As two former entrepreneurs, we immediately realized that we need to bring up mental health — both among people in general, and entrepreneurs in particular. By anecdotal evidence, we already knew that it was a big problem not really being talked about, but while studying the topic we realized that far more entrepreneurs are affected than we anticipated.

A lot of people have reached out after the talk and we realize that we should share our actionable learnings not just with the people at the summit, but also to everyone else involved in the startup ecosystem.

TL;DR

• A quarter of all people globally will experience mental health issues at some point in their lives.
• Founders are running a much higher risk of suffering from conditions such as depression, substance abuse and bipolar disorder (but not anxiety!).
• Entrepreneurs and their startups would benefit from breaking the stigma around mental health and we all have to contribute to make it happen.
• Read our five commitments and think about what you can do.
• Share, and contribute to, our list of recommended founder coaches.

The invisible pain

When I was building my previous startup, as soon as someone asked “how are you doing?” I quickly replied “we’re doing great” before taking a brief pause to think about how to motivate it this time. “Yeah, we’re crushing it. Growing like crazy, launching in new markets, hiring top talent.”

If someone then would have stopped me said “no, sorry, I mean: seriously, how are you, Erik, doing?” I probably would have burst into tears, crying that one colleague had become an alcoholic, one was depressed, one was having panic attacks and I hadn’t seen my family for months.

But no one asked, so on the outside, we kept the shiny look while “crushing it”.

If you ask founders in your network, everyone is crushing it. Everyone is killing it. Everyone is putting on their shiny shoes.

But on the inside, they all have blisters, twisted toes and missing nails.

As a founder, you’re supposed to be a true visionary, a brave risk taker, a relentless executor, a charismatic leader, and you’re supposed to be a crazy genius. There are extremely few, if any, individuals who have all these qualities. Trying to fit all founders’ feet into a one-size-fits-all shoe simply won’t work.

Why are founders putting on their shiny shoes? Because they have to. They have to always be pitching, always be selling and always be recruiting.

Founders simply cannot afford to show weakness.

Hence, we can’t blame founders for putting on their painful ballet shoes. The music is already playing. The audience is expecting them to dance. If you don’t enter the stage and perform, you can just as well quit.

My old startup grew to about a hundred people in four countries before our exit. At that point, mental health was of course an unavoidable topic. Not to say that I think we had more issues than other startups, but any team with 20+ people are very likely to have to deal with mental health problems (as you will soon learn more about).

As an investor, I’ve had the privilege to work with perhaps a hundred talented founders from diverse backgrounds. All of them are truly unique in their own ways, but they also have many things in common: They’re visionary, they’re ambitious, they’re working hard, but they’re also humans. Humans who try to meet the expectations of the people around them, which is sometimes causing more harm than good.

Breaking the stigma

I’ve learnt over the years that mental health is not only the problem of the individual, but everyone around them is affected too, including the company they’re working on (no matter if they’re founders or employees). I’ve also learnt that the stigma around this topic is very much real and is in many cases preventing people from recovering.

In order to try to help fight the stigma and support individuals who try to break loose from their sufferings, we at Trellis Road have decided to start talking much more openly about mental health by bringing it up at conferences, writing about it and commit to support our founders in different ways (more about that later).

Mental health issues are common…

Let’s just first set the stage a bit. According to WHO:

• A quarter of all people in the world will be affected by mental health issues at some point in their lives.
• One in 20 adults globally suffers from depression.
• >700k families lose a family member to suicide every year.

But what are the ties to startups and founders? Well, it turns out that those numbers are even more depressing if you only look at entrepreneurs.

…especially among entrepreneurs

A few years ago, a professor of psychiatry, Michael A. Freeman, published the largest study to date relating to entrepreneurs’ mental health, titled “Are entrepreneurs touched with fire?”. Out of the hundreds of entrepreneurs that participated in the study, half of them were themselves having mental health conditions, and another 25% had family members with similar conditions. Only 25% were unaffected.

Now you may be thinking: no surprise founders are struggling with mental health, building a startup means a lot of pressure. No wonder one gets anxious from time to time.

It turns out though, that the number of people struggling with anxiety was actually NOT higher among the entrepreneurs than the control group. Here’s the interesting stuff:

• Entrepreneurs were 2x as likely to suffer from depression.
• Entrepreneurs were 3x as likely to suffer from substance abuse.
• Entrepreneurs were 6x as likely to suffer from ADHD.
• And — the most extreme: they were 11x as likely to suffer from bipolar disorder.

That is serious shit.

Another interesting finding is that even entrepreneurs who are themselves asymptomatic often come from families with lifetime mental health conditions:

• Half of the entrepreneurs come from a family with mental health issues, which is twice as common as for the control group.
• It’s eight times as common for entrepreneurs to come from highly symptomatic families (with three or more different conditions).
• And the saddest realization of them all: Entrepreneurs, as well as their family members, are almost three times as likely to be suicidal than others.

What can we do?

What does this tell us about the mental health of founders?

We know that founders are more depressed, they use more drugs, they’re more likely to be bipolar and suicidal. They rarely come from families without any mental health conditions.

We can’t say for sure if there is a causality or simply a correlation. However, because of the link between symptomatic families and their kids becoming entrepreneurs, it seems like there may be a causal effect where certain genetic or environmental factors related to mental health increase the chance of some people starting companies.

This is of course neither a good nor a bad thing in itself. It just is. But we all have a responsibility to avoid pushing vulnerable founders closer to the edge. Because that’s where it gets dangerous.

Our five commitments

Having established that all founders to some extent are struggling with the pressures related to building a startup, it seems clear that we would all benefit from a more open culture when it comes to these things. Obviously no one is benefitting from the charade of pretending that being a founder doesn’t come with these challenges. As investors, we also need to realize that this is something that ultimately affects the outcome of our investments as well.

It’s always easy to argue what others should do, but it’s typically harder to ask oneself: what can I do to change the situation for the better?

Me and my co-founder Anna sat down to have that conversation and landed in five concrete actions that we are hereby committing to going forward, and we’re encouraging you to think about what you can do.

Our five commitments:

1. Distinguish between founders and their startups

We will become better at separating “how are you doing” vs “how is your startup doing” and we need to understand that thriving startups doesn’t necessarily equal thriving founders, and vice versa.

When I was building my own startup I was lucky enough that we were doing great as a company, so I could use that as a proxy for the team’s success and could avoid talking about, or even acknowledging, that we had mental health issues in the team. In hindsight, that was of course a mistake.

2. Not contribute to the hustle porn culture

Alexis Ohanian is the husband of Serena Williams. He introduced the term hustle porn a few years ago when he spoke about the dangers of glorifying founder suffering. He knows what he’s talking about because he’s not just Serena Williams’ husband, he’s also one of the co-founders of Reddit and suffered depression while building Reddit.

I think all of us in the startup ecosystem are definitely guilty of some of this when we interact with founders. It’s easy to joke about founder pains, but going forward we will be more mindful of how we talk about these topics with founders.

3. Encourage founder wellbeing

I’m not saying that founders shouldn’t work hard, because they have to. But sleeping, eating, exercising, being social and taking a break every now and then will not only benefit the founders’ mental wellbeing, it will also serve the company they’re building.

4. Enable founders to create safe founder spaces

We understand that despite our good intentions, we as investors might not be able to provide that safe space that founders should have access to. In our experience, it’s very helpful for founders to have those contact points with other founders and we will continue to help our founders connect with each other to create these safe spaces.

5. Help founders get professional support

Founders who are suffering need professional help with their struggles, and pretending otherwise is irresponsible.

In the same way that we wouldn’t encourage someone with cancer to cure themselves by eating ginger and drinking green tea, we shouldn’t tell founders struggling with depression to take a walk and eat more vegetables. They should have access to professional help.

If you don’t have serious mental health issues, but instead want to get in touch with a mentor to support you as an entrepreneur, please take a look at our public list of coaches in this spreadsheet. It’s a first step where we have started collecting recommendations for coaches who regularly support founders. It’s a very early draft and work in progress, but please use it and add your own recommenced coaches to the list.

Don’t stop talking

We’re definitely no experts on mental health but we’ve seen it too many times firsthand to know that it’s important to give the topic more attention and break the stigma. In order to do that, more and more people need to bring it up, to normalize the topic.

Please reach out to me or my Trellis Road co-founder Anna if you have any ideas on how to take this conversation further, or simply just start talking and writing about it yourself, to help spread awareness and break the stigma.

The Dark Side of Founder DNA was originally published in Mudcake on Medium, where people are continuing the conversation by highlighting and responding to this story.

In the US alone, it’s estimated that some 79 million households are now seeking more plant-based food, a 61% increase from previous years; elsewhere in the world, where strong vegetarian traditions have existed for centuries, such as in India, the interest in plant-based foods is even higher, with 63% of Indians (some 869 million people), open to switching to plant-based proteins.

