the books, and what a doozy it was. Record-smashing investment, future-tech hitting supermarket shelves, and, oh yeah, a pandemic. And so as we raise our champagne at midnight to–– what’s that? It’s only July? Oh boy.

Anyways, it’s been a banner year with more money and more hype than ever. So this week, we’re reflecting on the biggest takeaways of the year (so far), looking back at our 2021 predictions we made in January, and thinking ahead to what we assume will bloom before year’s end 🌼

So, what’s happened this year? Here's a few highlights.

💰 Valuations have boomed.

Across the foodtech board, investment and valuations boomed. 2021 investment is almost 90% of all of 2020's activity, through June alone. That’s a mix of traditional VCs willing to look beyond high-margin software products, AND an ever-growing cohort of specialist VCs with deep industry experience.

Foodtech Investment activity. Source: Pitch Book

🔥 eGrocery is HOT.

No sector has been hotter than grocery delivery, with Xinsheng Selected topping the charts with a $3B round on an $8B valuation. Not far behind are Gopuff’s $1.2B round or Glovo’s $528M in April. Just last week, Rohlik raised a $119M round, though they focus on a larger product selection and basket size than the “convenience” players like Gorillas or Flin

🥬 Indoor Farming is growing, fast.

Indoor farming company Local Bounti is preparing to go public (via SPAC) on a > $1B valuation. And that’s just one indicator of how quickly this space is maturing. Berlin’s Infarm (who's co-founder and CTO is speaking at this years FoodHack Summitis likewise exploring a SPAC IPO with help of Goldman Sachs. San Francisco’s Plenty, with over $500M in funding, is rapidly expanding their indoor lettuce and veg farms through the US. The future of grocery clearly involves herbs, greens, and vegetables grown indoors miles away from your home, thanks to advancements in vertical farming tech and investors willing to fund the high overhead to deploy urban farms. Yes, please.

Source: Infarm

👀 Where we’re bullish

So what do we think is in store before we toast our way into 2022? Here are our top 5 picks.

1. eGrocery Consolidation

M&A is in the air, with Getir picking up Blok this week to expand into Italy and Spain. UK-based Dija is also said to be seeking a sale to a competitor. Amazon is likely to seek acquisitions to grow their grocery business (they’ve looked at Flink), and may be able to muscle their way into dominance in many markets. We expect that by this time next year, eGrocery will look a lot like restaurant delivery: a few huge conglomerates (Delivery Hero, Just Eat Takeaway, Uber Eats) dominating the space (while struggling to earn a profit).

2. Pivots into eGrocery

Restaurant delivery platforms are slowly creeping into the eGrocery space. It’s a different business than restaurants, but the scent of a new (profitable?) revenue stream will blur the line between restaurant and food delivery platforms. One early launch includes Delivery Hero’s mjam market in Austria. Just Eat Takeaway appears to be focusing on delivering from brick-and-mortar grocery stores, but we expect all the big delivery players are exploring a dark store model and at least a few takes will launch in Q3/Q4.

An overview of eGrocery contenders. Full database here

3. Big Brands, Big Data

Big brands will continue to invest heavily in online, direct-to-consumer sales. Cutting out the middleman saves a bit of cash, yes, but more importantly: it lets the brand collect data on who consumers are and what they like. Early leaders like Heinz, Nespresso, M&M’s, and PepsiCo will be joined by many more big players providing their products online at a bargain price.

4. Alt Protein Tech

It’s been almost two years since Beyond’s blockbuster IPO, and the state of alt-meat is pretty good. We think new entrants will find it hard to compete with low-cost products from big producers, but those selling “shovels to goldminers” are maturing with a great year ahead. That’s especially true for cost-reducing technologies like fats and stabilizers, take Epogee (plant-based oils, USA) or 77 FOODS (vegetable fats, France).

5. Low-/No-Alcohol Segments

Cooped up at home, lots of folks increased their alcohol consumption during lockdown. We’re now seeing the health effects of that, with alcoholic liver disease in young people increasing as much as 30% in the US. We also know that Gen Z drinks less than prior generations, including around 20% less than Millennials.

