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Daily news and analysis about the food tech revolution

food tech investment

Investor Look: 10 Trends to Watch in Ag + Food Tech in 2022

Food, ocean and agtech venture fund S2G Ventures released a report citing ten catalysts that will shape intersecting industries including agriculture, food manufacturing, nutrition and food retail in 2022. The report examines the trends that are driving the transition to a climate-smart, healthy food system.

S2G — investor in several food and agtech startups — looks at technology disruption in three major categories including agricultural innovation, supply chain disruption and personalized food and nutrition.

“The food transition is still in its infancy but is being propelled by seismic tailwinds: massive demographic change spurring new consumer demand, significant advancements in the biology, chemistry and physics of food production to create new choices and now capital markets anchored by ESG that want to fund high growth, disruptive companies,” commented Sanjeev Krishnan, S2G Ventures Managing Director and Chief Investment Officer.

Farmers in the US are facing new challenges every day from nutrient-challenged soil to lack of access to capital. The S2G report describes the ways that innovation in fintech, robotics and biotech along with an increase in socially and environmentally conscious investing (ESG) will lead to the “fourth industrial revolution” in farms across the country.

The drivers of innovation in farming include:

  • Robots will increase efficiency while reducing labor needs across the food system.
  • The rise of ESG will help to digitize the farm.
  • Fintech will transform opportunities in agriculture, just as it did for the student loan and mortgage markets.
  • RNA technology that saved lives during Covid-19 will be applied to farms to save soils.

Supply chain disruptions experienced over the past two years have catalyzed both governmental institutions NGOs and the private sectors to fund and drive innovation in biotech, cellular agriculture and food waste solutions. The result according to S2G Ventures will be supply chains that are more nimble, sustainable, localized and less wasteful.

Innovations that will revolutionize supply chains include:

  • Fermentation will power the next generation of alternative protein products.
  • Cellular protein will provide consumers around the world with safe, sustainable food.
  • Adoption of food waste solutions will be recognized as both a good business practice and an essential tool for feeding the world.

Even prior to the pandemic, consumers were demonstrating a desire for better food choices and a renewed focus on ways to personalize their nutrition and healthcare. To answer this demand, food and nutrition startups are using cutting-edge bio and food science as well as AI and machine learning to develop nutrient-dense, functional and personalized food products.

Personalized food & nutrition catalysts include:

  • AI and machine learning platforms will unlock greater understanding of and use cases for plants and fungi.
  • Food will become central to the effort to prevent chronic disease and improve health outcomes.
  • Food brands and grocers will have to “personalize or perish.”

To dig into more details on areas to watch in food and agtech this year, download the full report from S2G Ventures.

Finistere: Food Tech Investment Reached $4.8B in the First Half of 2020

An unusually high volume of food tech investment news has kept us on our toes all summer, and we’re not the only ones to notice. Food tech VC firm Finistere Ventures said today that 2020 so far as been an “extraordinary” investment time for both food tech and agtech, with much of that investment happening smack dab in the middle of the pandemic. More importantly and according to the firm’s latest findings, much of the capital is actually a direct reaction to the pandemic. Finistere, whose investment portfolio includes Memphis Meats, CropX, and Good Eggs, released the findings today in collaboration with PitchBook Data, according to a press release sent to The Spoon.

For the first two quarters of 2020, total agtech investment reached $2.2 billion compared to the $2.7 billion raised for the entirety of 2019. While slightly lower, food tech investment reached $4.8 billion during the first two quarters of 2020 compared to $7 billion for all of 2019, and that number will continue to rise rapidly (see below). 

Large investments, what Finistere calls “mega rounds” of more than $100 million have continued and encompassed all of the top 10 food tech investments and 50 percent of the top agtech investments. 

Other notable points, as quoted directly from the report, include:

  • Investors are helping startups push their funding needs outside the “Covid zone” and build more evidence of their value as future growth investors will be looking for signals of scalability.
  • Rounds led by new investors have been a lesser part of the 2020 total, which is likely to continue while capital managers take stock of the market conditions.
  • While early-stage Agtech has seen a decrease in pre-money valuations, valuations for late-stage financings continued to increase in 2020 despite the current pandemic. Valuations will be under pressure looking forward and will likely require a year or more for the true impact of Covid to manifest in this metric.

