Valuations in foodtech: a look at how valuations have risen and where this is all headed

Valuations in foodtech: a look at how valuations have risen and where this is all headed

By
Sam Panzer
July 26, 2021

Valuations are on the rise

Foodtech investment is so hot that I’ve run out of metaphors to describe it 🤷 

Luckily, investors haven’t run out of money. Each week brings more investment rounds, and ever-higher startup valuations. That’s true of familiar spaces like delivery platform Swiggy hitting a $5.5B valuation. But we’re also seeing higher valuations in earlier stages and new segments, like two restaurant ordering platforms (Tridge and Choco) chalking up $500M+ valuations last week.

Startup valuations are something between disciplined accounting and black magic, so it’s no wonder that today’s skyrocketing valuations are making some observers scratch their heads. It's even trickling down into the pre-seed & seed stages where companies with no revenue are raising at $4-$8M valuations, just by slapping in keywords like 'fermentation' to their decks.

That’s why this week, we’re diving in on startup valuations: how it works, what’s changed, and what comes next.

🤯 Valuation Highlights

🇮🇳 Indian food delivery giant Zomato went public this week. Its shares were issued at 79 rupees ($1.06), but opened at 120 rupees ($1.61). That’s a 53% gain at the opening bell. Their market share is 650B rupees ($8.7B). But like other food delivery apps, Zomato loses money on every order and has investors wondering if the stock is overpriced. Nonetheless, the blockbuster opening gains were reassuring that pre-IPO foodtech valuations aren’t entirely off the rails.

🏆 Startup valuations keep setting records. While companies don’t always disclose their valuation when announcing investment, here are a few July valuations we’ve spotted this year:

  • Swiggy: $1.25B Series J at $5.5B (food delivery)
  • Getir: $550M Series D at $7.5B (egrocery)
  • Rappi: $500M Series F at $5.25B (delivery superapp)
  • Pivot Bio: $430M Series D at $2B (green fertilizer)
  • Choco: $100M Series B at $600M (restaurant supply platform)
  • Tridge: $60M Series C at $500M (restaurant sourcing platform)
  • Next Gen: $20M Seed at $180M (plant-based chicken)

🚀 ...and the valuation boom goes beyond foodtech. Shomik Ghosh, principal at boldstart ventures (enterprise software focus), noted on Twitter that valuations are now common at 40-50x of the last twelve months of revenue (LTM), with some rounds at 100x the next twelve months (NTM).

🍔 So… is this just a foodtech thing?

Nope. Foodtech is just maturing as an investment segment in the middle of a wider boom in investment activity.

Food & ag startups used to be an oddball investment for the Silicon Valley set. A CPG or new technology were never as attractive as software products, which can (theoretically) achieve margins over 90% for products with no physical costs (just storage and hosting). 

That’s not to say foodtech isn’t big business. It’s just that the low-cost, high-price models of software products ensured that “unicorns” were software startups. That’s even true in the first foodtech unicorns: Delivery Hero, Just Eat, DoorDash & co are software marketplaces with a workforce of drivers (typically) employed as contractors only paid per delivery.

But with a few milestone IPOs over the last few years (Beyond in 2019, Oatly in 2021), plus a rising interest in sustainable or impact investments, foodtech is getting more and more investor attention.


Meet the future of foodtech 👋

Ticket prices for the FoodHack Summit (Oct. 5-6, Lausanne + online) go up in 5 days from today.

Register now to hear from the founders of Oatly, Infarm, Taster, Astanor, BIOMILQ and more who are all attending in-person.

Use code NEWSLETTER-10 for a discount when getting your ticket here.


🧮 How valuations are calculated 

Startup valuations aren’t a rigid, standard process. Instead, they’re an agreement between the startup and investors. When a startup begins their round, they often have a target valuation in mind, which will later be checked & challenged by an interested investor (and any analysts they hire to look at the startup’s value).

Let’s oversimplify the process and zoom in on two key factors for a valuation:

💲 Earnings: first, the startup has to take a look at their annual revenue, usually from the past 12 months, or a projection of the next 12 months based on growth trajectory (or a hybrid of the previous 6 + next 6 months).