Usually, though, when we think of alt-protein, most of us imagine beef-free burgers and plant-based milk; for forward-thinking foodies, animal-free doesn’t stop there: enter chicken-free eggs.

TL;DR

• Plant-based proteins are on the rise, and egg is the fastest-growing plant-based category
• Chicken-free “eggs” are gaining popularity for a number of reasons, consumers’ concerns about the sustainability, ethics, and safety of the poultry industry, as well as their own individual dietary restrictions
• Presently, there are at least 40 startups working on chicken-free eggs, and probably a few more still in stealth more, in addition to a number of scaleups and corporate actors in the space
• There are many means of “hatching” alt eggs, but one way of distinguishing is between plant-based and biotech approaches;
• Challenges for alt-egg creators are recreating the functionality, nutritional value, and taste of one of the world’s most ubiquitous and versatile ingredients;
• Potential benefits of alt-eggs include revolutionizing the alternative protein industry by recreating a kitchen staple in a way that is sustainable and more inclusive of diverse dietary needs.

An egg a day keeps the doctor away?

The global egg market is huge, and with good reason. Eggs are among the most popular protein sources worldwide: the average American alone eats nearly 300 eggs a year (adding up to a grand total of some 1.14 billion eggs nationwide), which is still less than the average person in Japan, who consumes 320 eggs a year, or the average Paraguayan, eating 309 a year.

Long story short? People all over the world love eggs! And it’s no wonder: not only are eggs an excellent source of protein (and vitamins and minerals), they’re also versatile, with a range of uses in cooking and baking (not to mention the classics — scrambled, fried, or boiled).

…but at what cost?

Meeting this massive consumer demand, however, has come at a price: factory-farming in the poultry industry is notoriously problematic, raising concerns about ethics and sustainability both among producers and consumers; approximately 90% of the over one trillion eggs eaten each year across the globe are factory-farmed. Animal rights activists routinely cite animal welfare issues as a key concern, with chickens kept caged, in industrial and inhumane conditions.

Sustainability experts note that the carbon footprint of eggs isn’t exactly negligible either: some 2.7 kilograms of CO2 per dozen eggs (similar to the carbon footprint of milk and other dairy products). Still others are concerned about the safety of the actual eggs, with past outbreaks of poultry-related illnesses (such as avian flu and salmonella), which have decreased consumer confidence in the egg industry as a whole. And, finally, for a growing number of folks with dietary restrictions worldwide — vegans, people with egg allergies, folks on low-calorie, and low-cholesterol diets — regular chicken eggs just aren’t an option.

Enter alternative eggs

Food entrepreneurs and innovators have been working hard to create healthy, tasty, functional, and nutritious egg alternatives, which is no easy feat. Eggs are one of the hardest-working ingredients in the kitchen: they fluff, thicken, bind, emulsify rise, scramble, fry, and boil; if consumers are going to replace them, they want their alt-eggs to do the same (not to mention feel, taste, smell, look, and nourish like the ‘real’ deal, too).

Nevertheless, a few brave-hearted founders across the globe are intent on trying to recreate the classic fan favorite, without the chickens. The numbers are in their favor, too: at the moment, egg is the fastest-growing plant-based category, with sales surging nearly 200% from 2019 to 2020 alone; in 2021, the market was valued at 1.4 billion USD and is expected to reach 1.6 billion USD by 2027, growing at a CAGR of 6%.

According to our research, over 40 startups are presently hard at work trying to tap into that growing market (along with a pretty broad array of corporate and other non-startup actors, too). From a geographical standpoint, the United States, France, Germany, Israel, and Singapore are emerging as alt-egg hotspots, with over 28 alt-egg startups from those 5 countries.

The approaches can be boiled (pun intended) down into two broad camps: plant-based and biotech. The first category consists of low-tech approaches, utilizing plant-based alternatives to classic chicken eggs; the most common ingredients are legumes and pulses (e.g. chickpeas, peas, and lentils), beans (e.g. lupin, fava), nuts (e.g. almonds, cashews, and coconuts), and other plant-based alternatives (e.g. sunflower seeds, lemna, and algae).

Biotech approaches to hatching chicken-free eggs are more high-tech; the most common methods are cellular agriculture, precision fermentation, bio-engineering, and AI-backed ingredient informatics. The products themselves are just as varied: the alt-egg space consists of bakery & confectionary egg replacers (e.g. egg white alternatives, powdered egg replacers), condiments (e.g. mayonnaise, sauces), and direct replacements (e.g. liquid scramble & omelet mixes, hard-boiled ‘eggs,’ and even crackable, fryable, whole vegan ‘eggs’) designed with both the commercial and private consumer in mind.

First Movers

Eat Just, founded in 2011 in San Francisco, was one of the first companies to dive into the alt-egg space and is a clear market leader today. They’ve sold over 100 million alt-eggs as of 2021 and closed a $200 million funding round the same year. Their liquid egg substitute — made from mung bean protein — is designed to look and act like the ‘real deal,’ and can be used in the same ways as regular eggs (e.g. scrambled, fried, used for baking, etc.).

Spero Foods, another US-based market leader specializing in biotech and big data approaches to alternative proteins, launched their liquid egg substitute, Scramblit, in 2018. The ‘superfood’ liquid egg mix can be used to make omelets, scrambled eggs, and baked goods, and is made from squash and pumpkin seeds; it also definitely packs a punch: Scramblit contains 3x more protein, 8x more iron, 400x more fiber, and 2x more omega-3s than chicken eggs.

Other companies, like Finnish-based Onego Bio focus on more niche products, creating alternative egg-whites for the confectionary and baking industry from ‘bioalbumen,’ their proprietary chicken-free, fungi-based egg white protein; earlier this year, the company closed an $11.1 million USD seed round, and hope to be fully operational by 2023.

Pros vs. Cons

Like everything else, the alternative egg space comes with the good and the not-so good. Below are some of the main pros and cons of alt-eggs:

Pros:

• Sustainability (especially compared with factory-farmed chicken);
• Ethics (no chickens harmed in the process!);
• Consumer safety (no risk of avian flu, salmonella, or other issues that have been known to keep wary consumers away from ‘real’ eggs);
• Health (safe for consumers allergic to eggs, or those looking for low-calorie and low-cholesterol diets);
• Stable pricing (this is a particular concern for commercial consumers, because chicken egg prices experience bigger seasonal fluctuations).

Cons:

• Imitating both flavor and function is a challenge (including texture, look, nutritional values, and cooking functions like binding, fluffing, rising, etc.);
• Consumer buy-in may be difficult (especially relevant for high-tech approaches, where consumers may be more reluctant to eat lab-hatched eggs);
• Changing lifestyles is a challenge (chicken eggs are a fan favorite and a staple in most non-vegan kitchens, and, as we all know, old habits die hard, especially when the alternatives aren’t yet able to exactly recreate the full experience).

Conclusions

Overall, with a growing number of plant-based foodies globally and an ever-expanding group of forward-thinking founders rising to the challenge, it looks like alt-eggs are here to stay. Although consumer buy-in may be tough at first, perhaps the alt-egg industry may just have something for everyone: for the more reluctant foodies out there, a plethora of low-tech, plant-based options made with clean, ‘good for you’ ingredients may offer an easy transition into the world of alternative eggs; more adventurous food(tech)ies, on the other hand, might be eager to dive into biotech-hatched ‘eggs’ right away.

Moreover, consumer buy-in might be somewhat easier on the B2B market, and commercial consumers — already used to buying large quantities of egg mix, emulsifiers, egg whites, or other egg-products — may be the first to get on board. Firstly, worry-free storage goes a long way for chefs and restauranteurs that can rest easy knowing that there is no risk of their alt-eggs giving salmonella to a restaurant-full of brunch-goers. Secondly, the price stability of alt-eggs (compared with the seasonally-fluctuating ‘real deal’), make them particularly attractive for businesses and commercial customers. And, finally, for the growing number of vegan and plant-based restaurants out there, alt-eggs really make life a lot easier and simpler, meaning that chefs can recreate fan-favorite dishes without having to get too creative on their own when trying to come up with an alternative for the versatile, ubiquitous egg.

Ultimately, although it seems that no one company has fully ‘cracked’ the code of replicating the egg experience in its entirety, it’s certainly not for lack of trying. The growing number of foodtech founders and innovators striving to make alt-eggs a reality is just as promising as the growing number of plant-based foodies, and, although the alt-egg space hasn’t yet recreated the egg exactly, we can hope that, with such interest in the space, (just-like-chicken-)chicken-free eggs might just become a reality, sooner rather than later.

Table of Actors

Have a look at our full list of alt-egg startups, scaleups, and corporates.

Know a startup missing from this list? Please share it with us! You can write to us here: erik@trellisroad.com or anna@trellisroad.com

Additional Resources

• The Good Food Institute’s “Plant-based egg alternatives: Optimizing for functional properties and applications” (2021)
• The Good Food Institute’s “State of the Industry Report: Plant-based meat, eggs, seafood, and dairy” (2021)

Kudos

Huge thanks to Azra Tanović for helping out with preparing this post!