Food tech, in particular, has a promising outlook right now, thanks in no small part to consumers’ collective behavioral shift to eating more at home. “It is our view that there will be lasting and persistent changes to consumer behavior in at-home consumption, and interesting to note this is the first year since 1994 that restaurant share of food consumption dropped versus in-home,” the report stated.

Other activity around the food tech sector supports this idea. Online grocery sales have experienced record highs since the start of the pandemic. Many companies, from plant-based meat producers to snack brands, have launched direct-to-consumer channels in response to this shift away from public spaces and into the consumer home. And with the state of the restaurant industry still very much in flux, these behaviors aren’t likely to change anytime soon.

Finistere noted that for food tech, retaining customers and growing margins will be important to future funding rounds.

Agtech will have a bit more of an uphill climb. The report states that agtech companies “are likely to face a turbulent outlook for 2021,” citing farming margins, labor costs, trade conflicts, and pressure to develop more sustainable farming methods as factors. The industry should expect much consolidation in the future.

Here’s How Coronavirus Could Change Food Tech Accelerators in the Future

For the last couple weeks, I’ve been working out of the Food-X office, one of the most well-known food tech accelerators in the world. And amid news of state-wide restaurant closures, events getting postponed or cancelled, and other ways coronavirus has set the food industry reeling, I found myself wondering what happens to startup accelerator programs as the pandemic whips its way around the globe altering both daily life and day-to-day business operations?

Startup accelerators exist to foster and invest in the development and growth of young companies. Multi-month-long programs often involve startups working together, or at least out of the same shared office space, face-to-face meetings with mentors and potential investors, and demo days, where founders pitch their products and services to crowds of people. But at a time when public spaces are being shut down and companies are mandating employees to work from home, startup accelerators may also have to change they way they run their programs.

To get a hint of what’s to come, I sat down with Food-X’s Program Director Peter Boddenheimer last week to chat about how the startup accelerator format will likely change in response to all this, and what that means for participating companies.

1. Prepare for remote work and weird hours.

Accelerator programs vary widely in terms of how long they require participants to actually be onsite. Some, like The Yield Lab or Chipotle’s accelerator, only require companies to be at HQ for certain weeks. Others, like Food-X, are conducted in-person for the duration of the program.

That’s under normal circumstances, though. In the wake of a pandemic, in-person programs can almost certainly expect to change their format, something Food-X itself is already doing. Boddenheimer said that while the program will start as planned this week, it will be conducted virtually for the time being. “We’re preparing in terms of the tools that we’re going to use for remote sessions, recording everything and having high-quality recordings so that people can get value out of it,” he noted, adding that now was an “interesting opportunity” for alternative models like this.

Food-X is, of course, in New York City, one of the hardest hit areas in the U.S. in terms of coronavirus right now. But with more cities and states closing gyms, cinemas, restaurants, wineries, and other businesses, more programs around the world might want to consider virtual programming for cohorts that kick off soon. For those that continue to meet in person, they may also want to adjust office hours so that attendees are arriving and leaving during non-peak hours, when elevators, stairwells, and trains will be less crowded.

2. There may not be demo days.

The culmination of many accelerator programs is a demo day where startups pitch to potential investors and other industry figures. But given that the process involves lots of people crammed into a room together, and in light of the CDC is advising against groups of 50 or more meeting for the next eight weeks, we can expect that many demo days scheduled for the next few months will either move online or not happen at all. 

Boddenheimer said the prospect of not having one presents challenges — and that may not be a bad thing. Citing his own love/hate relationship with demo days, he noted that he actually looks forward to this challenge of having to find an alternative to the traditional format. “I think it puts the onus on us to do more in terms of preparing people. Not necessarily pitch videos but maybe higher production value videos that would help people communicate with investors.” While he added that any kind of community building was “going to be tough” right now, the glass-half-full view of the situation is that not being able to do in-person demo days and meetings with potential investors will force everyone in the startup community to look outside comfortable norms and run better processes when it comes to fundraising.

“And if we find some things that work, maybe they start to become the norm,” he said.

3. There will be lots of questions and uncertainties.

As of this writing, Food-X’s latest cohort is happening, though with modifications like remote sessions. Many more accelerator programs will have to grapple with whether or not to do the same with their formats, and in some cases whether to hold a cohort at all.

Startups, meanwhile, will have to decide if they are willing to relocate to participate.

“Everybody’s had questions,” Boddenheimer said of the chosen participants for Food-X’s upcoming cohort, which starts tomorrow. So far, only one of those has expressed major concerns and, after much discussion with Food-X, has ultimately decided to attend anyway.