✖️ Growth Multiplier: once you have a picture of the revenue, you can then multiply it based on the strength of its recent and projected growth –– meaning, how big can this thing actually get? Way back in ancient times (2020), it was common to multiply the revenue by 5-10x for high-growth (100% YOY growth) startups , or up to 20-25x for hypergrowth (300% YoY growth) startups.

But nowadays, that 20-25x multiplier seems… modest. We’re now seeing standard valuations at 40-50x LTM (last twelve months) revenue. Before the pandemic and our current VC bull market, it was very rare for a company to hit a $1B valuation with under $100M revenue. Fast forward to today, and it’s the norm.

Take Gorillas. Startups at this stage are only public about their earnings when it’s beneficial, so analysis requires some guesswork. But in an interview this spring, CEO Kağan Sümer suggested $100M annual revenue was “possible” this year. They’re now looking at a $6B valuation. If they hit Sumer’s revenue and valuation targets, that would be 60x over revenue, which would have been unimaginable just a few years ago.

Is that a problem? The jury’s still out, but there are mostly two camps on the topic: 

👍 The valuations make sense!
The old days were highway robbery for founders, with VCs getting in on ridiculously low valuations. Higher valuations means VCs have a more appropriate risk –– plus, the higher valuation at later rounds means the investors do better in the end. And most importantly, the startup gets more cash earlier to hire key people and extend their runway. 

👎 These valuations are crazy!

We’re all stuck on the train to crazytown. In no world does a 100x valuation of the previous year’s revenue make sense. There are surely junk ideas getting big checks. But we follow along, because there’s too much money for too few deals –– making it a founder’s market with no pressure to keep valuations sane. As one investor tweeted, “there are no VC funds with pricing discipline. All of us have caved.” Or as one WSJ writer suggested, it’s “WeWorks all the way down.”

🤷‍♂️ So, which is it? A bit of both:

There are surely overvalued startups in foodtech that will be balanced in the coming months (or make it to IPO, only to be shredded under the scrutiny of a public offering). But overall, the valuation boom seems more a reflection of (1) foodtech maturing as an investment sector, (2) growing interest in impact investing, (3) strong macroeconomic conditions.

🔔 How going public changes things

In today’s founder-friendly market, investors have to sign off on higher valuations to get in with the startups they like. But it’s a different story once that startup goes public –– if mainstream investors scoff at the valuation, share price sinks and everybody takes a hit. 

Even before the opening bell, startups seeking an IPO have to work with an underwriter like Citigroup or Goldman Sachs to determine share price. That can be a harsh reality check for some startups, and is one (of many) reasons why IPO explorations can drag on for years.

The scrutiny of an IPO is also why a good or bad public listing in foodtech is so impactful for our entire industry: it’s a major litmus test for if the pre-public valuations make sense to the broader investing public. That’s why Zomato’s success brought sighs of relief after tough IPOs for Deliveroo (fell 26% on opening day) and AppHarvest (fell 67% on opening day) earlier this year.

🎈What comes next?

These days, startup valuations feel like a game of hot potato: investors and founders trying to pass an overvalued startup on to the next round so their prior investment looks like a massive gain. This investment is driving innovation (fast!), but it’s likely unsustainable long-term.

Our take? Valuations are overheated because there’s too much money for too few startups. 

That could lead to IPO flops that scare away investors from foodtech (something we certainly want to avoid). The world doesn’t need more ‘general’ VCs pumping money wherever they can safely park it. We need angels, accelerators, advisors, and incubators –– all the infrastructure that makes companies successful. We need to nurture early-stage companies, and make sure the current investment boom reaches new ideas instead of a smaller group of validated startups. 

Investors, especially early-stage investors, also need to compete based on their advisory services and non-financial support they can offer. That know-how comes mostly from industry-specific VCs and CVCs that know the space.

One thing we expect to see a lot more: investors flocking to founders coming from rocketship startups in foodtech. Just like members of the “PayPal Mafia” went on to found YouTube, Yelp, Tesla, and more, we (and VCs!) want to see the lessons of recent foodtech unicorns stay in the space. Bring on the Infarm, Impossible, and Oatly Mafias!

