Climate change and water security have driven foodtech entrepreneurs to find innovative ways to feed the growing global population and reinvent farming as we know it.
A busy startup segment, $3.1 billion of VC investments has poured into vertical farming startups in the last five years, and 2022 is already on track to be a big record. The combined value of startups in the space has increased 19x in the same period, and there are now four companies that have reached unicorn status.
A drive to extend growing seasons and move production closer to the point of consumption, while leveraging controlled growing environments, have resulted in not one but three forms of vertical, or indoor, farming.
Hydroponic: growing plants without soil. Roots are dropped in a liquid containing nutrients and trace elements. Startups in the category include Just Vertical.
Aquaponic: A closed system that is mimicking the natural environment. Water from a tank farming fish is connected to a unit containing plants, which absorb the nutrient-rich water. The plants purify the water, which is led back to the fish tank. Startups in the category include Refarmers and Prontus.
Aeroponic: nutrients are misted in the air where plants are grown. In this category we count startups such as AeroFarms and CleanGreans
There are clear benefits of vertical farming such as pesticide-free produce, cleaner water, and proximity to customers. However, at this stage, the jury is out on whether vertical farms are truly the future of produce. The ecosystem is yet to converge to one business model and reach profitability. But there are now 103 startups now competing to make the model work.
📉 Delivery Hero CEO Oestberg Buys the Dip After Record Selloff via Bloomberg. Delivery Hero disappointed investors with projections for 2022. It triggered the worst sell off of Delivery Hero's equity shares, leading to a 30% loss of market capitalization. Delivery Hero's CEO Oestberg bought $16 million worth of stock, showing he remains confident in the company's long-term success.
🍕 Yum China adds machines, not workers, as it expands store network via Nikkei Asia. The operator of KFC and Pizza Hut in China has doubled the profits since 2016, but kept its workforce growth flat.
🍔 Report: Vegan Meat Alternatives On Track to Become Cheaper Than Beef via The Beet. Good Food Institute found that the price of plant-based meat could reach price parity with conventional meat as soon as next year. This is likely going to lead to mainstream adoption of alternative meat.
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Latest foodtech deals
Select deals from last week:
🇳🇱 Protix Biosystems, an insect-based ingredients company, raised €50 million for international growth and "ground-breaking R&D". VC investment in insect-based ingredients reached an all-time peak in 2020 with $331 million. VC investment cooled off in 2021, but a new regulation might kick-start a new funding frenzy.
🇪🇪 eAgronom, an Estonia-based farm management company, raised $7.4 million Series A to build a farming-based carbon credits platform. It will launch a web3-based DAO to help farmers finance CO2 reduction projects
Other notable foodtech deals from around the globe:
🇺🇸 Cann, a USA-based cannabis-infused drink company, raised $27 million led by GTI Capital and Imaginary Ventures.
🇨🇦 7shifts, a Canadian restaurant team management software company, raised $80 million Series C led by SoftBank Vision Fund 2.
There are (at least) 1,723 foodtech startups launched since last year. The most funded ones are in ultrafast grocery delivery. Only 10 of those are founded by a serial entrepreneur.
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