“Cracking” into the Chicken-Free Egg Space was originally published in Mudcake on Medium, where people are continuing the conversation by highlighting and responding to this story.

One could be cynical and say that most of the initiatives are largely driven by CSR greenwashing, and that they should take way more responsibility than they do. On the other hand, one could argue that all progress in the right direction is at least better than no progress and that even small actions by big corporations have a noticeable effect. Either way, we think it’s worthwhile to highlight some of the ways they are working with product development, public goals and pledges as well as other initiatives within these areas. We’re already covered how some of them are working with or investing in startups in this post.

The global alternative protein food market is set to reach $290B in 2035. Health is a key consumer concern, particularly in the wake of the pandemic, with one in four US consumers cutting back on meat in the past year. Sustainability, including food waste, carbon footprint and environmental impact, continues to be at the forefront of a lot of people’s minds, with 11% of consumers shifting their spending habits based on environmental claims and 83% considering the environment when making purchases. Corporates need to shape up their acts, and while investing in future-focused startups may be the right route for some, others are keeping things in-house.

We’ve delved into some of the biggest global corporations who are doing their own thing. As always, it’s a non-exhaustive list, so feel free to get in touch if we missed any.

Nestlé: dove straight into plant-based fish last year with its own brand of vegan tuna called Vuna. It took nine months to develop the product which contains just six ingredients: water, pea protein, wheat gluten, rapeseed oil, salt and a natural flavor blend. According to Ulf Mark Schneider, CEO of Nestlé, “It’s now one of the best-selling plant-based items in select European markets, and we’re still scaling it up and can’t make it fast enough”, and the firm intends to expand into other plant-based products. In December, it also launched its plant-based Harvest Gourmet range in China, marking its first plant-based foray into the country. Otherwise, having been named alongside Coca-Cola and PepsiCo as the top plastic polluters for the third year in a row in December, it also announced its plans to invest $3.58B to achieve net zero by 2050, including $1.34B which it will apportion to regenerative agriculture within its supply chain.

Coca-Cola European Partners: announced, shortly after the above ‘award’, a €250M investment to meet its target of attaining net-zero status by 2040, starting with a 30% reduction in greenhouse gases across its entire supply chain by 2030. It plans to engage with and set targets for its strategic suppliers across all areas of business, from ingredients to packaging. In fact, it just announced an upcoming trial of new paper-based bottles in Hungary, co-developed with Danish startup The Paper Bottle Company (Paboco), marking the first time it has launched bottles of its kind on the market.

PepsiCo: recently pledged to diminish its greenhouse emissions and reach net zero by 2040, a full decade earlier than the Paris Agreement demands, by focusing on agriculture, packaging, distribution and operations. It plans to scale its sustainable agriculture and regenerative practices, and manufacture with renewable energy where possible. Plus, it has committed to using recycled plastic for Pepsi brand beverage bottles by 2022, which will eliminate over 70,000 tons of virgin plastic per year and lower carbon emissions by 40%.

Unilever: set itself a ‘Future Foods’ ambition late last year, in line with Knorr & WWF’s Future 50 Foods report which outlines 50 plant-based foods which purport to have a lower impact on the environment — in terms of emissions, soil health, water use and yield — than animal products and most other plants. The corporate giant has set itself a new annual global sales target of €1 billion from plant-based meat and dairy alternatives, within the next five to seven years. While some of this growth will come from acquisitions such as The Vegetarian Butcher, some of it will come from plant-based product development within its existing well-known brands.

Danone: pledged, way back in 2018, to triple its plant-based food business by 2025. It’s doing this in part through acquisitions, such as its recent purchase of Earth Island, the company behind plant-based brand Follow Your Heart. However, it’s also working on its own product development and, in January, expanded its So Delicious Dairy Free range to include plant-based shredded and sliced cheeses, as well as creamy spreads, capitalizing on its cheese-making credentials to convince consumers, who may assume that plant-based cheeses taste inferior to dairy-based, to give them a try. It is also working on waste reduction, and in December partnered with Full Harvest, which rescues imperfect produce, to launch a yoghurt made from food which would otherwise have been wasted due to cosmetic imperfections, overproduction or a lack of secondary markets.

Müller: in December, Müller announced its plans to launch a program in the UK to help farmers improve their supply chain collaboration, herd health and sustainability, with an earning incentive for participants. In March, it is launching Müller Vegan, four products made with rice and coconut, to capitalize on the growth in the alternative dairy sector.

Marks & Spencer: the UK supermarket launched its very own ‘Innovation Hub’ in January to focus on ‘disruptive innovation’, part of its ambitious plans to respond to rising consumer demand for sustainable and healthy food choices, and which could give it an edge in the market. It is partnering with various startups and tech firms such as 3F BIO, whose mycoprotein technology will form part of a new vegan range, but has also assembled a crack team of colleagues to track emerging trends and insights, drive product development and address sustainability concerns. M&S has had its own plant-based range, Plant Kitchen, for a while, and reported in January that its New York Style No Beef Pretzel Roll was selling at a rate of two per minute.

Mondelez: its innovation hub has developed a French cracker brand, NoCOé, which it claims is both nutritious and carbon neutral. The crackers are made from plant-based ingredients that contribute to ‘dietary diversification’ and are nutritionally dense. The ingredients are locally-sourced and organic, to reduce their carbon footprint, and the product packaging is cardboard, to minimize its environmental impact. Any carbon emitted in production is measured, calculated and offset through buying carbon credits and planting trees.

Tesco: the UK’s largest supermarket chain announced its plans to target 300% growth in plant-based meat by 2025 in September. It is aiming to grow its plant-based offer through new product development, making its range more affordable and innovative to attract more consumers.

IKEA: the Swedish behemoth is not only known for affordable flat-pack furniture and bags of 100 tealights that are just irresistible, it is also one of the world’s largest food providers. In November, it committed to making 50% of its restaurant meals and 80% of its packaged food plant-based by 2025, to ensure its consumers can access affordable, sustainable and healthy foods.

Lidl US: launched a private label chocolate bar, made from 100% traceable and sustainable cocoa from Ghana, in December. The new chocolate bar contributes to a living income for cocoa farmers, as part of its plans to build a supportive and sustainable supply chain.

Walkers: is marrying beer with crisps to reduce the CO2 emissions from its manufacturing process by 70%. The firm’s technique involves capturing the CO2 from beer fermentation and mixing it with potato waste, then turning it into fertilizer and using it for next year’s crop.

Diageo: the booze giant has pledged to reach net zero carbon emissions, 100% recyclable or reusable/compostable packaging and 100% recycled content in plastic packaging by 2030. Moreover, it’s embracing new trends in low and no alcohol with the launch of an alcohol-free version of Guinness in October, after a four year development process, and a new alcohol-free Tanqueray gin this past week. And, earlier in February it introduced Baileys Deliciously Light, made with 40% less sugar and calories than its Original Irish Cream, backing the trend for healthier versions of consumer favorites.

13 Corporates Responding to Consumers’ Climate Concerns was originally published in Mudcake on Medium, where people are continuing the conversation by highlighting and responding to this story.

Recently, we covered eight of the most interesting high-impact foodtech ecosystems globally, in the hope of helping any startups who may be considering moving in order to progress their ideas and grow their business. From researching that post, as well as our daily interactions with high-impact foodtech startups, it’s evident that exciting developments are happening all over the world. Therefore we decided to delve deeper into an additional eight of the up-and-coming regions. Again, it’s not an exhaustive list, so feel free to send us details of any more we should think about.

South Africa

While not strictly focused on foodtech, the South African Innovation Summit is the largest startup event in Africa and takes place in September to showcase and support top entrepreneurs across the continent.

There are a couple of options for investment in South Africa, including:

• OceanHub Africa — for innovative impact-driven startups focused on protecting our oceans. The program provides startups with a workspace and a pretty swanky software and engineering support package, alongside mentorship and access to market leads.
• One Bio — this seed investment fund invests in early-stage biotech startups. Speed to market is critical, so startups need a prototype or form of IP which can be translated to a marketable product as quickly as possible. The fund allocates 85% of its resources to South Africa and 15% to the rest of Africa. It considers applications year-round. Typical investment size $30k — $1.2M, based on the achievement of defined milestones.

In terms of existing companies working hard to change the world: Mzansi Meat is Africa’s first cell-based meat startup, with a focus on developing products which are specifically tailored for traditional African dishes such as braai, and Aerobotics provides intelligent tools to the world’s agriculture industry, and raised $17M in an oversubscribed Series B round in January.