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Valuations are on the rise

Foodtech investment is so hot that I’ve run out of metaphors to describe it 🤷 

Luckily, investors haven’t run out of money. Each week brings more investment rounds, and ever-higher startup valuations. That’s true of familiar spaces like delivery platform Swiggy hitting a $5.5B valuation. But we’re also seeing higher valuations in earlier stages and new segments, like two restaurant ordering platforms (Tridge and Choco) chalking up $500M+ valuations last week.

Startup valuations are something between disciplined accounting and black magic, so it’s no wonder that today’s skyrocketing valuations are making some observers scratch their heads. It's even trickling down into the pre-seed & seed stages where companies with no revenue are raising at $4-$8M valuations, just by slapping in keywords like 'fermentation' to their decks.

That’s why this week, we’re diving in on startup valuations: how it works, what’s changed, and what comes next.

🤯 Valuation Highlights

🇮🇳 Indian food delivery giant Zomato went public this week. Its shares were issued at 79 rupees ($1.06), but opened at 120 rupees ($1.61). That’s a 53% gain at the opening bell. Their market share is 650B rupees ($8.7B). But like other food delivery apps, Zomato loses money on every order and has investors wondering if the stock is overpriced. Nonetheless, the blockbuster opening gains were reassuring that pre-IPO foodtech valuations aren’t entirely off the rails.

🏆 Startup valuations keep setting records. While companies don’t always disclose their valuation when announcing investment, here are a few July valuations we’ve spotted this year:

  • Swiggy: $1.25B Series J at $5.5B (food delivery)
  • Getir: $550M Series D at $7.5B (egrocery)
  • Rappi: $500M Series F at $5.25B (delivery superapp)
  • Pivot Bio: $430M Series D at $2B (green fertilizer)
  • Choco: $100M Series B at $600M (restaurant supply platform)
  • Tridge: $60M Series C at $500M (restaurant sourcing platform)
  • Next Gen: $20M Seed at $180M (plant-based chicken)

🚀 ...and the valuation boom goes beyond foodtech. Shomik Ghosh, principal at boldstart ventures (enterprise software focus), noted on Twitter that valuations are now common at 40-50x of the last twelve months of revenue (LTM), with some rounds at 100x the next twelve months (NTM).

🍔 So… is this just a foodtech thing?

Nope. Foodtech is just maturing as an investment segment in the middle of a wider boom in investment activity.

Food & ag startups used to be an oddball investment for the Silicon Valley set. A CPG or new technology were never as attractive as software products, which can (theoretically) achieve margins over 90% for products with no physical costs (just storage and hosting). 

That’s not to say foodtech isn’t big business. It’s just that the low-cost, high-price models of software products ensured that “unicorns” were software startups. That’s even true in the first foodtech unicorns: Delivery Hero, Just Eat, DoorDash & co are software marketplaces with a workforce of drivers (typically) employed as contractors only paid per delivery.

But with a few milestone IPOs over the last few years (Beyond in 2019, Oatly in 2021), plus a rising interest in sustainable or impact investments, foodtech is getting more and more investor attention.


Meet the future of foodtech 👋

Ticket prices for the FoodHack Summit (Oct. 5-6, Lausanne + online) go up in 5 days from today.

Register now to hear from the founders of Oatly, Infarm, Taster, Astanor, BIOMILQ and more who are all attending in-person.

Use code NEWSLETTER-10 for a discount when getting your ticket here.


🧮 How valuations are calculated 

Startup valuations aren’t a rigid, standard process. Instead, they’re an agreement between the startup and investors. When a startup begins their round, they often have a target valuation in mind, which will later be checked & challenged by an interested investor (and any analysts they hire to look at the startup’s value).

Let’s oversimplify the process and zoom in on two key factors for a valuation:

💲 Earnings: first, the startup has to take a look at their annual revenue, usually from the past 12 months, or a projection of the next 12 months based on growth trajectory (or a hybrid of the previous 6 + next 6 months).

