Where 20+ leading FoodTech VCs will invest next

Author

Laura at FoodHack
January 09, 2024

2024 will be a defining year for AgriFoodTech.

As fundraising gets harder and startup runways come to an end, resilient founders will look to new financing models, partnerships and strategies as they adapt to survive, and ultimately thrive.

If you’re looking to fundraise in 2024, here’s a cheat sheet to find your next investor.

We spoke to 20+ of FoodTech’s top capital allocators to uncover which technologies are top of mind. And now you can hear from them too.

TL;DR: They’ll be backing technologies that can move the needle in: 

💊 Food as medicine
🌾 Fossil-free fertilizer
🧫 Enabling technologies
🔄 Side stream valorisation
🌿Regenerative agriculture
🛠️ Infrastructure and hardware
👵 Longevity and healthy ageing
☕ Traditional foods and crop innovation

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Find out where they’ll invest next:

Steve Molino @ Clear Current Capital

  • Categories will Merge: Lines will blur between “alt protein” and other verticals within food and climate like circular economies, food waste reduction, sustainable packaging, and side stream valorization, as more startups focus on creating defensible moats through unique combinations of those verticals and apply it to food.

  • FoodTech Moves: There will be a major shift away from focusing on bioidentical ingredients (i.e., real casein/whey/albumin/cells/etc.) toward functionally identical ingredients. Companies have existed with this approach for some time, but the macroeconomic factors shifting mindsets toward commercially feasible unit economics from the start will result in new startups focusing on getting to the same end functional goal with cheaper inputs.

  • Fermentation and Cell Ag / Synbio: Emphasis will be on innovations that maximize the use of current infrastructure (i.e., upstream and downstream processing efficiency improvements, hardware + software to improve titers/yields, minimization of downtime, etc.) versus focusing mainly on building out, or innovating on, new infrastructure. Both are needed but have vastly different time horizons.

Brian Bernstein @ Rich Products Ventures

  • Hitting Mainstream: Cultivated proteins will begin to be introduced in more mainstream settings, outside of Michelin starred dining. Though production will be smaller scale at first, a broader consumer set will have access to cultivated poultry and seafood.

  • Food as Medicine: Companies (including but not limited to Medically Tailored Meals) and insurance providers will progress their partnerships from initial pilots to full-fledged partnerships and insurance coverage. This will be driven by increased data and focus around the improved health outcomes and positive ROI generated by shifting to a personalised diet targeting specific chronic conditions

  • Funding: Bridge / extension rounds will likely significantly decrease in favor of valuation corrections. Companies will benefit from accepting the reality of this new normal sooner rather than later.

Theresa Röring @ FoodLabs

  • Climate Adaptation x Food: With the growing frequency of extreme weather events, our food production systems are increasingly under pressure, posing risks to global food security. In 2024, we expect to see more solutions (beyond decarbonization and mitigation efforts) focusing on how our food value chains can adapt and rebound in a changing climate. Examples include climate-resilient crops, microbial agricultural solutions, and precision agriculture.

  • Enabling Technologies: As alternative proteins continue to hit the shelves in some geographies this year, achieving price, taste, and health parity remains key to ensuring mass consumer adoption. Going forward, we will continue to see enabling technologies play a crucial role in successful commercialisation. Particularly, we are excited about the potential of generative models to drive innovation in new protein design, strain engineering, and lab optimisation.

  • Food Waste & Safety: Amid concerns about food security, every year more than one-third of global food production is lost along the value chain. As we enter 2024, solutions aimed at changing consumer behaviors and tackling food spoilage from bacterial contamination will rightfully receive more attention. Some technologies to consider include pathogen detection methodologies, cool chain advancements, or smart packaging.

  • WaterTech: As a relatively new area within Agri-FoodTech, we anticipate innovations at the intersection of water management and the food supply chain. Technologies such as advanced desalination methods, efficient wastewater treatment, and smart irrigation will gain increasing attention and investment in the years to come, highlighting the urgency to mitigate the impending scarcity of freshwater resources.

