How FoodTech is Tackling Challenges and Creating Opportunities
The fact that the food industry is essential and evolving is no news to anyone. With population growth, changing consumer behavior, and inflation, the industry faces unprecedented challenges. Moreover, COVID-19 accelerated the industry’s digitalization, changing this market’s dynamics. As a result, current players in the food industry require new solutions to survive in this market. Is technology the answer to it? Or, even better, is FoodTech it?
As the name suggests, the merger of Food and Technology describes the ecosystem of entrepreneurs and startups focused on using technology to solve problems within the agrifood industry. Some of these startups were listed by The United Nations (UN) Sustainable Development Goals (SDG), and are tackling such topics as food waste, obesity, agriculture productivity, population growth, and climate change. FoodTech startups are transforming how we produce, distribute, and consume food, revolutionizing every aspect of the food industry.
At Chingona, we see a plethora of opportunities in the FoodTech space. We are particularly interested in software development solutions using Artificial Intelligence (IA), the Internet of Things (IoT), blockchain, or big data. There are three main areas where software can have the most significant impact: food producers, retailers, and consumers.
1. Food producers, such as farmers, have historically lacked access to best modern practices, and the sector has lagged in digitalization. There is still space to help farmers digitalize and professionalize their production and address problems involving compliance, quality control, or sustainability, such as data solutions on the supply chain from farms to retail/restaurants. Wikifarmer, for instance, is solving the need for more information on new practices for farmers in Europe through digital tech and empowerment. Our portfolio company Topl uses blockchain to help ensure quality control and traceability.
2. Retailers, think restaurants and supermarkets, are undergoing a digital transformation accelerated by COVID-19, and technology solutions in this space have been surging. Software solutions can help retailers reduce food waste, improve inventory management, and streamline operations. The future of retailers is more digital and integrated, thus, back-end and front-end solutions will be essential in the coming years.
- Back-end solutions refer to any system that supports back-office applications. Back-end solutions can span from inventory management, which can help reduce food waste, to operations improvement, such as the AI-powered solution created by Dragontail to help restaurateurs from kitchen to customer. Lunchbox uses OpenAI (the technology behind ChatGPT) to generate food pictures that will boost restaurant sales. Wasteless uses AI to create dynamic pricing to reduce waste due to perishment on retail. Additionally, our portfolio company Cartwheel helps restaurants manage their deliveries.
- Front-end tech solutions refer to solutions that are part of the information system that the user directly accesses — in this case, any technology that the retailer’s customer touch. This can help with improving the client’s experience and drive sales. For example, Tock helps restaurants increase the number of meals served by filling up emptier days.
3. Consumers are becoming increasingly concerned about food quality, sustainability, and healthy habits, thus creating new opportunities in this space. Software solutions or apps that leverage AI, social networks, and DNA information to integrate the full cooking, buying, and calorie-counting experience can help address these challenges. For example, startups like Habit and Nutrino use AI and personalization to provide tailored diet plans to consumers, while MyFitnessPal help consumers track their daily calorie intake. The main challenge here is traction, engagement, and retainment in order to become successful.
In terms of investment, the whole VC space has seen less funding during the last year, and this was no different with FoodTech. However, we still see a lot of demand and government support for automation in the space. We do believe that the FoodTech scene can help solve many of the problems the industry faces right now, and we remain optimistic about investment opportunities. We believe that the companies that can deliver on the challenges discussed here, while providing value to consumers will be the most successful in the long run. By leveraging technology, we can create more efficient, sustainable, and profitable solutions that benefit all stakeholders in the food industry. Our goal is to identify and support startups that have the potential to drive positive change and deliver strong returns for our investors.
If you’re an early-stage FoodTech founder who is currently raising money, we encourage you to submit your company here. We love companies that offer unique ways to engage with customers and provide value that enriches their lives and contributes to a better world. Additionally, you can refer to this link for more information on what we seek in the next generation of Chingona founders.