✖️ Growth Multiplier: once you have a picture of the revenue, you can then multiply it based on the strength of its recent and projected growth –– meaning, how big can this thing actually get? Way back in ancient times (2020), it was common to multiply the revenue by 5-10x for high-growth (100% YOY growth) startups , or up to 20-25x for hypergrowth (300% YoY growth) startups.

But nowadays, that 20-25x multiplier seems… modest. We’re now seeing standard valuations at 40-50x LTM (last twelve months) revenue. Before the pandemic and our current VC bull market, it was very rare for a company to hit a $1B valuation with under $100M revenue. Fast forward to today, and it’s the norm.

Take Gorillas. Startups at this stage are only public about their earnings when it’s beneficial, so analysis requires some guesswork. But in an interview this spring, CEO Kağan Sümer suggested $100M annual revenue was “possible” this year. They’re now looking at a $6B valuation. If they hit Sumer’s revenue and valuation targets, that would be 60x over revenue, which would have been unimaginable just a few years ago.

Is that a problem? The jury’s still out, but there are mostly two camps on the topic: 

👍 The valuations make sense!
The old days were highway robbery for founders, with VCs getting in on ridiculously low valuations. Higher valuations means VCs have a more appropriate risk –– plus, the higher valuation at later rounds means the investors do better in the end. And most importantly, the startup gets more cash earlier to hire key people and extend their runway. 

👎 These valuations are crazy!

We’re all stuck on the train to crazytown. In no world does a 100x valuation of the previous year’s revenue make sense. There are surely junk ideas getting big checks. But we follow along, because there’s too much money for too few deals –– making it a founder’s market with no pressure to keep valuations sane. As one investor tweeted, “there are no VC funds with pricing discipline. All of us have caved.” Or as one WSJ writer suggested, it’s “WeWorks all the way down.”

🤷‍♂️ So, which is it? A bit of both:

There are surely overvalued startups in foodtech that will be balanced in the coming months (or make it to IPO, only to be shredded under the scrutiny of a public offering). But overall, the valuation boom seems more a reflection of (1) foodtech maturing as an investment sector, (2) growing interest in impact investing, (3) strong macroeconomic conditions.

🔔 How going public changes things

In today’s founder-friendly market, investors have to sign off on higher valuations to get in with the startups they like. But it’s a different story once that startup goes public –– if mainstream investors scoff at the valuation, share price sinks and everybody takes a hit. 

Even before the opening bell, startups seeking an IPO have to work with an underwriter like Citigroup or Goldman Sachs to determine share price. That can be a harsh reality check for some startups, and is one (of many) reasons why IPO explorations can drag on for years.

The scrutiny of an IPO is also why a good or bad public listing in foodtech is so impactful for our entire industry: it’s a major litmus test for if the pre-public valuations make sense to the broader investing public. That’s why Zomato’s success brought sighs of relief after tough IPOs for Deliveroo (fell 26% on opening day) and AppHarvest (fell 67% on opening day) earlier this year.

🎈What comes next?

These days, startup valuations feel like a game of hot potato: investors and founders trying to pass an overvalued startup on to the next round so their prior investment looks like a massive gain. This investment is driving innovation (fast!), but it’s likely unsustainable long-term.

Our take? Valuations are overheated because there’s too much money for too few startups. 

That could lead to IPO flops that scare away investors from foodtech (something we certainly want to avoid). The world doesn’t need more ‘general’ VCs pumping money wherever they can safely park it. We need angels, accelerators, advisors, and incubators –– all the infrastructure that makes companies successful. We need to nurture early-stage companies, and make sure the current investment boom reaches new ideas instead of a smaller group of validated startups. 

Investors, especially early-stage investors, also need to compete based on their advisory services and non-financial support they can offer. That know-how comes mostly from industry-specific VCs and CVCs that know the space.

One thing we expect to see a lot more: investors flocking to founders coming from rocketship startups in foodtech. Just like members of the “PayPal Mafia” went on to found YouTube, Yelp, Tesla, and more, we (and VCs!) want to see the lessons of recent foodtech unicorns stay in the space. Bring on the Infarm, Impossible, and Oatly Mafias!