Brian Frank @ FTW Ventures

  • The Future of Farming: Increasing Farm Productivity, Access to Financial Services & Maximizing Core Inputs – fertiliser prices have continued to rise, water management is a hot topic in heat & drought riddled areas and farmers are now looking to tech to optimize operations and developer as much, high-quality food per acre as they can while protecting against the risk of crop damage due to pests & weeds, climate change and labor shortages.

  • Making More (and Better) Products, Using Less (Resources): Biotechnology Platforms to improve crop, soil and human health – the impact of new biotech breakthroughs like CRISPR, precision fermentation to make a variety of products for ag & food, the unlocking of the ‘secrets’ in the gut microbiome are just some of the innovations that will drive a whole new set of businesses that fix both plants & humans, as well as the planet, from the core molecules on up. 

  • A ‘Smarter’ Food System: Applications of AI in all forms in Food & Ag businesses – traditionally, the Food & Ag industry have been slow to adopt new technology (in comparison with other industries). But the interest in AI to power the future of Ag, the Supply Chain and new forays into improving Human Health through Food as Medicine are all pointing to a bright future of applied AI in all levels of the food system.

Gaya Shiloah @ Flora Ventures

  • Climate Change: More startups will address the climate crisis, through Regenerative Agriculture and Soil Health that have the potential to contribute to healthier crops, increase yields and enhance climate resilience. Companies who will concentrate on these areas will need to offer new differentiated technologies (not another satellite-only solution) and find the "right" business model.

  • Data: The adoption of digital, data-driven innovation, especially leveraging recent advancements in Generative AI offer a lot of promise for the AgriFood industry. The trend of Gen. AI got a lot of attention in other industries, and it is clear that in 2024 it would also accelerate in the Agrifood tech industry. For example, innovating product development, predicting optimal crop conditions, and optimizing supply chains.

  • Health x FoodTech: With the central role that food plays in human health, the healthcare sector will further embrace the transition to view ‘food as medicine’. This shift emphasises the recognition of the crucial role food plays not only in preventing but also in curing diseases, marking a significant evolution in healthcare practices. We will see more startups leveraging emerging functional ingredients, such as: nootropics and medicinal mushrooms to develop products with true efficacy.

Steven Finn @ Siddhi Capital

  • Enabling Technologies: There is a nearer path to revenue, stability in B2B markets, and willingness from potential customers right now to explore initiatives that cut costs or timelines.

  • Infrastructure: The biggest and most expensive enabling tech. Someone has to do it!

  • Blended products: It will be easier and cheaper, and therefore more impactful, to try to convince the world to eat blended products that contain some meat or animal components than to convince half the world to be animal free. The masses don't care, and taking the animals all the way out currently makes for products that are too expensive and not widely accepted. For cultivated meat, this will be the way most companies need to hit the market due to cost structures.

Eva Everloo @ Peakbridge VC

  • Food meets Healthcare: The connection between food and health is strengthening with nutraceuticals and digital health platforms becoming vital tools for managing health. The latter provide real-time insights through user-friendly technologies and are becoming more accessible through insurance reimbursements.

  • Nutrient-Dense Foods: The industry is moving away from ultra-processed foods / ingredients and prioritizing naturally nutrient-rich alternatives like legumes, echoing the growing concern for food security and the need for accessible, nutrient-dense foods.

  • AI in FoodTech: AI’s impact in the food industry is expanding, with data analytics now being woven into everyday operations to improve efficiency and guide decision-making. In 2024, expect food deal activity to start catching up with industries like healthcare and transportation and to see more products co-developed by AI on the shelves.

Alexandre Bastos @ Givaudan

  • Fermentation: More affordable fermentation via a suite of different end-to-end solutions from combined cultures, process optimisations to bioreactor innovation.

  • Healthy Aging: Performance, preventive and healthy aging enabled by precise nutrition with AI assistance and biomarker monitoring; hopefully supported by introduction of a new generation of pre and probiotics and a 1st wave of postbiotics. 

  • Solid State Fermentation as a platform for more affordable, minimally processed, nutritional and delicious sustainable food and ingredients.

Melody Violton @ CPT Capital

  • Plant-Based: As product-level concerns remain top of mind for consumers in plant-based, we will see more and more companies that aim at improving and achieving parity in taste, texture and price of alternative meat products to remove perceived barriers from consumers.