What does this mean? As we return to in-person celebrations, low- and no-alcohol options will boom –– especially delicious options that align with consumers’ values. Many of these are simply “distillates” of herbs and wood, for a balanced and bitter booze-free booze –– not “dealcoholized” products. Australia’s Lyre’s sells their 12+ 0% spirits imitating gin, whiskey, and herbal liquors globally. Other trendsetters include the UK’s Seedlip or Berlin’s Easip. Big players are also in the space, like Gordon’s 0.0% gin.

It’s a CPG niche with high margins and a huge growth opportunity –– up from $930B and growing fast, so we expect to see more activity here in the coming months.


Let's talk trends at the FoodHack Summit

In-person events are back. It's time we meet again 👋

The FoodHack Summit is 2-days of networking, idea generation and talks with some of the best and brightest minds in foodtech.

From scrappy startups, big name VC funds, established multinationals - and everything in between. All taking place in the beautiful Lausanne, Switzerland. In short, where you want to be this October 5-6th.

Use code NEWSLETTER-10 when reserving an attendee or startup booth ticket here. p.s. ticket prices increase every 2 weeks 🏃‍♂️


⛰️ Long-term plays

🧫 Cultured Meat

There’s an un-sexy little problem in cultured meat called fetal bovine serum (FBS). It’s extracted from unborn calves and used to grow cell-based meat. We’re just now seeing the first innovators crack this issue open. Canada’s Future Fields shipped their first run of a FBS replacement protein this year, and Eat Just claims upcoming products will be free of FBS. It’s the earliest validation stage for FBS alternatives, and it’ll take a few quarters to ramp up production.

We’re bullish on cultured meat in the long run, but it’s a long and complicated road that won’t put cultured meat on our plates this year. But next year? It’s go-time, with a few planned launches like Cubiq Foodscultured fats and Eat Just’s planned cultured chicken retail rollout (after their rumoured $3B IPO).

♻️ Food Sharing

There’s a flock of food delivery startups looking to connect diners with small-scale home cooks and “chefs without a restaurant.” See San Francisco’s Shef, NYC’s WoodSpoon, or Berlin’s HomeMealDeal, with modest seed + Series A financing (headlined by Shef’s $20M round in June). 

Investment here is slow given the regulatory minefield for food service out of non-commercial kitchens, and it’s still a tricky business. The good news? Such platforms are less dependent on major investment anyways. My favorite lockdown meal was Jollof rice from a Nigerian woman I message on Instagram whenever the craving hits. These businesses aren’t on the path to unicorn status, but they’ll slowly grow into a meaningful channel. 

My usual order of Jollof Rice from Berlin Naija Foodie

🤔 Closing Thoughts and a Bu… Bubb… Bubble?

There’s plenty more we’re looking forward to this year. Several Cloud Kitchens are scaling up fast, like Sweetheart Kitchen in the Middle East or Dubai-based Kitopi who just raised a $415M series C last week. A whole flock of AgTech startups are bringing crop monitoring, robotic weeding, and methane capture to the fields. And there’s a big year ahead for food BI tools like Journey Foods. We’ll be covering a lot of these themes in the coming weeks –– stay tuned.

And now the elephant (or bear) in the room. The economy has been rippin’ hot for years, and some valuations are, well, hard to wrap your head around (see Getir’s 10x valuation increase from January to July, now over $7.5B). Is it time for a correction?

Nobody knows. I’ve been holding my breath waiting for a downturn for 2 years. And in that time, this hot market has pumped tons of cash into brilliant technology that might not have received R&D funding in a “normal” market. This crazy economy might be the reason we get cultured meat, weed-picking robots, and zero-footprint lettuce in circulation now instead of 5+ years from now. That’s huge.

We’re in a boom moment across the foodtech universe, with plenty of change (and a bit of chaos) ahead. 

Just a thought, wouldn’t it be great if we could get together with fellow bright minds in foodtech to look at what’s coming next? Well, I’ll just leave this link here.