Valuations are on the rise

Foodtech investment is so hot that I’ve run out of metaphors to describe it 🤷 

Luckily, investors haven’t run out of money. Each week brings more investment rounds, and ever-higher startup valuations. That’s true of familiar spaces like delivery platform Swiggy hitting a $5.5B valuation. But we’re also seeing higher valuations in earlier stages and new segments, like two restaurant ordering platforms (Tridge and Choco) chalking up $500M+ valuations last week.

Startup valuations are something between disciplined accounting and black magic, so it’s no wonder that today’s skyrocketing valuations are making some observers scratch their heads. It's even trickling down into the pre-seed & seed stages where companies with no revenue are raising at $4-$8M valuations, just by slapping in keywords like 'fermentation' to their decks.

That’s why this week, we’re diving in on startup valuations: how it works, what’s changed, and what comes next.

🤯 Valuation Highlights

🇮🇳 Indian food delivery giant Zomato went public this week. Its shares were issued at 79 rupees ($1.06), but opened at 120 rupees ($1.61). That’s a 53% gain at the opening bell. Their market share is 650B rupees ($8.7B). But like other food delivery apps, Zomato loses money on every order and has investors wondering if the stock is overpriced. Nonetheless, the blockbuster opening gains were reassuring that pre-IPO foodtech valuations aren’t entirely off the rails.

🏆 Startup valuations keep setting records. While companies don’t always disclose their valuation when announcing investment, here are a few July valuations we’ve spotted this year:

  • Swiggy: $1.25B Series J at $5.5B (food delivery)
  • Getir: $550M Series D at $7.5B (egrocery)
  • Rappi: $500M Series F at $5.25B (delivery superapp)
  • Pivot Bio: $430M Series D at $2B (green fertilizer)
  • Choco: $100M Series B at $600M (restaurant supply platform)
  • Tridge: $60M Series C at $500M (restaurant sourcing platform)
  • Next Gen: $20M Seed at $180M (plant-based chicken)

🚀 ...and the valuation boom goes beyond foodtech. Shomik Ghosh, principal at boldstart ventures (enterprise software focus), noted on Twitter that valuations are now common at 40-50x of the last twelve months of revenue (LTM), with some rounds at 100x the next twelve months (NTM).

🍔 So… is this just a foodtech thing?

Nope. Foodtech is just maturing as an investment segment in the middle of a wider boom in investment activity.

Food & ag startups used to be an oddball investment for the Silicon Valley set. A CPG or new technology were never as attractive as software products, which can (theoretically) achieve margins over 90% for products with no physical costs (just storage and hosting). 

That’s not to say foodtech isn’t big business. It’s just that the low-cost, high-price models of software products ensured that “unicorns” were software startups. That’s even true in the first foodtech unicorns: Delivery Hero, Just Eat, DoorDash & co are software marketplaces with a workforce of drivers (typically) employed as contractors only paid per delivery.

But with a few milestone IPOs over the last few years (Beyond in 2019, Oatly in 2021), plus a rising interest in sustainable or impact investments, foodtech is getting more and more investor attention.


Meet the future of foodtech 👋

Ticket prices for the FoodHack Summit (Oct. 5-6, Lausanne + online) go up in 5 days from today.

Register now to hear from the founders of Oatly, Infarm, Taster, Astanor, BIOMILQ and more who are all attending in-person.

Use code NEWSLETTER-10 for a discount when getting your ticket here.


🧮 How valuations are calculated 

Startup valuations aren’t a rigid, standard process. Instead, they’re an agreement between the startup and investors. When a startup begins their round, they often have a target valuation in mind, which will later be checked & challenged by an interested investor (and any analysts they hire to look at the startup’s value).

Let’s oversimplify the process and zoom in on two key factors for a valuation:

💲 Earnings: first, the startup has to take a look at their annual revenue, usually from the past 12 months, or a projection of the next 12 months based on growth trajectory (or a hybrid of the previous 6 + next 6 months).