“We’re checking in [with companies] daily and reading up on things and we’re trying to make the best decisions we can based on the information we have, but it’s kind of something nobody’s really dealt with before.” He added that Food-X employees have gone to great lengths to “make sure the office is as safe an environment as possible.”

Of course, that’s if and when companies can actually show up to work onsite. And with the situation around COVID-19 changing hourly and more cities mandating closures, it’s anyone’s guess what accelerator programs and their participants will face in a week’s time, let alone a couple months.

But before we all head down the doom-and-gloom rabbit hole, consider this: successful startups and their founders tend to be far more flexible and adaptable by nature than, say, a 20,000-person corporation. As Boddenheimer says, “The best founders learn to take the ups and downs in stride. So I think those people thrive in this type of environment.”

That doesn’t mean the next few months will be easy or even pleasant for young startups and the organizations that foster them. But it does suggest that new and better norms, not to mention companies, can and will come out of this time.

“There’s a theory in general that the best time to start a startup is during downturns, when it’s the hardest,” says Boddenheimer. “It may end up being that the next year or two years are are really tough time but some great companies are going to be started in these next 12 to 24 months.”

Reheated: Q1 2017 Shows Food & Beverage Investment Is Hot Once Again

Food and beverage are hot again.

After a sluggish 2016, a strong first quarter of 2017 suggests investment in the food and beverage sector could be set for a comeback on an annualized basis according to CB Insights.  This would be a reversal from the past couple years, which has seen food and beverage sector investment decelerate since hitting a peak of $787 million in the final quarter of 2014.

Food and beverage investment. Source: CB Insights

Not only did last quarter reverse the trend in total annual investment, but also saw an increase in the average funding amount, which has also been on the decline for the past several years, falling from an average of $7.6 million per deal in 2014 to $2.7 million in 2016.  The average deal value in Q1 2017 was $6.7 million, more than double the 2016 average.

But Q1 2017 was an extraordinary quarter. A single private equity deal by Food Union, a Latvia-based conglomerate of food and beverage brands, accounted for nearly half ($225 million) of the total investment for the quarter.  Backing this deal out of the quarter’s total results in a figure much more on par with past quarters ($289M Q1 2017, $265M Q4 2016, $322M Q3 2016). It’s tough to say whether we’re seeing a true reversal in the decline in investment or just an anomaly resulting from a single high value deal.

Who’s backing food and beverage deals?

While deal value has been on the decline the last few years, the volume of deals has risen steadily since 2012.  With the growing activity in food and beverage, several new investment firms have emerged, like CAVU Ventures, New Crop Capital, PowerPlant Ventures and S2G Ventures, that focus solely on this space.

And these funds are growing fast.  AccelFoods, one of the early leaders focused on the food and beverage sector, nearly doubled the value of its fund recently, growing from a $20 million fund to a $35 million fund.

Large corporations in this space are also getting the fray, creating incubator and funding branches to foster growth in innovative start-ups.  Company-affiliated funds include Kelloggs’ 1894 Capital, General Mill’s 301 Inc., and Campbell’s Soup’s Acre Venture Partners.

What are they investing in?

Since 2013 spices and condiments as a product category have attracted the most funding and acquisition deals.  Notable in this sector was the acquisition of Justin’s by Hormel Foods in 2016 for $286 million after raising $48 million.

From a funding perspective, beverages account for half of the top ten most well-funded start-ups since 2013. Cold-pressed juice start-up Suja takes the top spot with $196 million disclosed funding from investors including Coca-Cola, Boulder Brands Investment Group, and Leonardo DiCaprio.

Looking forward, venture capital is seeking out market disruptors for investment.  One of the leading categories currently attracting deals is plant-based protein, which has the potential to significantly alter the beef and dairy industry.  CB Insights has earmarked plant-based protein as a significant investment category based on the high level of activity in this space amongst what they term “smart money” investors, those with a strong past performance and exit history.  Examples of alternative protein are varied and include molecularly engineered meatless hamburgers from Impossible Foods ($183 million raise from Google Ventures, Khosla Ventures, and Bill Gates), dairy-free milk made from peas from Ripple ($43 million raise), and cricket-based snack bars from Exo ($5.3 million raise).

