💸 15 FoodTech Investors' Fundraising Advice for Founders

Last week we took a look back at the 20 largest fundraises in AgriFoodTech, totalling over $1.2 billion between them.

Are you preparing to / in the middle of a fundraise? Yes, then read on.

We caught up with 15 FoodTech investors to hear their advice on how to navigate the current downturn and successfully raise capital.

Without further ado 🥁

👉 Recap all the rounds of Q1 head this way.
👉 See the 20 largest rounds from Q1 read this.
👉 Get advice from 15 FoodTech Investors read this.

15 FoodTech investors on Fundraising in a Downturn

Bodil Sidén and Christian Tang-Jespersen of Kost Capital

”Reverse engineer! Think about your next round already before your first round. Set milestones on where you need to be when you raise your second round and back track your business plan based on what you want to achieve.

As a founder, if you manage to reach the outlined milestones, that is really strong evidence for investors. A few things we double click on are i) does the founding team have commercial foundation, ii) founders’ fundraising abilities and iii) how founders present to an audience” says Bodil Sidén

Christian Tang-Jespersen adds: ”And remember, you are never fundraising and always fundraising. So stay in touch with investors, keep them updated (but not drowning in details). Being top of mind always makes it easier when you are actually kicking off fundraising.“

Steve Molino of Clear Current Capital

“Discussions should be hyper-focused on both:

How what you’re building is truly solving a problem for your end customers (note: this means truly understand who your customer is)

Why this is the right time for your solution/company to exist.

The foodtech space has been hit hard since the end of 2021, both from a funding and consumer reception standpoint, so showing you understand the history of the space, and why your company will succeed now is important.”

Gaya Shiloah of FLORA Ventures

“Given the ongoing market correction in general and specifically in AgriFood-Tech, it's crucial for startup founders to navigate fundraising challenges strategically.

When engaging investors, acknowledge current industry trends, emphasize efficiency in usage of funds, scalability, and a well-thought-out financial strategy to build confidence in potential investors during these challenging times.

Try to offer creative funding approaches to investors to reduce their investment risks and motivate them to bet on you, for example: offer investors to invest in tranches based on milestones vs. all at once. In addition, seek proactively for non-dilutive funding through grants, competition prizes etc.”

Stephanie Dorsey of E Squared

“Have a maniacal focus on customers! The companies that go the extra mile for customers are typically the companies that have the strongest probabilities for success and this is a crucial aspect scrutinized early by investors.

Early acquisition of a broad and paying customer base, detailed case studies, and a robust customer acquisition and retention strategy is critical. Gain deep customer knowledge, embrace customer feedback, form significant connections with customers, develop partnerships, and demonstrate a commitment to customer satisfaction.

This will give investors tangible data points that they can rely upon to ascertain your ability to grow the business by gaining material customer traction, it will illustrate how important your product is to customers, it will demonstrate that you have the know-how to efficiently win your customers at scale, and highlight the real, sustainable value your company offers.”

Steven Finn of Siddhi Capital

“Give it twice as much time as you'd expected, and get used to hearing "no" and not getting discouraged. Secondly, focus on nearer term opportunities with less financing risk.

It's much harder to raise 20MM right now if you need to raise 100MM next year than it is to raise 20MM to get to profitability and sustainability. Figure out how to tell the story with the least financing risk!”

Alexandre Bastos of Givaudan

“It is clear to me that 2024 is still a year of enormous challenges to raise capital, develop technology and scale products.

My personal advice to startups is to create strong and strategic partnerships by building an ecosystem of core enabling capabilities around your IP as a way to de-risk your venture, accelerate development and attract capital. It will be hard for most startups to do the "Tesla Approach" and do it all by itself, but they can smartly orchestrate it with others.”

Melody Violton of CPT Capital

“Founders should emphasise how their technology will address a specific pain point in the food industry and set them apart from their competitors. 

Building a strong team is also key, especially at the early stage where R&D progress will set the milestones to achieve before the next fundraising. 

It is also important to show potential investors that your business model will be scalable across the lifecycle of the business. As such, founders will sometimes need to adapt their business model through partnerships and collaborations with more established players of the ecosystem. Finally, founders should think of how to generate revenues in the shorter-term to validate financial milestones and sustain interest of later-stage investors.”

Ashley Hartman of Bluestein Ventures

“Share a compelling vision combined with a disciplined, capital-efficient plan for execution.

Take a systematic approach to fundraising, treating it like a sales process (…and expect a mountain of no’s, but fight through to find those with conviction)

Prioritize raising capital and the right investor over optimising for valuation.”

Hadar Sutovsky of ICL Planet Startup Hub

“When seeking initial funding for a FoodTech startup, prioritise a compelling pitch outlining your unique value proposition. Clearly articulate how your innovation addresses market needs.

Develop a comprehensive business plan, emphasizing scalability and sustainability. Showcase your strong team expertise. Engage with potential investors, demonstrating your passion and commitment.

Lastly, be transparent about potential challenges and mitigation strategies. Firms seeking to scale up and attract further investment for next round, I advise, show meaningful progress towards growth milestones, regardless of your valuations, while fine-tuning your value proposition.”

Andrew Ive of Big Idea Ventures

“In 2024, it may still be hard to raise funds. But founders with a unique product, solving industry problems, an experienced team, and data backing it up, will succeed.

Invest in creating unique technology that sets you apart from competitors and has a big impact on the overall ecosystem. Create and deliver the Big Ideas! That should be the focus.”

Peter Schmetz of Vorwerk Ventures

“Financing rounds still take substantially longer to be closed than in 20/21/22. Make sure you have at least 12 months of runway before entering the fundraising process.

In addition, dual track (also considering M&A early on) should always be an option and it is important to be in touch with relevant stakeholders early.

Moreover, be pragmatic if you have the chance to close the round and don´t drag the process along with topics you can fix in the future.”

Brian Bernstein of Rich Products Ventures

“When talking with a corporate venture fund, go into the conversation with a clear understanding as far as what you believe you and your startup are looking for out of a strategic partnership.

This needs to go deeper than simply “strategic expertise” or “customer relationships” – corporates want to partner with and invest into startups that want to work with them for targeted reasons (we’re not all the same).”

Anna Ottosson of Mudcake

“Back to first principles: build something people love (which together with most of the old YC’s essential startup advice still holds true).

From day one, make sure that you’re solving a real problem for real customers out there.

If you can show investors that you are an exceptional founding team working on something important with a large market opportunity, that will take you a very long way.”

Matteo Leonardi of Grey Silo Ventures

“For a founder looking to raise the first round I'd suggest 2 things: firstly, to make sure to check all the boxes that investors look for at that stage and sector: a full-time team with complementary skills, a solid technological foundation that solves a big/complex problem (and if in the bio-economy space, access to facilities and equipment that allow for fast testing).

Secondly, to have in mind exactly the amount of money needed, the runway it will provide them and the milestones that that capital injection will allow them to achieve. For a founder raising the next round the second point becomes more critical, as well as the importance to show that your company is close to (or better, has already achieved) PMF.”

👋 Agree, disagree or want to have your say? Drop us a note [email protected]