---

Boring disclaimer: This is not financial or investment advice and should not be taken as such. This is not intended to serve as the basis for any investment decision, and doing further due diligence on a potential investment is highly recommended. Invest (or don't) into startups at your own risk.

FoodTech Trends: A Mid-Year Review

2021 is in the books, and what a doozy it was. Record-smashing investment, future-tech hitting supermarket shelves, and, oh yeah, a pandemic. And so as we raise our champagne at midnight to–– what’s that? It’s only July? Oh boy.

Anyways, it’s been a banner year with more money and more hype than ever. So this week, we’re reflecting on the biggest takeaways of the year (so far), looking back at our 2021 predictions we made in January, and thinking ahead to what we assume will bloom before year’s end 🌼

So, what’s happened this year? Here's a few highlights.

💰 Valuations have boomed.

Across the foodtech board, investment and valuations boomed. 2021 investment is almost 90% of all of 2020's activity, through June alone. That’s a mix of traditional VCs willing to look beyond high-margin software products, AND an ever-growing cohort of specialist VCs with deep industry experience.

Foodtech Investment activity. Source: Pitch Book

🔥 eGrocery is HOT.

No sector has been hotter than grocery delivery, with Xinsheng Selected topping the charts with a $3B round on an $8B valuation. Not far behind are Gopuff’s $1.2B round or Glovo’s $528M in April. Just last week, Rohlik raised a $119M round, though they focus on a larger product selection and basket size than the “convenience” players like Gorillas or Flin

🥬 Indoor Farming is growing, fast.

Indoor farming company Local Bounti is preparing to go public (via SPAC) on a > $1B valuation. And that’s just one indicator of how quickly this space is maturing. Berlin’s Infarm (who's co-founder and CTO is speaking at this years FoodHack Summitis likewise exploring a SPAC IPO with help of Goldman Sachs. San Francisco’s Plenty, with over $500M in funding, is rapidly expanding their indoor lettuce and veg farms through the US. The future of grocery clearly involves herbs, greens, and vegetables grown indoors miles away from your home, thanks to advancements in vertical farming tech and investors willing to fund the high overhead to deploy urban farms. Yes, please.

Source: Infarm

👀 Where we’re bullish

So what do we think is in store before we toast our way into 2022? Here are our top 5 picks.

1. eGrocery Consolidation

M&A is in the air, with Getir picking up Blok this week to expand into Italy and Spain. UK-based Dija is also said to be seeking a sale to a competitor. Amazon is likely to seek acquisitions to grow their grocery business (they’ve looked at Flink), and may be able to muscle their way into dominance in many markets. We expect that by this time next year, eGrocery will look a lot like restaurant delivery: a few huge conglomerates (Delivery Hero, Just Eat Takeaway, Uber Eats) dominating the space (while struggling to earn a profit).

2. Pivots into eGrocery

Restaurant delivery platforms are slowly creeping into the eGrocery space. It’s a different business than restaurants, but the scent of a new (profitable?) revenue stream will blur the line between restaurant and food delivery platforms. One early launch includes Delivery Hero’s mjam market in Austria. Just Eat Takeaway appears to be focusing on delivering from brick-and-mortar grocery stores, but we expect all the big delivery players are exploring a dark store model and at least a few takes will launch in Q3/Q4.

An overview of eGrocery contenders. Full database here

3. Big Brands, Big Data

Big brands will continue to invest heavily in online, direct-to-consumer sales. Cutting out the middleman saves a bit of cash, yes, but more importantly: it lets the brand collect data on who consumers are and what they like. Early leaders like Heinz, Nespresso, M&M’s, and PepsiCo will be joined by many more big players providing their products online at a bargain price.

4. Alt Protein Tech

It’s been almost two years since Beyond’s blockbuster IPO, and the state of alt-meat is pretty good. We think new entrants will find it hard to compete with low-cost products from big producers, but those selling “shovels to goldminers” are maturing with a great year ahead. That’s especially true for cost-reducing technologies like fats and stabilizers, take Epogee (plant-based oils, USA) or 77 FOODS (vegetable fats, France).