While it’s unlikely that bug based protein is going to overtake the livestock industry anytime soon, the fact that these types of companies are getting funding demonstrates the broad thinking and growth in deal activity in food and beverage.  As early indicators show, 2017 is shaping up to be a very interesting year in the investment community, particularly for food and beverage companies.

DoorDash Adds a B2B View to the On-Demand Home Delivery Market

DoorDash’s latest TV spot shows a family relaxing in their San Francisco Victorian home when they are suddenly alerted that dinner has arrived. As a micro sized red car pulls up, dad jumps out of his chair, daughter pushes over her toy tea set and Rover makes a beeline for the door. Mom answers the doorbell where she is greeted by a smiling “Dasher” who hands her the food. Dad and daughter are hanging out the window grinning as if they had won the Publishers Clearing House prize. Yes, it’s DoorDash, and the spot ends with the slogan, “Get ready to get the door.”

The finely crafted 30-second ad may inspire customers to download the DoorDash app and order up their Sunday supper. However, the company’s recent announcements indicate restaurant-to-home-delivery is only a small part of its vision.  In Dec. 2016, the company launched DoorDash Drive, a service in which a restaurant can place the delivery order and indicate its destination. Drive is part of what company executives say is a point of competitive differentiation—a focus on the backend/infrastructure.

“With DoorDash Drive, we’re building the first logistics layer for restaurants, to solve deliveries that may or may not originate on the DoorDash marketplace,” DoorDash cofounder and CEO Tony Xu said in a recent interview with Fast Company. “A lot of times, an off-premise order, whether it’s takeout or delivery, doesn’t necessarily happen through an app. It happens over the telephone or in person. A merchant may want to fulfill those deliveries, and so why can’t there be a way for them to do that?”

Amazon’s Prime Now restaurant delivery is poised to provide major competition to DoorDash as an infrastructure provider. Already one of the world’s largest backend providers with AWS, Prime Now offers restaurants a merchant app which can accept, cancel or refund orders. No doubt, that’s the tip of the iceberg for what Amazon can provide its clients.

As a straight-up restaurant delivery company, DoorDash is much smaller than GrubHub with far less financial resources. In fact, DoorDash’s most recent investment round in 2016 dropped its valuation to $700 million, with share prices dropping 16% between its second and third fundraising campaign. The focus on money is crucial for a company intent on earning its reputation by building a comprehensive infrastructure to handle restaurant delivery logistics. DoorDash’s theory is that if an eatery can use its Dashers to handle inbound and outbound orders, the establishment can expand its catering business.

DoorDash Drive product manager Abhay Sukumaran says his company’s aim is to build a “programmatically accessible logistics network” that becomes a platform for its customers to add its own personalization such as linking it to a CRM system. “The goal is that this infrastructure becomes something that you can build other things on top of,” he told Fast Company.

Taking on delivery for restaurants and caterers could be a good market niche for DoorDash, but it will not be without its challenges. For example, a delivery person handling a large order on behalf of a food client becomes more of a representative of the establishment. While a restaurant can set rules for its own drivers regarding appearance and customer interactions, working with virtual delivery agents cuts out such important controls.

But there are delivery agents DoorDash can control—the robotic kind. U.K.-based Starship Technologies is working with DoorDash in Redwood City, CA to test a small number of its remote-controlled robots as surrogates for humans for short-distance food delivery.

DoorDash is by no means leaving its food delivery roots behind. They already operate in 300 cities in the U.S. and the company is adding liquor delivery and small-item grocery delivery from Whole Foods to its roster. That seems like a lot of the company’s plate as it tries to ride its infrastructure vision to either an IPO or big-ticket takeover.

Chatbots Utilize Advanced Technology to Bring Instant Grub Gratification

Restaurants, supermarkets and even TV food networks are taking the concept of multichannel marketing to new heights. Using technology like Artificial Intelligence (AI) and Natural Language Processing (NLP), companies ranging from Food Network, Whole Foods, Pizza Hut to Wingstop are using social media platforms like Twitter and Facebook Messenger to connect with their customers.

Chatbots, an application that uses AI and NLP to fuel conversations between consumers and brands, attempt to replicate human-to-human interaction. This is done by offering the hungry masses access to recipes, cooking tips and even ordering of prepared food. NLP and AI translate the meaning of a user’s request and connect to a database of possible responses, or in the case of a food order, links to a provider’s ordering system. In theory, chatbot applications are “learning systems” which get smarter with each successive interaction between customer and brand. Over time, the application should be able to predict a user’s preferences to create an even more valuable experience. “I see you like vegan recipes,” the chatbot from your grocery store will suggest. “I have a new way to sprout chickpeas you might like.”