Brazil

The alternative protein market is on fire right now, and Latin America is no exception to the trend. Brazil is the world’s third largest consumer and second largest producer of beef, so a plant-based shift in Brazil alone would see an enormous impact on the meat industry. There are plenty of local startups focused on the future of food, and Brazil is starting to set itself up to support them. With a gross domestic product of around $3.46T in 2019, Brazil is by far the largest economy in Latin America and the eighth largest in the world. Two of its universities, University of Campinas and University of São Paulo both have courses and facilities for students and startups interested in food technology. Plus, there are a couple of programs to support growth:

• FoodTECH HUB — this program has a rigorous, five step selection process, but it has a variety of programs for all aspects of the foodtech industry. Its four month startup program provides mentorship as well as access to the best venture capital funds in Brazil and abroad, alongside access to national and international events. You can register your interest at any point.
• The Yield Lab LatAm — an accelerator program designed to leverage the agriculture assets unique to Latin America, whose fund will invest up to $100,000 into early stage technology companies that sustainably revolutionize agrifood systems globally.

Startups to watch include The New Butchers, Fazenda Futuro and 100 Foods who produce plant-based alternatives to animal products.

Australia

Australia is a pretty unique proposition for startups. Its relatively small population is clustered around some very specific hotspots, and the rest of the country is sprawling and largely empty other than farmland. That being said, in recent years there have been several startups making a difference within sustainable technology, and three of its universities are top rated for food and nutritional sciences: University of Melbourne, University of Queensland and University of New South Wales.

There are a few options for investment in Australia:

• Cicada GrowLab — this incubation program provides mentors and facilities for anyone using deep tech to address human and planetary needs, from climate change to food waste, antimicrobial resistance and dwindling natural resources.
• Lion’s Unleashed — this twelve week accelerator gives startups the opportunity to collaborate with one of the region’s largest food and beverage companies, with unique insight into Lion and its customers. Typical investment size: up to AUD$150k, but selected startups can access up to a further AUD$500k from program partners.
• SproutX — Australia’s leading Food and Agtech Accelerator, empowering founders to build world-class agricultural technologies which will have a positive impact in the lives of producers and consumers. Typical investment size: AUD$40k in exchange for 5% of equity.
• SparkLabs Cultiv8 — a mentorship program designed to help Australian startups meet the increasing needs of Asian consumers. Applications for its 2021 program are open now. Typical investment size: up to AUD $100k.

Five Aussie startups made the shortlist for Rabobank’s FoodBytes! Virtual Pitch for 2020, including I Am Grounded from Queensland, a social enterprise which upcycles discarded coffee fruit into sustainable snack products, and Carapac from New South Wales, which makes durable, home-compostable packaging from crustacean shells. Plus, v2food is Australia’s number one plant-based meat brand, currently expanding its range to include new plant-based sausages and partnering with Burger King Korea to add two new plant-based versions of its famous Whopper to its menu across all 240 of its locations.

China

China has the world’s largest population and is the world’s largest food producer, so is actively encouraging startups to bring new ideas to solve global food safety and nutrition issues. It has a number of educational institutions focused on the food of tomorrow: Jiangnan University is ranked as best in the world for foodtech, and South China University of Technology, Zhejiang University and China Agricultural University aren’t far behind. Chinese startups are primarily focused on alternative protein, and this is reflected in its accelerator and funding options:

• Bits x Bites — China’s pioneer foodtech venture capital firm, investing across the supply chain, from agriculture, production and distribution to retail.
• Dao Foods — this accelerator’s Venture Fund 1 plans to support and invest in 30 alternative protein companies over the next three years. It invests 500,000 RMB in each company in a bid to increase the velocity of quality alternative protein development in China, which it views as a ‘huge business opportunity with massive social impact.’ Typical investment size: $75k.
• Lever China Alternative Protein Fund — early investors in Beyond Meat and Impossible Foods, recently completed its first five investments in pioneering early-stage plant-based and cell-cultivated meat companies in China.

Shanghai-based Hero Protein (disclosure: we’re investors) is the latest of China’s plant-based meat startups, and several of its products are particularly suited for classic Chinese cuisine. Plus, cultivated meat startup Joe’s Future Food raised 20M RMB ($3M) in January from angel investment to accelerate R&D of its cell-based minced pork product, which is China’s first.

France

La France, one of the gourmet capitals of the world, is home to a plethora of facilities for food and agritech-focused startups. The University of Lyon is listed as one of the premier universities for foodtech in Europe, with research facilities dedicated to the future of food. The French government is not currently very supportive of cultivated meat, but some French Big Food companies are getting behind the trend of alternative protein, so things could be about to change.

There are several work spaces and accelerator programs that startups can access:

• Food’Inn Lab — the aim of this incubator is to create more links between research teams, students and entrepreneurs of AgroParisTech, with office space, labs and test kitchens provided.
• Le Village by CA — France’s premier accelerator, it provides a network of support, creating links between startups and national businesses, to further innovation and create employment.
• ShakeUpFactory — based in the world’s biggest startup campus, Station F, it’s a six month accelerator program designed to help startups scale their companies. It’s taking applications now so sign up to get involved.
• ToasterLAB — focused on agtech, with 12 months of personalised acceleration support, plus free office space and accommodation during the intensive phase (2–3 months), based in Dijon. It costs €6k to join, but you don’t have to sacrifice any equity.

Alongside these, there are venture capital firms interested in impact-driven startups:

• Angelor Capitale — angel group seeking to invest in the foodtech, health and greentech sectors, with a food-specific syndicate.
• CapAgro — the first European venture capital fund dedicated to agtech and foodtech, with an ambition to be the leading investment fund for maximising sustainable value creation across the entire agrifood value chain.
• Five Seasons — investing in product and process innovation aimed at solving the global challenges of the food industry, such as agricultural yield and food waste.
• Seventure Partners — primarily dedicated to life sciences, including human and animal nutrition, alongside digital technologies.

Notable high-impact foodtech startups from France include Ÿnsect, which raised another $224M in October 2020 to commercialise the world’s most high-tech bug colony. Its vertical farms are raising insects for protein, currently used to supply fish farms, but which it plans to make available as an alternative protein source for humans. Plus, cell-based startup Gourmey is working on cultivated, cruelty-free foie gras. Bien sûr.

Spain

Spain is becoming a major foodtech player in Europe and globally, with a growing ecosystem of startups and investors. According to this report by Forward Fooding, €235M was invested in Spanish foodtech startups 2010–2018, and another €400M in 2019 (out of which €336M was invested in Glovo). The report helpfully lists out some of the active investors in the sector, which includes Food Business Angels, a network of private investors, promoted by Eatable Adventures, which aims to boost investment activity in startups within catering, food, beverages and technological services.

Startups in Spain can access the following research facilities and innovation hubs:

• Eatable Adventures — it was the first food entrepreneurship community, first European early-stage food investment network, and has worked with over 25,000 startups and over 500 projects each year since its inception. Its accelerator program takes four months, is intensive and hands on, and connects startups with its international mentor network.
• The Food & FoodTech Innovation Hub — Barcelona’s first shared workspace dedicated to the most avant-garde food and foodtech companies in Spain, powered by Forward Fooding in Partnership with Talent Garden to connect and engage entrepreneurs. Applications are always open.
• Fishing Tech — connecting the experience and contacts of leading companies in the fishing industry with innovative technology startups and companies around the world. Applications are open now, and there are zero equity requirements.
• Ivoro — primarily an innovation hub, though did hold an accelerator in 2017. Successful applicants can use its Lab Kitchen to further develop and fully test concepts, and you can register your interest at any time. Typical investment size: $150k.

Spanish startups making waves include plant-based meat brand Heura Foods, which tripled its turnover through the pandemic and sparked controversy with a giant billboard in Madrid late last year which claimed that “one beef burger pollutes more than your car”. BioTech Foods’ brand, Ethicameat, is developing a range of cultured meat products which are high in protein, fat-free and antibiotic-free. Eco startup Feltwood is making packaging materials from farming and vegetable waste that is not suitable for human consumption.

Sweden

A few years ago, the Swedish government released a national food strategy to produce food more sustainably, including the allocation of more capital into food and agriculture innovation. Since then, Sweden’s foodtech space has blossomed, and its very own SLU is ranked as the world’s third best agricultural university. Also, Lund University and KTH Royal Institute of Technology in Stockholm are some of the top-rated universities in Europe. Plus, there are a couple of options for startup accelerators:

• Norrsken Impact Accelerator — a brand new 8-week program for 2021, bringing together a global collective of entrepreneurs and investors in Stockholm to solve some of our planet’s greatest challenges. Typical investment size: $100k in exchange for 5% equity.
• PINC — focused on the Nordics but also open to Europe, this incubator offers attractive financing opportunities alongside its mentoring strengths borne of 145 years in the industry. It’s always looking to connect with startups. Typical investment size: up to $2M.
• +impact, a Nordic initiative by Danske Bank to accelerate early-stage impact startups. Usually the accelerator focuses on circular economy startups but the spring 2021 batch has a foodtech focus. It’s free for startups, and equity-free.

