Latest trends in Foodtech and their fundraising
Focus on the evolution of food industry and their VC investments
Hello everyone !
To continue this series on the trendiest sectors of startups, we’ll analyse Foodtech today ! 🍉
Foodtech group together startups whose core business is in the food industry. The scope is quite broad since several sub-sectors can be identified, for example the production of food, its possible transformation or its distribution. The whole value chain is impacted from the producer to the consumer !
The market
As in many markets, Foodtech originated in the United States and gradually entered the European market. With UberEat, consumers have not hesitated to take the step of home delivery, and COVID has helped in this respect. This mechanically led the consumer to spend less and less time in the kitchen, allowing Foodtech to take advantage of this to offer more and more services and thus to have a real B2C positioning. To do this, smartphone apps were ideal since they established a perfect interface between restaurateurs, startups and consumers. 📱
At a numerical level, the global food technology market is expected to grow by more than $250.43 billion by 2022. A beautiful growth in perspective and a buoyant market where there are opportunities to be seized ! Restaurants have clearly understood this and are themselves implementing innovative solutions such as ghost kitchens, in other words kitchens that serve exclusively to produce the dishes that delivery personnel must deliver to customers.
VC’s interest
An excellent article from WhiteStar Capital indicates that the number of fundraisers has a CAGR of +27% since 2011. In 2019, North America remained the leader on the subject with 398 deals while Europe made 227 deals in the same year (almost half as many). VCs are therefore well established in the sector. 🔎
To give you an idea of pre-money valuations on average (i.e. how much a startup is worth before an investment) :
- Seed : $9.5M in the US — $8.7M in Europe
- Series A : $18.4M in the US — $23.9M in Europe
- Series B : $85M — $68.5M Europe
As the market is growing and therefore increasingly competitive, we can clearly assume that these valuations will increase in the coming years ! 🔮
New trendy sectors
In order to synthesize the magnificent curve above and to be more precise, Foodtech can be divided into 6 categories : Food Science, Agtech, Food services, Coaching, Delivery and Retail. Let’s go to discover their specificities and the most successful startups of the moment without further delay ! 🍽️
1) Food science & Agtech
According to Pitchbook, in the last quarter of 2020, investment activity was mainly concentrated around two segments : food science and agriculture, which together accounted for 70% of the total value of worldwide fundraising. In-line grocery, plant-based meat and dairy and new agricultural processes outperformed the others in terms of investment ! 🥚
And we understand why. Until now, innovations have focused on consumption patterns (deliveries, solutions against waste, etc.). With Food science and Agritech, the innovations focus on consumption itself, i.e. food. The main targets include vegetarians and vegans, who are constantly on the rise, but also informed consumers who want to take care of their health (particularly in developed countries). All in all, the market size is quite huge and exponential. 🎯
Let’s take a look at what startups offer in these two areas :
⚗️ Food Science
- Les nouveaux affineurs (Paris) : The pleasure of good French cheese found in a vegan version. The startup uses organic Cashew Nuts and Soya as well as the ferments traditionally used for aroma, acidity and texture. 0 animal product, 0 additive, 0 preservative. Everything is done to preserve the same taste as the classic cheeses because their vegetable creations are developed with master cheese-makers and ripeners. Goodbye cholesterol, hello taste pleasure 🧀
➡️ The startup made a 2.2 million euro Seed round in 2020 with the participation of the Demeter Partners fund. - This (London) : Born in 2018, the startup started in the vegan meat sector, with a trend coming mainly from the USA (see below in the section IPO, acquisitions and major leases). Their flagship products : Nuggets, Bacon and Chicken truer than life ! More precisely, it is the Tofu added to other ingredients that allows this perfect imitation both in terms of taste and appearance. The solution has a double benefit : We can eat as much “red meat” as we want while preserving our kidneys & the animals are (a little more) preserved from a clearly unfriendly process. 🍖
➡️ The start-up raised $13.2 million with the participation of Idinvest and Five Seasons Ventures in the Seed rounds. The latest financing is a £4 million Crowdfunding in 2020. - Cuure (Paris) : Created in 2019, Cuure allows people to supplement their traditional diet with vitamins, minerals, trace elements and polyphenols in order to be healthier and therefore in better shape. A 5-minute questionnaire is to be filled out in order to better understand our needs and a box containing the food supplements is then sent to us at home. The solution was developed by nutritionists, neurologists and doctors of pharmacy. 💊
➡️ Cuure has successfully completed a €1.8 million (Seed) financing round in 2020 thanks to investments by Newfund Capital and Kima Ventures. - Air up (Munich) : Founded in 2018, Air up has invented a solution to drink water with a strawberry, apricot or other fruit flavor. What’s new? It is not the taste buds that are solicited, but the sense of smell : On a plastic bottle, a cap is integrated around the neck. When the capsule is activated (by a pressure system), it will send air with a natural aroma with each sip. To resume : You drink pure water, without additives, but with taste. Top. 💧
➡️ The start-up raised 18 million euros in 2020 (Series A) with the participation of Five Seasons Ventures.