Chatbot are aimed at impatient millennials who are always on the hunt for instant gratification. Whether it’s ordering a pizza, or looking for ideas on how to create quick meals, connecting instantly through social media is a way for incumbent grocery and fast food chains to become more accessible and relevant to this younger target audience. Executed properly, chatbots have synergy with other marketing channels — television, internet video, and web-based ads. What used to be called omnichannel marketing takes on a new meaning when strong channels work in harmony to deliver measurable outcomes.

“We have very socially minded millennial customers,” Wingstop Chief Marketing Officer Flynn Dekker told Fortune in a June 2016 interview. He said today’s consumers are a more impatient society that doesn’t want to have to wait for their food. “We all want to cut the line. This technology allows people to cut the line,” he added.

“Consumers are looking for fast and easy ways to find recipes, and chat bots are just that—fast, and very easy to use,” Liesel Kipp, vice president of product management for Scripps Networks Interactive, the parent company of Food Network, told [a]listdaily in a Dec. 2016 interview. “Bots are another great way for us to deliver on the promise of Food Network being our user’s best friend in food.”

Austin-based Conversable has built the chatbots for Whole Foods, Wingstop, Viacom, Pizza Hut, and Victoria’s Secret. In a guest post with Venture Beat, co-founder Ben Lamm, provides some advice for companies looking at chatbots as a new channel to add to their marketing arsenal.

Answering a key question regarding what a client should look for as successful outcomes for deploying a chatbot, Lamm says, “Data, data, and more data. Once you’re live, you can collect invaluable data about the questions your customers ask, the features they want to see next, and so much more about their needs as they evolve over time.”

“Succeeding with bots is not rocket science,” adds Lamm, “A little common sense, a walk-before-you-run approach and some basic communication can get you from theory to production in less time, at dramatically lower costs, with tangible results to show for it that you can continue to build on and expand into more AI-driven experiences over time. That’s the value proposition bots were supposed to have all along, and it’s there for the taking if you have the discipline to capture it one step at a time with the right conversational intelligence behind it.”

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Analysis: How Postmates Tackles the World of Urban Logistics for Restaurants and Beyond

Since launching in late 2014, San Francisco-based Postmates has had its own grand vision. This plan includes disrupting the way products get from any restaurant or store to their ultimate destination.

Competing in a SRO category, which includes UberEats, Amazon, Grubhub, and specialty delivery companies, such as Drizly, requires more than a fleet of drivers with good GPS. Postmates approach to what it calls urban logistics combines utilizes some standard industry practices such as advanced fleet management.  The company diverts from the pack by expanding its delivery menu to include non-food items, experimenting with robotics, and focusing on niches such as liquor delivery to build a differentiated market profile. The big selling point to consumers and merchants is the aim to bring delivery costs down with a tighter relationship between buyers and sellers.

“We have a dream that there is a world with zero delivery fees,” Postmates CEO Bastian Lehmann told Fast Company in 2016. “That’s where we want to move toward.”

According to Postmates, it has 6,000 partners on its platform who pay a 20% commission on orders made within the company’s app. For consumers, who rely heavily on delivery services for food and other goods, the company launched a subscription service for $9.99 per month for unlimited deliveries for orders over $25 from Postmates’ partner merchants. Lehmann believes that the subscriber-partner connection acts as a direct, targeted advertising/marketing channel for merchants who can save on acquisition costs by collapsing the sales funnel. At some point, those partner savings can be passed on to customers, bringing down delivery costs close to zero.

“It’s the company’s job to recruit more merchants to participate [as partners] so that delivery gets more and more attractive to customers,” Lehmann added.

As of January 2017, Postmates eliminated the need for drivers to schedule their active times in advance. According to the company’s website, “… as weekly demand continues to increase, the scheduling system has become increasingly ineffective.” The company does suggest times when ordering is at its peak which will allow drivers to maximize their time and even take advantage of what it calls “blitz pricing”—a supply to demand calculation. As the company’s site explains, “When there are not enough Postmates (drivers) to fulfill demand, the delivery price increases by a multiple. When enough Postmates come on the platform, then the price comes back down.”

Postmates interaction with its fleet varies from others in the space with the issuance of a prepaid credit card. The card is used by drivers for deliveries that need to be paid for at pickup. Drivers are given the option of accepting cash-only deliveries for which they are reimbursed within a few days. Tipping is accepted, but the company recommends customers add gratuities via the app or website rather than offering cash.