  • Enabling Technologies: These will help fermentation and cultivated meat companies to reduce their costs of production to achieve quicker price parity are of interest, however these enablers will need to show that their business model can be versatile and applicable to other industries (e.g. cell therapy) in order to de-risk the path of commercialisation.

  • M&A: We expect further consolidation in the alternative protein sector through M&A, and more failures to come following the first publicly-disclosed defaults announced in the space this year. Companies with strong balance sheet, differentiated IP and unique product offerings will be the survivors in the space following this downturn.

Andrew D. Ive @ Big Idea Ventures

  • 2024,The Year of Partnerships / Alliances: Enabling technologies will receive a boost as these innovations are what is required to scale precision fermentation products, cultivated meat products and hybrids. This year should be the year for increased collaborations to help reduce costs and increase the scaling of these products.

  • More Sustainable Foods: With an increased focus on product development, companies focused on innovations in ingredients should find more opportunities for investment and collaboration. This includes fats solutions, protein ingredients like gelatin or collagen, product enhancers like coloring and flavoring agents as well as sweeteners.

  • Government Leadership and Support: Increased collaboration and funding to to improve food security and leadership positions through building infrastructure, facilities and production. Corporates and bigger players within the food industry will start to play an important role in moving scale up forward.

  • Old Products in New Ways: We expect to see innovation across traditional foods and in crops like cocoa, coffee, sugar, and palm. They contribute to biodiversity conservation, lessen pressure on natural resources, and improve social and community resilience.

  • Regenerative Farming Technologies: Changing farming practices to ensure food safety and increased nutrition will become even more important in 2024. Investors will be supporting companies developing biopesticides and technologies to detect pathogens in food, as well as create antiviral and antimicrobial coatings for food protection. 

Michal Klar @ Better Bite VC

  • Lower carbon food-print: companies, consumers and governments are getting more and more aware of the link between food production and climate change; so it is more important than ever for startups to build low-emission solutions to the products with the biggest footprint - meat and dairy are topping the list, but also products like cocoa, coffee, palm oil and rice (more on that below)

  • Food waste no more: almost 1/3 of all food is wasted, contributing significantly to methane and other greenhouse gas emissions; startups can help across the supply chain - solutions must be localised, though: in high-income markets, it’s more about retailers and consumers, in low-income countries focus should be on storage and logistics, where most of the loss happens

  • Decarbonise Rice: this global staple food is responsible for 12% of all methane emissions - in CO2e terms, that’s more than the entire aviation industry; there are existing solutions related to irrigation and farming practices that could slash its emissions in half - startups can play a role by incentivising rice farmers with innovations including carbon credits and smart financing

Brett Brohl @ Bread and Butter Ventures

  • Labour, labour, labour across the entire food value chain, from farm to supply chain to retail. How can we help the food work force be more efficient, get up to speed faster or find unique solutions for very difficult or dangerous jobs.

  • Vertical SaaS within the food vertical: Niche on Niche? Maybe, but there is tremendous opportunity for entrepreneurs in the food value chain to continue to digitize the industry.

  • Logistics: So much of the food system is logistics. The logistics of food is a tremendous opportunity for founders to build truly unique companies in the space.

Robert Dupree @ Alwyn Capital

  • Down Rounds: More companies will continue to take down rounds while the industry stabilises.

  • Additional M&A Activity: Companies being bought for their IP and we are likely to see a few larger companies sold piecemeal in restructuring deals.

  • Plant Based: The category’s offerings will take a leap in quality and be available in market

  • Raw Ingredient: optimisation and development as well as new texturization technologies will produce better products

Anna Ottosson @ Mudcake

  • Adapting to a changing climate: More and more founders and investors are realizing the severity of the effects that climate change, biodiversity loss and water scarcity will have on our food system; we expect to see more solutions centered on adaptation to this new reality across the agricultural sector and food supply chain.

  • Ocean as the New Frontier: Our oceans and how we use the planet’s water resources in relation to our food system has gained attention in recent years. We believe there’s still plenty of unexplored subtopics here and are keen to get to know the startups focused on this new frontier of the food system.