✖️ Growth Multiplier: once you have a picture of the revenue, you can then multiply it based on the strength of its recent and projected growth –– meaning, how big can this thing actually get? Way back in ancient times (2020), it was common to multiply the revenue by 5-10x for high-growth (100% YOY growth) startups , or up to 20-25x for hypergrowth (300% YoY growth) startups.

But nowadays, that 20-25x multiplier seems… modest. We’re now seeing standard valuations at 40-50x LTM (last twelve months) revenue. Before the pandemic and our current VC bull market, it was very rare for a company to hit a $1B valuation with under $100M revenue. Fast forward to today, and it’s the norm.

Take Gorillas. Startups at this stage are only public about their earnings when it’s beneficial, so analysis requires some guesswork. But in an interview this spring, CEO Kağan Sümer suggested $100M annual revenue was “possible” this year. They’re now looking at a $6B valuation. If they hit Sumer’s revenue and valuation targets, that would be 60x over revenue, which would have been unimaginable just a few years ago.

Is that a problem? The jury’s still out, but there are mostly two camps on the topic: 

👍 The valuations make sense!
The old days were highway robbery for founders, with VCs getting in on ridiculously low valuations. Higher valuations means VCs have a more appropriate risk –– plus, the higher valuation at later rounds means the investors do better in the end. And most importantly, the startup gets more cash earlier to hire key people and extend their runway. 

👎 These valuations are crazy!

We’re all stuck on the train to crazytown. In no world does a 100x valuation of the previous year’s revenue make sense. There are surely junk ideas getting big checks. But we follow along, because there’s too much money for too few deals –– making it a founder’s market with no pressure to keep valuations sane. As one investor tweeted, “there are no VC funds with pricing discipline. All of us have caved.” Or as one WSJ writer suggested, it’s “WeWorks all the way down.”

🤷‍♂️ So, which is it? A bit of both:

There are surely overvalued startups in foodtech that will be balanced in the coming months (or make it to IPO, only to be shredded under the scrutiny of a public offering). But overall, the valuation boom seems more a reflection of (1) foodtech maturing as an investment sector, (2) growing interest in impact investing, (3) strong macroeconomic conditions.

🔔 How going public changes things

In today’s founder-friendly market, investors have to sign off on higher valuations to get in with the startups they like. But it’s a different story once that startup goes public –– if mainstream investors scoff at the valuation, share price sinks and everybody takes a hit. 

Even before the opening bell, startups seeking an IPO have to work with an underwriter like Citigroup or Goldman Sachs to determine share price. That can be a harsh reality check for some startups, and is one (of many) reasons why IPO explorations can drag on for years.

The scrutiny of an IPO is also why a good or bad public listing in foodtech is so impactful for our entire industry: it’s a major litmus test for if the pre-public valuations make sense to the broader investing public. That’s why Zomato’s success brought sighs of relief after tough IPOs for Deliveroo (fell 26% on opening day) and AppHarvest (fell 67% on opening day) earlier this year.

🎈What comes next?

These days, startup valuations feel like a game of hot potato: investors and founders trying to pass an overvalued startup on to the next round so their prior investment looks like a massive gain. This investment is driving innovation (fast!), but it’s likely unsustainable long-term.

Our take? Valuations are overheated because there’s too much money for too few startups. 

That could lead to IPO flops that scare away investors from foodtech (something we certainly want to avoid). The world doesn’t need more ‘general’ VCs pumping money wherever they can safely park it. We need angels, accelerators, advisors, and incubators –– all the infrastructure that makes companies successful. We need to nurture early-stage companies, and make sure the current investment boom reaches new ideas instead of a smaller group of validated startups. 

Investors, especially early-stage investors, also need to compete based on their advisory services and non-financial support they can offer. That know-how comes mostly from industry-specific VCs and CVCs that know the space.

One thing we expect to see a lot more: investors flocking to founders coming from rocketship startups in foodtech. Just like members of the “PayPal Mafia” went on to found YouTube, Yelp, Tesla, and more, we (and VCs!) want to see the lessons of recent foodtech unicorns stay in the space. Bring on the Infarm, Impossible, and Oatly Mafias!