Alongside these, there are many investors seeking impact-driven startups:

• Kale United — looking for ‘plant-based game changers’ to improve the availability of plant-based products and make the transition to a plant-based lifestyle as easy as possible.
• KTH Innovation — helping researchers and students at KTH to commercialize their research results and business ideas.
• Martas Explorers — a privately-owned investment group investing in early stage startups in environmentally, financially and socially sustainable companies in the Nordic region.
• Nicoya — a VC focusing on strong consumer food brands.
• Norrsken VC — a venture capital fund worth $100M focused on social tech entrepreneurship, supporting early stage impact startups to generate strong financial returns.
• Otiva — a Stockholm-based investment firm undertaking series A to late growth funding cycles in foodtech businesses.
• Pale Blue Dot — a climate tech focused pre-seed and seed stage vc.
• Vinnova — a Swedish government agency working under the Ministry of Enterprise, providing funds for R&D within greentech and foodtech.
• Trellis Road — well, whilst having a global outlook we call Sweden our home, so we couldn’t finish this list without mentioning ourselves :)

Sweden is obviously home to Oatly, which raised $200M last year and is now seeking a valuation of $10Bn in their upcoming IPO. Also, Nick’s recently raised $30M for their low-sugar ice-cream. Another Swedish startup, Matsmart, has over the years raised almost $50M for their soon-to-expire online groceries business. There are also plenty of up-and-coming Swedish startups working hard to change the world, and here’s a handy list of ten to watch in 2021.

US — Chicago

The windy city has stiff competition in the US (we covered the East and West Coast hubs in our previous post), but it has been a pioneer, from having the first skyscraper in 1884, to reversing the flow of the Chicago River in 1900 and being the start of the historic Route 66, so no surprise that startups here are finding their feet (and plenty of investment). Plus, it’s home to The University of Chicago, which hosts a tonne of research facilities for future-focused businesses.

There’s a small selection of programs designed to give startups a boost:

• The Food Foundry — an accelerator program designed to support, connect and propel innovative startups who are reimagining the food industry, providing investment, office space and administrative support. Applications to be part of its next cohort are open now. Typical investment size: $75k in exchange for 3% equity.
• The Hatchery — a startup community space, where tech companies can use the state-of-the-art kitchen facilities plus access courses and events, networking opportunities, financing and mentorship. It takes applications constantly, so why not sign up to be considered?
• IFT — a forum for passionate food professionals and students to collaborate, learn, and contribute to strengthening the important role food science and technology plays in advancing our global food system.

And plenty of investment options:

• ADM Ventures — the venture arm of Archer Daniels Midland, one of the world’s largest food commodities, processing companies, and supplier of plant based protein ingredients.
• Bluestein Ventures — looking for seed and series A startups in the food and retail industry, to invest across the value chain.
• Cleveland Avenue — founded by a former Mcdonald’s CEO, investing technologies designed for foodservice and hospitality.
• Cultivian Sandbox — investing in innovative food and agriculture technology companies who are commercializing the necessary solutions to increase food production, reduce inputs and increase sustainability.
• Germin8 Ventures — supporting transformative food and agriculture technology to drive a 21st century food system upgrade.
• GreenLeaf Foods — a wholly owned, independent subsidiary of Maple Leaf Foods Inc, committed to shaping the future of plant-based foods.
• Litani Ventures — looking for businesses that bring valued novelty to market within the foodtech and agritech sectors.
• S2G Ventures — backing entrepreneurs who are working to disrupt the food system across the supply chain, to meet consumer demands for more nutritious, sustainable, and traceable food.

Chicago is home to many foodtech startups, including fermentation tech Nature’s Fynd, which recently pre-released its Breakfast Bundle made with its proprietary nutritional fungi protein called Fy, and sold out in less than 24 hours. Other Chicago foodtech startups is Farmer’s Fridge, selling plant-focused meals and snacks via automated vending machines. And of course, Chicago is the home of restaurant marketplace giant Grubhub acquired by Just Eat Takeaway for $7.3Bn last year.

Sources

• https://collegelearners.com/best-universities-for-food-science-in-europe/
• https://siliconcanals.com/news/fastest-growing-food-tech-startups-in-france/
• https://www.digitalfoodlab.com/french-foodtech-top25/
• https://forwardfooding.com/blog/foodtech-trends-and-insights/the-2020-spanish-food-tech-ecosystem-report-is-out/
• https://www.euronews.com/2020/09/18/5-startups-that-are-changing-the-food-tech-landscape-in-spain
• https://www.foodhack.global/articles/10-swedish-foodtech-startups-to-watch-in-2020
• https://www.startupgrind.com/blog/why-startups-should-join-the-chinese-food-tech-revolution/
• https://www.timeshighereducation.com/student/best-universities/best-universities-chicago
• https://www.foodanddrinkbusiness.com.au/news/aussie-start-ups-go-global-with-sustainable-solutions
• https://ventureburn.com/2020/01/accelerators-incubators-african-startups-2/
• https://tracxn.com/explore/Food-Tech-Startups-in-Brazil

Where to Start Your Foodtech Startup — Part III was originally published in Mudcake on Medium, where people are continuing the conversation by highlighting and responding to this story.

To us, and probably to the general public as well, the developments of fish-free fish products have been overshadowed but the buzz around animal-free beef, chicken and pork with players such as plant-based Impossible Foods and Beyond Meat, and lab-grown meat pioneers Memphis Meats, JUST, Mosa Meat and others.

During the last few weeks we’ve come across a surprisingly high number of animal-free seafood startups. We started asking around and realized that quite a lot is happening in the space, all over the world. To help people interested in the space, we thought it makes sense to share what we’ve found so far.

We list all innovative startups we’ve come across, except for a couple of companies still in stealth mode. Also, to limit the scope a bit, we here only cover startups focused on animal-free seafood and their brands, i.e. we exclude:

• corporates, even though they’re working on products competing with some of these startups (e.g. Vuna, Nestlé’s plant-based tuna),
• companies simply importing products for local rebranding,
• general plant-based companies not focusing on seafood (but who may still have a few such products),
• fish companies not mainly focusing on fish-free alternatives,
• startups who folded or paused operations.

To give you a better overview, we’ve segmented them by geography and technology (very broadly defined as plant-based vs. cultivated).

In alphabetic order:

• Avant Meats (Hong Kong) — targeting Chinese consumers with seafood delicacies produced from cultivated cells.
• Betterfish (Germany) — canned tuna from macroalgae, from the team behind Nordic Oceanfruit.
• BlueNalu (US) — growing fish meat and other seafood products in a lab, $25M funding.
• Bluu Biosciences (Germany) — Europe’s first cultivated seafood company.
• By2048 (Canada) — Smoked and poké salmon made from carrots.
• Cell Ag Tech (Canada) — also trying to cultivate fish meat from stem cells.
• Finless Foods (US) — with almost $4M in funding, trying to cultivate bluefin tuna.
• Good Catch (US) — the perhaps most well-known alternative seafood startup with $45M in funding.
• Hooked (Sweden) — developing plant-based shredded tuna, and salmon.
• IMA (UK) — a vegan sushi company focusing on salmon sashimi.
• Kuleana (US) — aiming at plant-based sushi-grade raw tuna.
• Legendary Vish (Austria) — 3D printing of plant-based salmon.
• LIKE Foods (China) — cultivated seafood (in stealth mode, but agreed to be named on this list).
• Mimic Seafood (Spain) — using a special tomato species to create tuna.
• New Wave Foods (US) — shrimp made from seaweed and other plants.
• Novish (Netherlands) — focusing on coated fish products like sticks and burgers.
• Ocean Hugger Foods (US) — plant-based salmon and tuna sushi, selling mainly through restaurants.
• Odontella (France) — smoked salmon made from marine algae and microalgae.
• Open Meals (Japan) — 3D printed plant-based sushi cubes.
• Prime Roots (US) — first product is bacon but soon launching several plant-based seafood (formerly called Terramino Foods).
• Save da Sea (Canada)— plant-based smoked salmon.
• Shiok Meats (Singapore) — cultivated shrimp meat, $7M+ in funding.
• Sophie’s Kitchen (US) — gourmet vegan mixed seafood, available in US supermarkets.
• The Plant Based Seafood Co (US) — self-explanatory.
• Tofuna Fysh (US) — tuna spread and sauces made from jackfruit and seaweed.
• Vegan Zeastar (Netherlands) — a brand by Vegan XL, already on the market with plant-based tuna and salmon sashimi
• Wild Type (US) — growing salmon in the lab with $16M funding.

Which other innovative startups did we miss?

