What is Foodtech and Why Investors Love It

If you’ve ever savored an artisanal meatless burger made in a lab or savored an kale salad produced by a hydroponics plant You’ve had an experience of foodtech. At present, it may seem like a fringe option for those who love food. However, in the next few years this fast-growing sector will be popular and transform the way we eat.

What’s behind the growth of foodtech? Startups are trying to improve the sustainability of modern food and efficient, in response to the danger of food shortages or inefficiencies, as well as negative environmental impact in the agricultural and meat industries. Some are even aiding consumers in making better, healthier choices in their food choices.

The global food industry isn’t suited for the job These facts illustrate:

As per the United Nations, the world must increase its production of food by 60% in order to feed the estimated population of more than 9 billion by 2050.
Changes in the climate, urbanization , and water shortages have reduced how much arable land that we can utilize to grow food.
Around 690 million people across the world are affected by hunger.
The figure is predicted to increase to the 840 million mark by 2030. This is aggravated through the pandemic.

Foodtech companies are aiming to fill in some of the gaps in the market and they have caught the attention of investors.
The many ingredients in food and technology

Beyond meats grown in labs or on city-based farms in vertical verticals, the term “foodtech” needs to be considered as a vast range of businesses that use technologies such as artificial intelligence Internet of Things (IoT) and big data to alter aspects of food chain all the way from manufacturing to distribution.

The sector can be classified into six verticals or sub-sectors (definitions taken by The Digital Food Lab):

AgTech Startups that aim to improve the output and quality of crops by using drones, sensors, and software to replace human labor. This vertical is focused on agricultural products, next-generation farms, and urban agriculture.

Food Science: Startups are studying and developing products for food which address environmental and health issues. Plant-based meat, lab-grown alternatives to meat, and other proteins are all part of this category.

Food Service: New startups are changing the way that food-related businesses (hotels cafes, restaurants, and hotels) are run in the present. Innovative concepts hailed as restaurants for the next generation’, such as robot chefs and cloud kitchens are part of this sector.

Coaching: companies that educate customers and create the public’s awareness of their choices in food, the health benefits , and help people achieve their personal goals such as fitness or managing chronic illnesses.

Delivery: Startups that dig into the problem of transporting food items in the industry. Restaurant and grocery delivery are included in this.

Retail: companies that are developing technology-based solutions that optimize the functions of the retail food industry. This could include improvements to the back end, such as digitizing the supply chain, or front-end software to offer more convenience for shoppers in stores.

Certain foodtech incubators offer more precise categorisations. However, these six verticals provide general information about the sector.

Why investors have a taste for It

Foodtech startups, due to their nature, need plenty of time to R&D and rigorous safety testing before they are able to bring their products to market. It took 10 years or more for Impossible Foods and Beyond Meat to be household names with billion-dollar valuations. These companies are among the top success stories of the industry’s early days to date.

The interest of investors in food technology has gained momentum recently, partly because of the United Nations and other international organizations highlighting the issue of food insecurity and setting the Sustainable Development Goals (SDGs) to be met by 2030.

The Financial Times reported a surge of investors interested in investing based on Environmental, Social and Governance (ESG) principles. Investors channeled more than US 70 billion to sustainability-focused investment funds in the months of April through June of 2020 due to the growing awareness of the climate crisis.

The COVID-19 epidemic also brought to light the dependence of our supply chains as well as inefficiencies in traditional models of food production. The government has begun turning its focus to foodtech in order to speed up production at home and also. For instance, Singapore launched a SGD $30 million (US $21 million) fund to boost local food production in addition to its current initiatives to ensure that the island’s ability to supply 30 percent of its food needs in 2030.

Private investors are entering the market too. In the report by Food Navigator USA, investment in US foodtech reached a record all-time high at US $8.4 billion during the initial three quarters of 2019. This is more than the record-breaking sum in the amount of US $7 billion the sector received throughout the year. For further details of foodtech VC check out synthesis.capital.

Alternative proteins have been hugely popular in recent years, with US research into alternative proteins and lobbying association The Good Food Institute reporting a total of US $3.1 billion funneled to the research field. This is an increase from US $1 billion figure for the year.

The advancements in this field aren’t limited to most advanced Western markets. Within Southeast Asia, investment in the region’s foodtech and agriculture startups increased up to US $350 million during the initial six months of 2019. It is in line to surpass the full-year total that was US 423 million.

The pandemic as well as lockdowns have not stopped creativity, with a multitude of foodtech companies responding to the situation and being resilient. After the disruption of imports from abroad and consumers turning to local stores, farms and food delivery firms.

In light of the future outlook for global food production, the sustainability issues and ever-changing food trends, the foodtech’s popularity isn’t likely to slow down anytime in the near future. It’s a good time to take a look at securing your place at the table. Tomorrow’s foodtech innovations are already being ready to be served.