Valuations are on the rise

Foodtech investment is so hot that I’ve run out of metaphors to describe it 🤷 

Luckily, investors haven’t run out of money. Each week brings more investment rounds, and ever-higher startup valuations. That’s true of familiar spaces like delivery platform Swiggy hitting a $5.5B valuation. But we’re also seeing higher valuations in earlier stages and new segments, like two restaurant ordering platforms (Tridge and Choco) chalking up $500M+ valuations last week.

Startup valuations are something between disciplined accounting and black magic, so it’s no wonder that today’s skyrocketing valuations are making some observers scratch their heads. It's even trickling down into the pre-seed & seed stages where companies with no revenue are raising at $4-$8M valuations, just by slapping in keywords like 'fermentation' to their decks.

That’s why this week, we’re diving in on startup valuations: how it works, what’s changed, and what comes next.

🤯 Valuation Highlights

🇮🇳 Indian food delivery giant Zomato went public this week. Its shares were issued at 79 rupees ($1.06), but opened at 120 rupees ($1.61). That’s a 53% gain at the opening bell. Their market share is 650B rupees ($8.7B). But like other food delivery apps, Zomato loses money on every order and has investors wondering if the stock is overpriced. Nonetheless, the blockbuster opening gains were reassuring that pre-IPO foodtech valuations aren’t entirely off the rails.

🏆 Startup valuations keep setting records. While companies don’t always disclose their valuation when announcing investment, here are a few July valuations we’ve spotted this year:

  • Swiggy: $1.25B Series J at $5.5B (food delivery)
  • Getir: $550M Series D at $7.5B (egrocery)
  • Rappi: $500M Series F at $5.25B (delivery superapp)
  • Pivot Bio: $430M Series D at $2B (green fertilizer)
  • Choco: $100M Series B at $600M (restaurant supply platform)
  • Tridge: $60M Series C at $500M (restaurant sourcing platform)
  • Next Gen: $20M Seed at $180M (plant-based chicken)

🚀 ...and the valuation boom goes beyond foodtech. Shomik Ghosh, principal at boldstart ventures (enterprise software focus), noted on Twitter that valuations are now common at 40-50x of the last twelve months of revenue (LTM), with some rounds at 100x the next twelve months (NTM).

🍔 So… is this just a foodtech thing?

Nope. Foodtech is just maturing as an investment segment in the middle of a wider boom in investment activity.

Food & ag startups used to be an oddball investment for the Silicon Valley set. A CPG or new technology were never as attractive as software products, which can (theoretically) achieve margins over 90% for products with no physical costs (just storage and hosting). 

That’s not to say foodtech isn’t big business. It’s just that the low-cost, high-price models of software products ensured that “unicorns” were software startups. That’s even true in the first foodtech unicorns: Delivery Hero, Just Eat, DoorDash & co are software marketplaces with a workforce of drivers (typically) employed as contractors only paid per delivery.

But with a few milestone IPOs over the last few years (Beyond in 2019, Oatly in 2021), plus a rising interest in sustainable or impact investments, foodtech is getting more and more investor attention.


Meet the future of foodtech 👋

Ticket prices for the FoodHack Summit (Oct. 5-6, Lausanne + online) go up in 5 days from today.

Register now to hear from the founders of Oatly, Infarm, Taster, Astanor, BIOMILQ and more who are all attending in-person.

Use code NEWSLETTER-10 for a discount when getting your ticket here.


🧮 How valuations are calculated 

Startup valuations aren’t a rigid, standard process. Instead, they’re an agreement between the startup and investors. When a startup begins their round, they often have a target valuation in mind, which will later be checked & challenged by an interested investor (and any analysts they hire to look at the startup’s value).

Let’s oversimplify the process and zoom in on two key factors for a valuation:

💲 Earnings: first, the startup has to take a look at their annual revenue, usually from the past 12 months, or a projection of the next 12 months based on growth trajectory (or a hybrid of the previous 6 + next 6 months).