Further Reading

If you want to dive further into the ocean of animal-free seafood, don’t miss:

• Good Food Institute’s Sustainable Seafood Initiative
• PISCES, also from GFI, which is a tool to support research and development within plant-based seafood
• Third an final GFI recommendation: their newsletter Turning the Tide
• next.fish’s newsletter
• S2G Ventures who recently announced a $100M ocean fund
• Hatch, an accelerator with offices in Hawaii, Norway and Singapore
• Katapult Ocean, a Norway-based accelerator

Edit Nov. 20, 2020: Moved the By2048 logotype to the plant-based section in the graph. Thanks to Sonalie Figueiras at Green Queen for pointing out this mistake, and for reposting this article.

Fish(ish) Startup Landscape was originally published in Mudcake on Medium, where people are continuing the conversation by highlighting and responding to this story.

My Trellis Road co-founder Anna Ottosson recently published a summary of the European investment landscape for foodtech and agtech startups. Since then we’ve been wondering how Europe compares to other regions in terms of funding, exits, academia, regulations etc. What are the pros and cons of starting a foodtech startup in Stockholm, Shanghai or New York?

Since we started digging into the global foodtech and agtech landscape a couple of months ago we’ve been fortunate enough to speak to hundreds of experienced individuals in the foodtech space — investors, journalists, seasoned entrepreneurs, researchers etc. — who have been kind enough to share their perspectives on the regional differences. Combining these insights with available data, we will now try to share what we’ve learned so far.

While we can’t accurately predict the future (yet), we’ve found quite a few regional trends, strengths and weaknesses worth highlighting. In this post, we will cover five areas: funding, exits, academia and how regional regulations and eating habits affect the foodtech scene.

In a future post, part II, we will also discuss the must-know regional foodtech players: investors, incubators, accelerators, corporates etc.

TL;DR

• US dominates foodtech investments with 44% of all invested capital. That’s more than Europe (17%), China (18%) and Southeast Asia (2%) combined. [1, 2, 3, 4]
• Globally, investments in foodtech went down by 5% last year [1], but invested capital in Europe grew by 70% [2].
• Foodtech is heavily overrepresented in Europe. Within foodtech, Europe represents 17.2% of global capital, compared to 11.9% in other industries. This effect is even more pronounced on seed level. [2, 5, 7]
• China had significantly less foodtech investments in 2019 compared to 2018 (-38%), a drop explained by significantly smaller series D+ rounds. Big late-stage deals can still happen in China but there is a lack of seed funding. [3]
• Except for the ongoing consolidation in restaurant marketplaces, the M&A landscape is still immature in all geographies with only six(!) disclosed deals with values north of $50M, in addition to the Beyond Meat grand IPO. [1]
• The strongest agricultural universities are European. On the top five list, four are European and only one is American. The top Chinese university is ranked #10. [10]
• Regulations are generally considered acceptable, except in Europe where “new food” (incl. GMO) limitations from the European Union acts as a wet blanket.

Also see the conclusion for a discussion on where to start your startup.

Funding

Definitions of foodtech and agtech varies in different sources, so in this post we decided to stick to AgFunder definitions. Using the same definition and data collection methods in all geographies makes comparisons rather robust, even if we wouldn’t bet our farm on the absolute numbers.

At a high level:

• The global trend in foodtech investments has been clear: more and more money is invested in foodtech. 2018 was an exceptional year, mainly due to a few huge pre-IPO Chinese funding rounds. In 2019 was also great but total invested capital decreased by 5%, to $19.8B. [1]

• US is dominant in foodtech funding. Out of the total $19.8B, 44% went to US companies [1] while only 17% was invested in Europe [2], 18% in China [3] and only 2% in Southeast Asia [4].

However, these snapshots don’t describe the power balance between the ecosystems. To put the numbers into context, consider the following aspects of the different markets.

Europe

• Looking at overall startup investments across all industries, 12% of funding went to Europe. [5, 7] Within foodtech, this number is a whopping 40% higher, at 17%. [2] Europe is much more foodtech focused than US, China or Southeast Asia.

• Narrowing even more down on the early-stage foodtech landscape: 28% of foodtech seed funding went to European startups [1, 2], underlining the remarkably strong focus on European seed stage foodtech funding.
• Investments in European foodtech grew by 70% to $3.4B, a staggering growth from an already all-time high of $2B in 2018. [2] Even disregarding Deliveroo’s $575M Series G round, last year goes to the history books with a massive funding record.

China

• China is the clear #2 country in the world in terms of foodtech investments with 18% of total capital 2019. [3] This is on par with China’s share of overall startup funding. [8]
• 2018 was an exceptional year for Chinese foodtech investments, with two $1B+ pre-IPO rounds in Meituan Dianping and Haidilao, so it’s no surprise that investments decreased. Compared to 2017 investment levels, 2019 saw a 100% increase though. [3]
• The Chinese pattern in terms of stage focus is very different from Europe’s. Chinese rounds are typically fewer but larger, with more emphasis on late-stage rounds. [1, 3] AgFunder, with their partner Chinese foodtech VC Bits x Bites, only found 69 seed deals in China 2019, corresponding to 6% of global foodtech seed rounds, compared to Europe’s 263 seed deals. [2, 3]

• On the other hand, China had more series A and series B rounds, and those rounds were also significantly larger than the European counterparts. [2, 3]
• Based on this data, I believe that the relatively unified Chinese market, with a huge number of consumers with high purchasing power, poses an excellent opportunity for stellar teams with great ambitions. If you can navigate the Chinese market you can raise significant series A+ rounds (as seen in the data). Since seed money is scarcer, you may need to find an alternative path to get to the A round.

US

• Still the clear #1 in most things foodtech. With 44% of all foodtech capital, 35% of all deals [1] and the home of most foodtech M&A (see below), no one can really say that the US is threatened in its leading role.
• Most US foodtech funding goes to California ($4.9B). Excluding California, the rest of the US ($3.8B) is similar to Europe and China in terms of funding activity. [1, 2, 3]
• All the major accelerator funds investing in foodtech (but not necessarily foodtech specific) are US based: SOSV, Y Combinator, 500 Startups with more than 30(!) foodtech investments each last year. [1]

• Most international media focusing on foodtech investments (and other food and agriculture news companies) are US based, reinforcing the US as the global foodtech epicenter.

Southeast Asia

• We must admit that we were surprised by the low amount of funding activities in Southeast Asia, given all the activity we’ve heard about, including accelerators and anecdotal (obviously) funding rounds.
• Southeast Asia represents 5% of all foodtech deals, but only 2% of the capital, partly explained by the lack of large late-stage funding. At seed stage though, 5% of global capital ($39M) is invested in Southeast Asia. [4]
• Investments grew by 33% from 2018 to 2019, but still “only” sums up to $423M in 2019. [4]

Exits

M&A activities are generally hard to track as many acquirers don’t want to disclose the price tag, but this is not unique for foodtech. To make sense of the data, you have to compare sectors and/or years.

Let’s say it out loud: except for the Beyond Meat IPO, 2019 was a disappointment, even within the M&A (and investment) outlier: restaurant marketplaces. This sector has been driving foodtech M&A since early 2010s. I started my own restaurant marketplace business in 2005, exited 2012 and have ever since followed the M&A activities in the space with great interest, both as an entrepreneur but also as an investor in Delivery Hero (disclaimer: I’m still a shareholder). Still these years, consolidation is more active than ever. Even though we didn’t see any mega deals closing 2019, the top two foodtech acquisitions in 2019 were in restaurant marketplaces, both in the US (DoorDash acquired Caviar from Square for $410M and Waitr acquired Bite Squad for $321M). [1]

Counting all disclosed foodtech and farm tech M&A deals worth $50M or more in 2019, five were within restaurant marketplaces (jointly worth $1B+) and six were in other sectors (almost the same aggregated value). [1] Almost all the major M&A deals happened in the US last year.

In terms of IPOs, as far se we can tell, only two significant foodtech IPOs took place last year, both in the US; Beyond Meat (US) and Precision BioSciences (US) both listed on NASDAQ. [1] We’ve previously mainly seen significant IPOs from restaurant marketplace companies, e.g. Delivery Hero (Europe), Just Eat (Europe), Takeaway.com (Europe) and Grubhub (US), so seeing a US alternative protein frontrunner do a successful IPO was refreshing.

Both 2018 and Q1+Q2 2020 [2] saw significantly bigger M&A deals than 2019, and also a completely different geographic focus with European companies in the spotlight. In 2018, Merck’s acquisition of French Antelliq for $2.4B was enough to exceed 2019’s aggregated exit proceeds. In January this year, Dutch Takeaway.com acquired/merged with British Just Eat (for $7.8M) and US Grubhub ($7.3M), which is more than enough to set out 2020 to be a record year in terms of foodtech M&A in Europe and globally. In addition, we have already seen at least four more $50M+ deals in Europe this year (Glycom, Lily’s Kitchen, Gastrofix and Frisco). I may have missed one or two.