5. Low-/No-Alcohol Segments

Cooped up at home, lots of folks increased their alcohol consumption during lockdown. We’re now seeing the health effects of that, with alcoholic liver disease in young people increasing as much as 30% in the US. We also know that Gen Z drinks less than prior generations, including around 20% less than Millennials.

What does this mean? As we return to in-person celebrations, low- and no-alcohol options will boom –– especially delicious options that align with consumers’ values. Many of these are simply “distillates” of herbs and wood, for a balanced and bitter booze-free booze –– not “dealcoholized” products. Australia’s Lyre’s sells their 12+ 0% spirits imitating gin, whiskey, and herbal liquors globally. Other trendsetters include the UK’s Seedlip or Berlin’s Easip. Big players are also in the space, like Gordon’s 0.0% gin.

It’s a CPG niche with high margins and a huge growth opportunity –– up from $930B and growing fast, so we expect to see more activity here in the coming months.


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⛰️ Long-term plays

🧫 Cultured Meat

There’s an un-sexy little problem in cultured meat called fetal bovine serum (FBS). It’s extracted from unborn calves and used to grow cell-based meat. We’re just now seeing the first innovators crack this issue open. Canada’s Future Fields shipped their first run of a FBS replacement protein this year, and Eat Just claims upcoming products will be free of FBS. It’s the earliest validation stage for FBS alternatives, and it’ll take a few quarters to ramp up production.

We’re bullish on cultured meat in the long run, but it’s a long and complicated road that won’t put cultured meat on our plates this year. But next year? It’s go-time, with a few planned launches like Cubiq Foodscultured fats and Eat Just’s planned cultured chicken retail rollout (after their rumoured $3B IPO).

♻️ Food Sharing

There’s a flock of food delivery startups looking to connect diners with small-scale home cooks and “chefs without a restaurant.” See San Francisco’s Shef, NYC’s WoodSpoon, or Berlin’s HomeMealDeal, with modest seed + Series A financing (headlined by Shef’s $20M round in June). 

Investment here is slow given the regulatory minefield for food service out of non-commercial kitchens, and it’s still a tricky business. The good news? Such platforms are less dependent on major investment anyways. My favorite lockdown meal was Jollof rice from a Nigerian woman I message on Instagram whenever the craving hits. These businesses aren’t on the path to unicorn status, but they’ll slowly grow into a meaningful channel. 

My usual order of Jollof Rice from Berlin Naija Foodie

🤔 Closing Thoughts and a Bu… Bubb… Bubble?

There’s plenty more we’re looking forward to this year. Several Cloud Kitchens are scaling up fast, like Sweetheart Kitchen in the Middle East or Dubai-based Kitopi who just raised a $415M series C last week. A whole flock of AgTech startups are bringing crop monitoring, robotic weeding, and methane capture to the fields. And there’s a big year ahead for food BI tools like Journey Foods. We’ll be covering a lot of these themes in the coming weeks –– stay tuned.

And now the elephant (or bear) in the room. The economy has been rippin’ hot for years, and some valuations are, well, hard to wrap your head around (see Getir’s 10x valuation increase from January to July, now over $7.5B). Is it time for a correction?

Nobody knows. I’ve been holding my breath waiting for a downturn for 2 years. And in that time, this hot market has pumped tons of cash into brilliant technology that might not have received R&D funding in a “normal” market. This crazy economy might be the reason we get cultured meat, weed-picking robots, and zero-footprint lettuce in circulation now instead of 5+ years from now. That’s huge.

We’re in a boom moment across the foodtech universe, with plenty of change (and a bit of chaos) ahead. 

Just a thought, wouldn’t it be great if we could get together with fellow bright minds in foodtech to look at what’s coming next? Well, I’ll just leave this link here.

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Boring disclaimer: This is not financial or investment advice and should not be taken as such. This is not intended to serve as the basis for any investment decision, and doing further due diligence on a potential investment is highly recommended. Invest (or don't) into startups at your own risk.

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