🚜 Agtech
- Agricool (Paris) : Created in 2015, the startup grows fruit and vegetables in urban farms located near Paris in order to transmit the best possible products to the consumer. Indeed, the products are pesticide-free and are currently available in 15 stores (monoprix, la belle vie etc). The current offer revolves around 5 ingredients : Lettuce, Coriander, Basil, Parsley and Strawberry. New products will be available soon ! Stay in touch 🍓
➡️ Agricool completed a $25 million Series B in 2018 through investments by BPI France, Kima Ventures, XAnge and Daphni. - Agriconomie (Champagne-Ardenne) : Born in 2014, Agriconomie is a marketplace whose objective is to enable farmers to buy everything they need on their farm in one place and at the best price. By offering fertilizers, seeds, spare parts, workshop equipment and plant health and animal nutrition products, Agriconomie aims to give them the opportunity to buy more simply, more quickly and at a better price. And of course, it allows them to save time to develop more and more good products ! 👨🌾
➡️ The startup completed a venture round of an undisclosed amount in 2016 with the participation of Idinvest as lead investor.
2) Food services & Coaching
The growth of advisory platforms and environmental issues have prompted conservators to innovate. Indeed, how to respond to more than 100 notices per day on platforms as diverse as they are varied? How to reduce the environmental impact by reducing food waste? Entrepreneurs have succeeded (as usual) in finding solutions to these problems via hyper-efficient and easy-to-use CRMs !
Moreover, restaurants were not the only ones to benefit from help. Indeed, applications now allow us to know exactly the positive or negative impact of the food we buy on our health but also and above all to learn how to eat properly. And clearly, it is not a small matter : Between good fat and bad fat, knowing when to take this or that vitamin/oligo-element according to the time of the year…Good luck. 😫
Finally, according to the WHO, in 2016 there were more than 1.9 billion overweight adults and more than 650 million were obese. Obesity, once a problem reserved for high-income countries, now also exists in low- and middle-income countries. Although obesity is not exclusively due to malnutrition and can be explained by environmental and/or genetic factors, many people are overweight because of what they eat. ⚠️
Let’s take a look at some of the startups that have been working on the Coaching and Food Services axes :
👨🍳 Food services
- Zenchef (Paris) : Founded in 2010, Zenchef is an all-in-one SaaS marketing solution that helps restaurants attract and retain their customers. Website creation, reservation management software, emailing campaigns, notice management, e-reputation and much more ! Concretely, this allows restaurants to free up 2 hours of productivity per day and save 2 euros per seat. Well done. 🍽️
➡️ The startup has raised 6 million euros (Series B) in 2015 with Elaia, Kima Ventures and XAnge participating in the round table. - FoodMeUp (Paris) : Created in 2014, the startup aims to optimize expenses related to products from recipes : reimbursement of delivery anomalies, reduction of waste, inventory control, optimization of margins, etc. The startup’s goal is to optimize the cost of products from recipes. There are also HR functionalities such as staff training or turnover prevention ! 💸
➡️ FoodMeUp has completed a 1.7 million euro Seed round in 2020 with Founders Future after a first round of 480,000 euros in 2016 thanks to Numa. - Aveine (Paris) : Born in 2016, Aveine simplifies access to wine tasting with a collection of connected objects and services. Red or white, young or old, airing allows to exhale flavors and reveal aromas. But it is often a step that consumers tend to neglect, either out of haste or out of forgetfulness. Today, no more excuses ; cheers ! 🍷
➡️ The start-up raised 1.5 million euros in 2019 with the participation of Newfund Capital.
💪 Coaching
- Yuka (Paris) : Founded in 2016, Yuka scans food and healthcare products to shed light on their ingredients and assess their impact on our health. The startup provides clear information at a glance to make informed purchases on products whose characteristics we sometimes understand absolutely nothing about, we’re not going to lie to ourselves. And because it is a 100% independent application, product evaluations and recommendations are completely objective: no brand or manufacturer can influence them in any way. And that is rare enough today to emphasize this. 🙋♂️
➡️ Yuka completed a 600,000 Euro Seed Round in 2018 with Founders Future’s investment. - Oviva (Zurich) : Created in 2013, Oviva enables type 2 diabetics to learn the principles of a healthy diet in order to avoid hyperglycemia and its complications. Indeed, they become diabetics because of a bad diet that has been too rich in sugar for some time. Instead of going to see a nutritionist every times, Oviva takes care of everything via a smartphone application !
PS : If you want to know more about diabetes, it’s here. 👨⚕️
➡️ The startup has completed a $21 million Series B in 2020, notably with the participation of Partech, Albion VC and Eight Roads Ventures.