Academia

Some US universities have great brand names (Stanford, Harvard, MIT, Berkeley, etc.) and US does dominate most university rankings, usually with at least the #1 position and at least three universities on the top 5 list. This holds true for engineering and technology, life sciences and medicine, natural sciences and social sciences. [10]

However, the world’s number one university in agriculture and forestry is Wageningen in the Netherlands. Out of the top five universities, four are European and only one from the US. [10]

The best Chinese ag university (China Agricultural University) is ranked 10 and the highest-ranked non-Europe/US/China universities are Canadian University of British Columbia (#16) and the Australian University of Queensland (#17). [10]

What does this mean? In combination with the strong seed funding in Europe, I think this can be interpreted as a strong indication that Europe has some of the most important the building blocks for challenging US on the #1 position within agtech.

Regulations

Talking to entrepreneurs, investors and community builders globally, it seems like there is actually some consensus on how regulations are affecting different regions.

It’s obvious that the EU non-GMO approach is making it harder for EU startups to go the GMO way. While there are lots of considerations going into a startup’s decision of choosing the GMO path, we can’t avoid mentioning some anecdotal evidence: The leading European cultivated meat company, Mosa Meat, chose the non-modified stem cell approach to cultivated beef, while the leading US counterpart, Memphis Meats, seems to settle for genetically modified stem cells. The jury is still out on whether these regulations will benefit European companies long-term by giving them some protection and time to grow.

All “new food” in Europe is subject to extensive, case-by-case, science-based food evaluation. Entrepreneurs and investors are not very enthusiastic.

The anti-GMO attitude of European regulators is quite new. In fact, compared to the US, Europe didn’t have any strict GMO regulations at all. Not until a few events in the late 1990s, and when EFSA was founded in 2002, did EU start regulating GMO strictly. Since then, all “new food” in Europe (including all GMOs and irradiated food) are subject to extensive, case-by-case, science-based food evaluation. [11] Generally, entrepreneurs and investors are not very enthusiastic about pursuing EFSA’s evaluation process.

In contrast, in the US, FDA and USDA announced almost two years ago that they will be working together to enable cultivated meat to reach the market. Even though the speed and willingness of the authorities’ engagement have been questioned, the general attitude among foodtech actors is that US regulations are not that bad. As a US-based foodtech investor told me, regarding a European company choosing the GMO path:

“If you’re going GMO, you’re going to US.”

In China, the EFSA and FDA counterpart NMPA was created not long ago by a consolidation of several different authorities. Food safety has risen as a general concern in China. For example, in 2007, the former head of SFDA (the NMPA predecessor), was executed by lethal injection for taking bribes from various firms in exchange for state licenses related to product safety. [12] We still haven’t collected enough experience regarding the NMPA to give you a clear opinion on foodtech regulations in China, but the attitude among a few global investors (who have invested in Chinese foodtech companies) is that, while the NMPA is not considered very predictable, for most startups, Chinese regulations likely will be even less of an issue compared to the US and Europe.

As an illustrative example, naming meat alternatives can be a challenge for startups. In Europe, this has triggered a conflict as we wrote about in our latest newsletter. In the US, most states are quite liberal while others are stricter. In China, naming is more liberal with terms like “vegetarian chicken” already established.

Eating Habits

As a foodtech entrepreneur or investor it’s risky business to make far-going assumptions about different consumers’ eating habits. Assuming that all Americans love hamburgers, that French people eat duck liver or that Chinese consumers crave for insects is a recipe for disaster in your expansion plans.

That doesn’t mean you should ignore the topic. On the contrary, a nuanced and data-informed picture of how different regions’ food cultures differ can be crucial to understanding where to start your business, or what markets to target.

This post is not the place to dig into the diets of all Chinese provinces, US states and European countries. We do think it’s worth highlighting, however, a few things that can serve as reminders of how important it is not to make ungrounded assumptions on this topic:

• US, Argentina, Australia and European countries are highly ranked in terms of meat consumption per capita, but the picture is not black and white. For example, the average Chinese consumer eats more meat than a Slovak, and Mongolians consume more meat per person than almost all Western Europeans.
• Eating insects is not a new thing. FAO estimates that about two billion people, mainly in Asia, Africa and Latin America, eat insects every day. It’s more exotic being an American eating a hamburger.
• You may think that France — the home of croissants and baguettes — is the top bread eating country in the world? With 50 kg bread per person and year, they’re not even on the upper half in Europe and nowhere near Chile’s 86 kg or Turkey’s 150 kg. Surprised? That’s okay, as long as you don’t use similar assumptions in your business decisions.

• Also, don’t allow yourself to be misled by making extrapolations from unusual foods lists on the internet, compiled to disgust readers and spread virally. It’s not like all Chinese eat dog meat, Americans eat alligator sausage or Swedes eat fermented fish.

Conclusion

If you’re about to start a foodtech startup and have the luxury to be able to pick and choose where to start it, we think it’s worth considering the following:

It may be obvious but it’s still worth mentioning: The data published here is not a prediction of what the foodtech scene will look like in a few years. The reason why there is much more funding going into US startups may not be (only) because it’s easier to attract funding in the US, but because there are more startups in the US checking investors’ boxes. A strong startup may have an almost as easy time raising money in Singapore as in Berlin or Boston.

In part II in this series, we will cover foodtech incubators, accelerators, corporates and other organizations and their geographical distribution. Stay tuned.

Sources

Foodtech investment data comes from AgFunder (we love AgFunder, but may we call for a naming convention of future reports? 😊):

[1] Global and US 2019: Agri-FoodTech Investing Report — 2019
[2] Europe 2019: 2020 European Agri-FoodTech Investment Report
[3] China 2019: China AgriFood Startup Investing Report 2019
[4] Southeast Asia 2019: ASEAN 2020 AgriFoodTech Investment Report

Sector-agnostic investment data:

[5] Global 2019: Crunchbase: The Q4/EOY 2019 Global VC Report
[6] US 2019: Pitchbook-NVCA Venture Monitor
[7] Europe 2019: Crunchbase: European Venture Report
[8] China 2019: Crunchbase: VC Dollars For China Take A Dip In 2019
[9] Southeast Asia 2019: Cento Southeast Asia Tech Investment — 2019

Academia rankings:

[10] QS World Universities Ranking 2019

Regulations:

[11] Wikipedia: Genetically modified food in the European Union
[12] Wikipedia: National Medical Products Administration

Where to Start Your Foodtech Startup, Part I was originally published in Mudcake on Medium, where people are continuing the conversation by highlighting and responding to this story.

“A chef, because I like big bellies,” I replied, proudly patting my stomach, when my mother asked me what I wanted to be when I grew up. I was four years old. “Or an ant hunter. I’m going to shoot them one by one.” I hated fire ants at the time, constantly attacking my poor naked feet.

I have since learned that the size of your stomach isn’t a good predictor of your future profession, and that killing ants with a rifle isn’t a proper occupation. However, apparently an early interest in hunting, insects and cooking may indicate a future fascination with foodtech.

Ever since I exited my online food delivery startup almost a decade ago I’ve been searching for my next thing. In the meantime I started investing in startups. This was a good way to learn about new industries and business models. Perhaps too good — I enjoyed it so much that six years later I was still searching.

Then something happened that changed everything. I had my first kid. Suddenly it was undeniable that everything I do has an impact on the future world of my daughter’s generation. I should spend my time and money in a way maximizing my positive impact on the world, both for you and me but even more for our grandchildren.

Humans (and other animals) on earth are facing difficult times. Climate change is threatening us with natural disasters, sea level rise, droughts, floods, wildfires, desertification and eventually malnutrition, local economic collapse and mass migrations. Biodiversity is rapidly declining, posing major threats to crucial ecosystems. Pandemics (often caused by the way we treat animals) lead to deaths, suffering and economic recession.

To ensure that no one goes to bed hungry in 2050, we need to increase food production by 50%. From this perspective, cutting down vivid rainforests to make space for cattle ranches, and growing livestock feed, might seem to make sense. But while there are two billion more mouths to feed in 30 years, the EAT-Lancet report shows that net GHG emissions from the food industry need to decrease by 40–65% in the same timeframe. This challenge — producing 1.5x as much food with ~0.5x of the GHG emissions (a 3x global food productivity increase!) — is urgent and important to address.

According to Project Drawdown, two of the three most impactful solutions to stop global warming at 1.5°C are food related: plant-rich diets and reducing food waste. Incidentally, this is also good for human health, biodiversity, animal welfare and the economy.

At the same time, we are in a perfect storm. Purpose is a top career priority for Millennials’. More people are becoming aware of the food industry’s contribution to climate change. Research repeatedly demonstrates our healths’ dependence on what we eat. Entrepreneurship is gaining traction as an alternative to corporate life. Investments in foodtech startups is rapidly growing.

