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.
- 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 , but invested capital in Europe grew by 70% .
- 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. 
- 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. 
- 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. 
- 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.
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. 
- US is dominant in foodtech funding. Out of the total $19.8B, 44% went to US companies  while only 17% was invested in Europe , 18% in China  and only 2% in Southeast Asia .
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.
- 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%.  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.  Even disregarding Deliveroo’s $575M Series G round, last year goes to the history books with a massive funding record.
- China is the clear #2 country in the world in terms of foodtech investments with 18% of total capital 2019.  This is on par with China’s share of overall startup funding. 
- 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. 
- 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.
- Still the clear #1 in most things foodtech. With 44% of all foodtech capital, 35% of all deals  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. 
- 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.
- 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. 
- Investments grew by 33% from 2018 to 2019, but still “only” sums up to $423M in 2019. 
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). 
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).  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.  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  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.
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. 
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. 
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). 
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.
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.  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.  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.
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.
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.
Foodtech investment data comes from AgFunder (we love AgFunder, but may we call for a naming convention of future reports? 😊):
 Global and US 2019: Agri-FoodTech Investing Report — 2019
 Europe 2019: 2020 European Agri-FoodTech Investment Report
 China 2019: China AgriFood Startup Investing Report 2019
 Southeast Asia 2019: ASEAN 2020 AgriFoodTech Investment Report
Sector-agnostic investment data:
 Global 2019: Crunchbase: The Q4/EOY 2019 Global VC Report
 US 2019: Pitchbook-NVCA Venture Monitor
 Europe 2019: Crunchbase: European Venture Report
 China 2019: Crunchbase: VC Dollars For China Take A Dip In 2019
 Southeast Asia 2019: Cento Southeast Asia Tech Investment — 2019