3) Delivery & Logistics
In the Delivery market, there are clearly dominant positions. These include DoorDash, Just Eat and Uber Eats, which have built up a significant enough share of the market to quietly acquire new entrants with well-placed M&A deals. And in order to be acquired (or for the brave ones to target the IPO), startups must now verticalize to offer a niche service. Verticalization can involve either :
- on the target : children, students, vegan/vegetarian etc ;
-on the products offered : delivery of local products, exceptional products etc.
Then, as far as Logistics issues are concerned, operational costs are a real problem for companies in this segment. Indeed, their margin is charged of these famous costs. So less revenue. So less profitability. So less fun. Machine Learning, Predictive AI and IoT can help companies overcome these difficulties and ultimately gain a sustainable competitive advantage. 👊
Let’s take a look at the solutions proposed by startups to innovate in Delivery and to perform in Logistics :
🛵 Delivery
- Milkrun (Portland) : Born in 2018, MilkRun is a weekly subscription service for delivery of products produced on local farms. Whether it’s meat, dairy products, eggs or bread, there’s something for everyone ! Mcdo and Ubereats just have to behave 🐄
➡️ The startup completed a $1.9 million Seed Round in 2020 with an investment from the prestigious Y Combinator. - Duffl (Los Angeles) : Created in 2019, the startup offers students the products they consume the most : coffee and protein bars for sports, popcorn for parties, shampoo for everyday life, with this the exams will become a formality given the time saved. 🎓
➡️ The startup has completed a $1.1 million Seed round in 2020 with several Business Angels and GoAhead Ventures as lead investor.
🤝 Logistics
- Ripe.io (San Francisco) : Founded in 2017, Ripe.io improves food traceability by making it possible to analyze the entire journey of food from their production site to our plates in a hyper-transparent manner. In addition to allowing the company to automate its entire supply chain traceability process, it allows us to know concretely where our food comes from, the transformations it may have undergone and where and for how long it was stored. 🔗
➡️ The startup completed a $2.4 million Seed round in 2018 with the participation of Maersk Growth and Relish Work, Inc. - Novolyze (Bourgogne) : Born in 2012, the startup is a company specializing in food safety. Their solution is based on the use of state-of-the-art microbiological analysis combined with the latest developments in digital, IoT and Machine learning. Novolyze offers services to help the food industry produce safer food, while ensuring strong compliance with international food safety and quality standards. Their research focuses on the evaluation of the inactivation of foodborne pathogens under different types of stress (heat etc.). On the basis of this expertise, they have developed the first range of ready-to-use substitute bacteria, an innovation that allows the food industry to test the effectiveness of microbial intervention steps under real conditions and faster. 🔬
➡️ Novolyze has completed a 2.2 million euro Seed round in 2018 thanks to the investments of several B.A.’s and Family offices. A venture round of 750,000 euros was then launched in 2019.
IPOs, acquisitions and major fundraising 📈
Several Foodtech have successfully completed the famous IPO sesame, including :
- Ocado in 2010 ;
- Just Eat and Grubhub in 2014 ;
- Takeaway.com in 2016 ;
- Hello Fresh and Blue Apron in 2017.
The recent IPO ➡️ Beyond Meat (US) : Created in 2009, this is the leading company in the market for meat from vegetable products. Their mission is to reduce water consumption by 99%, CO2 by 90% and the energy required to produce meat by 46% in order to offer it to the largest number of people. The IPO was completed in 2019 after numerous fundraisers (up to Series H) and today allows the company to have a market capitalization of 8.54 billion dollars.
In short : In addition to generating a lot of positive effects, making steaks from plants pays a lot. 🤑
Moreover, the above-mentioned startup THIS has surfed on the wave since it was also created in 2019 by taking advantage of a good momentum among the Western population. Other startups have sniffed out this trend and are starting to develop in other European countries. 🇪🇺
Also, in a study on Unicorns Foodtech, DigitalFoodlabs mentions that the number of unicorns has increased significantly since 2000 on a global level. And what we can say is that they have really accelerated to grow :
- Of the 19 🦄 created before 2012, 42% took more than ten years to become a unicorn, such as Just Eat and Ocado in England. 🇬🇧
- In the remaining 14 🦄 born after 2012, 86% took only 3 years to become a unicorn (which is extremely fast) like Indigo or Doordash in the USA. 🇺🇸
Useful Resources
✅ Digital Foodlab, a key player in the ecosystem set up by French entrepreneurs where you can find very interesting information (including a database on Foodtech) !
🗺️ Mapping made by BPI France, with lots of other information…
This tenth article is finished ! Thank you for your reading, I hope you enjoyed it !
To continue the adventure, the next episode will focus on a sector that raises a lot of barriers to entry thanks to AI, IoT and Machine Learning : the Insurtech ! 👫