  • Biomedical Innovations: Humanity needs to transform what we eat into a therapeutic asset, merging dietary science with medicine (e.g. RNA and microbiome research) to enhance health and prevent disease. We want to redefine food's role in well-being, integrating advanced biomedical insights for more effective nutritional strategies.

Hadar Sutovsky @ ICL Group

  • Carbon Utilisation: It has the potential to create positive environmental impacts by enabling a more sustainable lifecycle for captured carbon, providing lower environmental risks in addition to social rewards. 

  • AI in Food and Agriculture: AI technology is infiltrating many areas in the agrifood system, from integration in precision agriculture, real-time monitoring, predictive analytics for crop management, and autonomous equipment for precise farming operations to restaurants drive-thru automation technologies that use generative AI (GenAI), automatic speech recognition, natural language processing (NLP), and other tools that improve order fulfillment times, address labor shortages, and even upsell customers. I am specially watching AI-based product development both in Agtech for the discovery of novel crop solutions and in FoodTech to design novel functional protein-based ingredients for food. 

  • Inputs for Cultivated Meat: Cultivated meat which is vastly the more efficient than growing poultry or beef and also benefit everything from biodiversity to climate, in this value chain we are watching opportunities in the entry point of cell culture media, ingredients optimisation, scaffolding and scaffolding materials, since life sciences industry inputs are not yet optimise to cultivated meat production and it fits ICL as an ingredients supplier.

Matteo Leonardi @ Grey Silo Ventures

  • Molecular Farming: Provided regulatory bodies will allow, will increasingly become a challenger for precision fermentation companies. More specifically, at GSV we are interested to see how plant cell culture, a sub-tech of molecular farming, will become an alternative for the production of proteins and other high-value compounds.

  • Regenerative Agriculture: In its broader acceptance, will become the key to reach net zero targets. Agriculture still plays a major role in global greenhouse gasses emissions and technologies facilitating farmers and companies to adopt such practices, such as biosequestration, improved water cycles and soil usage.

  • Fermentation Scale Up: Technologies in support of scaling precision fermentation may find their momentum. With many companies struggling globally to produce at scale, solutions such as more efficient downstream techniques and/or to optimise parameters to allow scaling up from lab to pilot plants (and more) may finally get the funding necessary for the whole sector to thrive.

Daniel Skaven Ruben @ Solvable Syndicate

  • Fertilisers: They have a massive greenhouse gas footprint, over 2 Gigatons of carbon per year, which is more than global aviation and shipping combined. The emissions happen both during production and when the fertiliser is applied to fields. Fossil-free fertiliser is therefore an exciting opportunity that several startups are working on.

  • Food Waste: A third of food produced is never consumed, meaning food waste represents about 10% of total global greenhouse gas emissions. Solutions to cut post-harvest food loss and food waste are therefore crucial must-wins.

  • Driving Adoption: To meet consumer expectations and increase the adoption of alternative protein products, we need to see improved infrastructure and better ingredients.

Giancarlo Addario @ Five Seasons VC

  • Consumer Adoption: Consumers are, and will be, the driving force, the final validators of product/business model innovation for the entire food supply chain; witnessed by the largest more recent exits in the EU FoodTech space being B2C brands like Just spices, Yfoods and Butternut box.

  • Funding: Valuations and round sizes will continue to exit from the stagnation, with a less cautious, yet more rational approach, more aligned to the risk profile the food business

  • Taste and Price will keep being the top purchase drivers along with fare pricing, with an increased awareness to sustainability.

  • Food as Medicine: Both for humans and pet food to prevent chronic diseases, improve brain and physical performance and ensure longevity/healthy aging with leading categories being drinks and supplements. We could expect an inflection point on this trend led by GLP-1 drugs in the EU market as well as the launch of the next generation of cheaper oral products (vs current injectables) with a disruptive impact on the overall food market.

  • Food Security: Wars, political instability and climate puts sustainable food security on top of the agenda, whether it is about advanced crop breeding, green fertilizers, bio-stimulants, precision nutrition, pre- or post-harvest treatment to avoid food loss, or other agtech-related technology.

  • Data: Increased regulation and pressure from consumers require better data across the value chain with regards to various sustainability measures like GHG, biodiversity, land usage, water etc.