✖️ Growth Multiplier: once you have a picture of the revenue, you can then multiply it based on the strength of its recent and projected growth –– meaning, how big can this thing actually get? Way back in ancient times (2020), it was common to multiply the revenue by 5-10x for high-growth (100% YOY growth) startups , or up to 20-25x for hypergrowth (300% YoY growth) startups.

But nowadays, that 20-25x multiplier seems… modest. We’re now seeing standard valuations at 40-50x LTM (last twelve months) revenue. Before the pandemic and our current VC bull market, it was very rare for a company to hit a $1B valuation with under $100M revenue. Fast forward to today, and it’s the norm.

Take Gorillas. Startups at this stage are only public about their earnings when it’s beneficial, so analysis requires some guesswork. But in an interview this spring, CEO Kağan Sümer suggested $100M annual revenue was “possible” this year. They’re now looking at a $6B valuation. If they hit Sumer’s revenue and valuation targets, that would be 60x over revenue, which would have been unimaginable just a few years ago.

Is that a problem? The jury’s still out, but there are mostly two camps on the topic: 

👍 The valuations make sense!
The old days were highway robbery for founders, with VCs getting in on ridiculously low valuations. Higher valuations means VCs have a more appropriate risk –– plus, the higher valuation at later rounds means the investors do better in the end. And most importantly, the startup gets more cash earlier to hire key people and extend their runway. 

👎 These valuations are crazy!

We’re all stuck on the train to crazytown. In no world does a 100x valuation of the previous year’s revenue make sense. There are surely junk ideas getting big checks. But we follow along, because there’s too much money for too few deals –– making it a founder’s market with no pressure to keep valuations sane. As one investor tweeted, “there are no VC funds with pricing discipline. All of us have caved.” Or as one WSJ writer suggested, it’s “WeWorks all the way down.”

🤷‍♂️ So, which is it? A bit of both:

There are surely overvalued startups in foodtech that will be balanced in the coming months (or make it to IPO, only to be shredded under the scrutiny of a public offering). But overall, the valuation boom seems more a reflection of (1) foodtech maturing as an investment sector, (2) growing interest in impact investing, (3) strong macroeconomic conditions.

🔔 How going public changes things

In today’s founder-friendly market, investors have to sign off on higher valuations to get in with the startups they like. But it’s a different story once that startup goes public –– if mainstream investors scoff at the valuation, share price sinks and everybody takes a hit. 

Even before the opening bell, startups seeking an IPO have to work with an underwriter like Citigroup or Goldman Sachs to determine share price. That can be a harsh reality check for some startups, and is one (of many) reasons why IPO explorations can drag on for years.

The scrutiny of an IPO is also why a good or bad public listing in foodtech is so impactful for our entire industry: it’s a major litmus test for if the pre-public valuations make sense to the broader investing public. That’s why Zomato’s success brought sighs of relief after tough IPOs for Deliveroo (fell 26% on opening day) and AppHarvest (fell 67% on opening day) earlier this year.

🎈What comes next?

These days, startup valuations feel like a game of hot potato: investors and founders trying to pass an overvalued startup on to the next round so their prior investment looks like a massive gain. This investment is driving innovation (fast!), but it’s likely unsustainable long-term.

Our take? Valuations are overheated because there’s too much money for too few startups. 

That could lead to IPO flops that scare away investors from foodtech (something we certainly want to avoid). The world doesn’t need more ‘general’ VCs pumping money wherever they can safely park it. We need angels, accelerators, advisors, and incubators –– all the infrastructure that makes companies successful. We need to nurture early-stage companies, and make sure the current investment boom reaches new ideas instead of a smaller group of validated startups. 

Investors, especially early-stage investors, also need to compete based on their advisory services and non-financial support they can offer. That know-how comes mostly from industry-specific VCs and CVCs that know the space.

One thing we expect to see a lot more: investors flocking to founders coming from rocketship startups in foodtech. Just like members of the “PayPal Mafia” went on to found YouTube, Yelp, Tesla, and more, we (and VCs!) want to see the lessons of recent foodtech unicorns stay in the space. Bring on the Infarm, Impossible, and Oatly Mafias!

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