Foodtech startups took center stage during the pandemic out of necessity. They are a fixture in everyday life even as lockdowns come to a close.
Approaching the midyear mark, suppliers, distributors and other food-related tech startups have raised more than $16 billion worldwide, 86% of the total raised in 2020, according to PitchBook data. Food suppliers alone—primarily online grocers and meal-kit providers—hauled in $8.1 billion so far this year, marking a 66% jump from last year’s total deal value.
“2021 has been phenomenal for the foodtech space,” said Sanjeev Krishnan, chief investment officer at S2G Ventures. “A lot of money is coming into the sector, and we are in a period of almost irrational exuberance.”
Globally, venture funding is heavily skewed toward late-stage online grocery deals, followed by startups offering food-delivery apps and marketplaces such as Swiggy and GoJek.
China-based Xingsheng Selected, the developer of a grocery delivery platform, leads the pack this year, with a $3 billion round led by Sequoia China in February.
In March, GoPuff raised $1.15 billion, and in five months it had more than doubled its valuation to nearly $9 billion. The Philadelphia-based company delivers groceries and other household items in 650 US cities. European startups on the list include Glovo, a Spanish convenience delivery startup, and Berlin-based Gorillas, which reached a unicorn valuation less than a year after its founding.
More than 30 mega-deals in the sector have pushed the median valuation of late-stage companies to a record $160 million.
“Some investors have realized that foodtech is not just recession-proof, but it is also largely pandemic-proof,” said Krishnan. S2G Ventures, which invests in the agriculture and food industries, raised $550 million last year for its third fund. The firm’s portfolio includes Future Meat, Sweetgreen and Apeel Sciences.
Beyond the buzzy companies that have raised billions in venture capital, investors this year have also bet on a plethora of emerging technologies around alternative proteins, ghost kitchens and delivery robots.
Eat Just, a developer of plant-based egg alternatives and lab-grown meat, raised $200 million in a round led by the Qatar Investment Authority in March.
Information on consumer shopping behaviors and new data capabilities has set the groundwork for a generation of foodtech companies that can use data to predict consumer trends, reduce food waste in production facilities and help consumers find products, according to a recent PitchBook report on AI opportunities in foodtech.
Said Krishnan, “My hope is that investors use their insight and knowledge from food delivery and online grocery trends, and ask themselves, ‘What else can we do in the food sector that is early-stage, more scientific and has a huge potential?’”
Featured image by lemono/Getty Images
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