  • Plant-Based 2.0: Not sure if it is in 2024 or 2025, but at some point, all the efforts in both mycoprotein and better ingredients for plant-based such as alternative fats will hit the market, providing better tasting and more clean label/nutritious offerings.

  • Precision Fermentation: Related to some of the other points, but precision fermentation deserves to be highlighted as it can be truly disruptive in many fields as long as it involves high value ingredients and relevant techno-economics.

Peter Schmetz @ Vorwerk Ventures

  • Hybrid Technologies: Hybrid technologies in the alternative protein space without regulatory hurdles, e.g. HME x fermentation producing proprietary products and therefore attracting additional customers to the space.

  • Side Stream Valorisation: Usage of reliable waste streams driving costs down while offering differentiating functionalities.

  • Healthier Food for All: Solutions making healthy diets more affordable and accessible than unhealthy junk food.

Ryan Grant Little - Angel Investor

  • Foodtech Messaging Pivot: We are still just at the beginning of the food system’s transformation. This year clever FoodTech companies will change the narrative away from sustainability and health and towards food security and taste/enjoyment. That should finally turn regulators’ and consumers’ heads.

  • Cultivated Meat: 2023 saw some watershed moments in cultivated meat approvals. 2024 will be a huge year for the sector as people try it for the first time (like my cat did in December) and products make it to the market. Expect lots of headlines as populist politicians and big ag lobbyists spread fear.

Ashley Hartman @ Bluestein Ventures

  • Metabolic Health: Metabolic health will come increasingly into focus, driving consumers toward nutrition that reduces inflammation, supports balanced blood sugar levels, and promotes a healthy gut.

  • Sustainability and Waste Reduction: Sustainability & waste reduction will require further innovation across the supply chain, opening the door for disruptive technology to enable attractive unit economics.

  • Cold-Chain Solutions: Increasing consumer demand for fresher, more nutritious food is creating pressure on already overworked supply chains. Technology that drives a safer, cheaper and more efficient (read: sustainable) cold supply chain is vital.

Noga Shalev @ Fresh Start

  • Health x Food: The intersection of healthtech and foodtech has been steadily growing, capturing the interest of both food giants and the health industry. Given the challenges faced by FoodTech in the past two years, this space offers potentially higher-value solutions, better margins, and new funding sources.

  • The next stage of alternative protein: A lot has been said about the disappointment from both consumers and venture capitalists regarding alternative protein solutions, predicting the disappearance of mediocre products, consolidation of companies, and a sharp decline in investments in long TTM developments. However, the need for alternative protein solutions still exists. Breakthroughs in plant-based texture and taste solutions are crucial. Proven game-changing technological approaches for scale and price parity in fermentation and cell culture may be the key to attracting interest from specialized investors in the space. There will be a higher focus on plant sourcing, including seed genetics for new and existing sustainable crops, combined with an increasingly deeper understanding of plant protein functionality, introducing more holistic solutions.

  • Data and AI-based solutions: Still challenged by the food industry's traditional structure and data availability barriers, solutions that overcome data sourcing issues and provide an intuitive user experience for both industry professionals and consumers will be recognized as important mitigators of the current gaps. Utilizing open AI tools within the food industry's domain expertise, such as R&D tools, supply chain management and planning, restaurant tech, and nutrition tech, has the potential to create such mitigation while attracting interest from data industry giants and presenting new potential investors in the space.

Data, data, data. In the Agrifood sector, a substantial volume of data is continually generated, encompassing farm-level activities, food distribution, consumer interactions, and the consequential effects of these products on human health. The comprehensive scope of this data presents significant opportunities for capture, utilisation, processing, and monetization within the industry. Three particular areas in data excite us:

  • A massive opportunity lies in integrating data sets, enhancing data sets and facilitating coordination and collaboration between processes and platforms in the ag space. 

  • With the increasing use of data in ag, there are concerns about data privacy and security. Ensuring farmers' data is protected and used ethically is an important consideration and an area of significant opportunity. 

  • As food reaches consumers, understanding their behaviour becomes pivotal—insights into preferences and consumption habits offer invaluable opportunities for product development and understanding the impact of food choices on human health. 

Agree, disagree or want to have your say? We’d love to hear from you.

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