This is why I’ve decided to spend my time going forward on high-impact foodtech startups, all the way from agriculture to consumer awareness and food waste. My co-founder Anna Ottosson and I will, through our company Trellis Road, focus on the European foodtech ecosystem by raising awareness, attracting talent, helping startups and investing in startups. As a first step, we’re investing our own money (€25k-100k tickets) in seed rounds (no pun intended). Please feel free to point anyone in the space in our direction and sign up to our monthly newsletter.

I may not be a chef, have a particularly big belly or even own an ant rifle. But I know for sure, that if more people start working on fixing the broken food industry, we have a great chance to leave a better world behind to my daughter and future generations.

Why I’m Investing in Foodtech was originally published in Mudcake on Medium, where people are continuing the conversation by highlighting and responding to this story.

In fact, if those numbers are the core of your pitch, I will most likely lose interest quickly and my mental checkbox for “team quality” will remain unchecked.

How to prepare

What I do care about, however, is why you and your co-founders are crazy enough to spend the foreseeable future building this new company, and why you are the best possible team to do it. Focus on why, who, what, how, and of course the relevant metrics.

Below is a long-list of topics I often use when trying to understand a business. It’s not intended as a list of pages in a pitch deck, but rather as a cheat sheet for making sure you haven’t forgotten anything important.

Of course all companies are different and not all questions are relevant for all startups. On the other hand, I think this summary gives a decent overview of the topics to be prepared to discuss when pitching investors.

1. Background
2. Company purpose/vision
3. Team
   - Founders
   - Others
   - Advisors
4. Problem
   - Customer pain
   - How customers solve it today
5. Solution/product
   - Value proposition/use cases
   - Demo
   - Roadmap
6. Why now
   - How space has developed/recent trends
   - What the world will look like in the future
7. Market size
   - Customer profile
   - TAM, SAM, SOM (both top-down and bottom-up)
   - Now, in 5 years, in 30 years
8. Competition
   - List of competitors
   - Competitive advantages
   - Defensibility
9. Business model
   - Revenue model
   - CAC
   - CLTV
10. Go-to-market
    - Sales model
    - Marketing strategy
11. Status
    - Traction
    - Current customers
    - Next steps
12. Financials
    - Monthly revenue
    - Burn rate
    - Founders’ salaries
    - Runway
13. Investment
    - How the money will be used
    - Previous investments rounds
    - Cap table
    - How we can help
    - Proposed deal

This list is based on an old version of Sequoia’s Writing a business plan.

Why who, what and how eat awards for breakfast was originally published in Nordic Makers on Medium, where people are continuing the conversation by highlighting and responding to this story.

Why does it happen?

Typically, the company has been growing slowly for a while and made several rounds already, but still isn’t ready for a series A round. Alternatively, a co-founder has left but there was no vesting agreement in place. A third possibility is that FFF or pre-seed investors have negotiated too aggressively in previous rounds.

Wait, is that really a problem? 🤔

Assuming that you’re building a startup that will need several rounds of financing down the road, you’ll be heavily diluted. If a founder wakes up one morning with a small stake, that’s a major risk for the investors. You leaving is one of the worst things that can happen since the investors primarily invested in you, not your product or vision.

Every startup faces inevitable dark periods. If key people are too diluted, they’re more likely to leave for a high-paid job, a big upside in another startup or even starting something new, when things turn sour.

While you’re busy pitching the investors in front of you, they’re pondering what you’ll look like in front of the next investor down the line. Seed investors think about how to sell you to A round VCs, who will think about the B round. And so on.

What’s in it for me?

The obvious financial upside aside, there are a few other reasons why retaining most shares yourselves is a good idea: you have more votes to push your views and you have a cushion if you need a bridge round later on. Also, it makes it less likely that investors with many votes can push you out if things go south.

Yeah yeah, how much should we own then?

There are of course no simple rules. For a research-heavy or hardware-focused company, you will probably have to accept more dilution in the first rounds than light-weight software companies. If there has been a change in management, old founders may still own some shares.

Despite all the caveats and exceptions, I’d like to propose a very rough rule of thumb:

The active team should own 50% after series A.

Applying this benchmark has consequences. If you’re raising a seed round that can take you straight to an A round, and you estimate 20% dilution in each round, you need to own at least 79% of the shares before the seed round. Given 25% dilution per round, you must control 89% of the company before raising seed money. And that’s assuming that no bridge financing is needed before your series A.

No worries, my active chairman owns 25%

You can really only rely on key people who commit to spend the coming 5–7 years building the company. Investors can’t bet on the full engagement from part-timers, active board members or founders who say they want to be active in the future. Only full-timers who are willing to commit for several years (e.g. through vesting) count.

Hey, that’s not fair to the old investors

You’re probably right. In many cases, the passive shareholders have earned their equity. It may be unfair to push for a redistribution. However, the 50% rule of thumb is not aiming at creating fairness. And let me be very clear: Not all companies should redistribute equity just to please investors. The purpose is just to give an indication of what most companies should expect to hear in future discussions with VC.

Of course, investors always make an overall assessment of your company. There are examples of great companies being built with the team owning as little as 20% already in the early rounds. Hopefully you score very high on most other parameters (team, traction, market size etc.) and then investors will accept a somewhat unsatisfactory cap table. But that’s an unnecessary risk to take if you can avoid it.

What if we’re already diluted too much? 😱

Then you’re screwed. No, just kidding. There are ways to fix it, but no silver bullet. All solutions will require tough discussions and hard decisions. And they can never be forced upon by an external party; you have to take the lead yourself in fixing your cap table. Here are a few ideas that might work in some cases:

• If you have passive co-founders, they can return (most of) their equity to the active shareholders (a.k.a. vesting). That’s basically the same thing as buying shares from them for a low price. It’s better for them to have a small piece of a big pie, than nothing.
• Create a bigger-than-normal ESOP and direct the surplus to the founders. I’ve seen pre-seed option pools of up to 30% to compensate founders for the dilution. Here’s how to do it in Sweden. This naturally requires approval from all major shareholders, including existing investors.
• Ask your passive shareholders if they, in their own best interest, can accept to sell some shares cheaply to the new investor, so the new investor can accept a higher price per newly issued share and cause lower dilution.
• If you have hyper-growth or other amazing traction, skip the seed round and go directly for an A round.
• Don’t fix it. It’s your choice. It might work well to build your company in a different way. Perhaps you won’t need VC money at all or the VCs will accept the situation. Maybe it would just be too unfair to the passive shareholders to make a major redistribution. Just be aware of the risk you’re taking by not dealing with this issue early on.

Alright, we’ll fix that after series A

Oh no, it will never be easier to deal with your problems than now. If it’s hard now, imagine what it will be like when the stakes are higher and valuation goes up!

Summary

Make sure to plan your dilution early. Have the discussion with your co-founders and set up vesting. Assume that you’ll need bridge funding. Negotiate a new option pool in every major financing round. And make sure to kick ass so you can get a decent valuation in next round.

If you already own too little, solve it now or forever hold your peace. But then your VC marriage may not happen.

Strangling yourself with a cap table was originally published in Nordic Makers on Medium, where people are continuing the conversation by highlighting and responding to this story.

As a founder, no one can hear you scream

When we started our first companies we were rather alone, in a very immature startup ecosystem. Non-existing actually. Since then the ecosystem has blossomed but so have also the amount of investors. Or allow us to say “investors”. The range of people wanting to invest are all from realtors and bankers who know money but not companies, to people who built great companies, but not tech companies, to serial entrepreneurs wanting to help. We wished that there were people we could talk to who had been there before. Not only the good days, the extremely busy days, and the hard working days, but also the shitty days. About the founder fights, the lost vacation and the not-appearing product market fit.

You shouldn’t have to read the fine print

With a lot of investors there are also a span of terms, from robber baron terms to ultra-founder-friendly. As angels we have individually always wanted to be the good guys, because we know that our success was not only due to skill, but also grit, luck and supportive people. As Nordic Makers we are not focusing on getting a certain chunk of your company — or even worse, thinking of how to push you out. We are thinking of how to make the business fly, and how to make the next round. We want founder-friendly, and future-round-friendly, terms. We like to be honest and direct in all communication, legalese and real life. And yes, we want to be treated nicely too :)

Herring, sharing, and caring

The Nordic culture is not an alpha-male viking culture, but actually a culture of sustainability. If you want a company to succeed you need the people not only to survive, but to thrive. We believe that having a learning organisation where people don’t only work for titles, salaries, and perks but for learning, accomplishing, and having a good time is a better way to get there. There is a reason why the Nordic languages have a (rather unique) word for “enjoying work” (arbetsglädje/arbejdsglæde).

So, if you are an early-stage company and want Nordic values, fair terms and angels that help you out, then contact us at hello@nordicmakers.vc or visit www.nordicmakers.vc.

Alexander, David, Erik, Hampus, Klaus, Lars, Martin, Thomas, Thorvald, and Tommy. (Yes, we wish we weren’t all white dudes…)

Our raison d’être was originally published in Nordic Makers on Medium, where people are continuing the conversation by highlighting and responding to this story.