Another leg of Postmates’ stool is to look at what it believes are underserved categories which brings new partners to its fold. Even as the number of delivery services solely focused on alcohol grows, Lehmann sees his company’s subscriber-based, unlimited delivery model having a leg up on its competitors. This year, Postmates expects to generate $10 million in revenue from alcohol sales alone.

Postmates is looking to robotics to expand its delivery fleet, a sign the company is looking to technology to fuel its path forward. Starship Technologies, with its autonomous delivery robot, has launched a pilot program for on-the-ground robots to deliver goods for Postmates in Redwood City, California. The robots will deliver small products they can carry in their storage units while human remotely monitor their performances for the trial.

Beyond the lofty view of its future, Postmates will have challenges in getting from its current position to leadership in the delivery/logistics space. As of late 2016, the company has raised $278 million in eight rounds from 26 investors making any sort of strategic pivot difficult. Well-funded competitors including GrubHub ($3.2 billion market cap), Amazon ($414 billion market cap) and Uber ($8.81 billion capital raised) are positioned to easily replicate any successful venture Postmates undertakes. Also consider GrubHub and UberEats have a global footprint while Postmates is only available in the United States.

While it might not be its stated goal, Postmates is evolving into an attractive addition to either a competing delivery service seeking an alternative for expanding its product mix beyond restaurants, or a large grocery chain wanting to add a more robust home delivery service to its arsenal. The evolving economic climate will determine whether the company’s future includes an IPO, partnership, buyout or some other exit strategy.

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Image credit: Flickr user Matthew Scott under creative commons license.

Portable Cooling Technology Takes the Gold at Food + City Competition

In keeping with the theme of supply chain innovation, Evaptainers, a company that offers low-cost, mobile, electricity-free units, took home the top prize at the 2017 Food + City Challenge.  The third annual event highlighting startups and innovation in food technology was held at McCombs School of Business, on the campus of the University of Texas, Austin.

Evaptainers started as part of a class project at MIT where students were asked to create something that would change the lives of one billion people. The company, which has field-tested its cooling device in Morocco, is headed by co-founder CEO Scott Taylor, cofounder/COO Quang Truong, and co-founder/CTO Jeremy Fryer-Biggs. In addition to the $30,000 grand prize, Evanptainers has received grants from the United States Agency for International Development, National Geographic, and the Massachusetts Clean Energy center.

Rise, based in Brooklyn, won the Silver Award for $10,000. The company is a startup that upcycles spent barley from microbreweries into organic, high-protein flour for bakers. Nuwiel, a Hamburg-based company that has developed an intelligent e-powered bicycle to facilitate more efficient delivery, won the Bronze Award for $5,000.

The People’s Choice Award, chosen using internet voting by engaged citizens, was given to Origintrail. Based in Slovenia, the company provides detailed information about a food product’s roots which allows marketers the ability to create differentiation.

Food + City Challenge Becomes Springboard for Awareness and Future Success

While most startup showcases are hardcore “show and tell” with a single purpose, the Food + City Challenge prize is as much about raising awareness as it is about attracting financing.

“I have done startup meetings,” says Tom Schultz, President, and CEO of Fresh Surety, one of the 17 companies that made the finals in the 2017 competition. “If I find two or three people in the crowd of more than a thousand who say this is something I can use, it is a success. This is a disruptive technology that will have an impact effect over the next 20-to 30 years.”

Fresh Surety will be demonstrating its technology, which utilizes sensors that are able to determine the freshness of produce from farm to table. This is achieved by measuring the ambient temperature of a specific compound in the fruits or vegetables. With this new application, Fresh Surety can create an economic efficiency in the value chain. As Schultz explains, 30% of the $600 billion fresh produce market is lost to spoilage. For example, by tracking the freshness of a palette of strawberries, with all parties in the value chain—the farmer, wholesaler, and market—approximately 10% of the fresh fruit can be saved from spoilage en route to its final destination.

The ASIC device was invented by career technologist John W. Hodges. He grew up on a tomato farm and immediately saw the application of his work. But, as with many cutting-edge discoveries, the marriage of technology and business was needed to apply Fresh Surety to a broader market opportunity. That’s where Schultz –who has a long track record of bringing innovative tech products to market — comes in. “(Fresh Surety) was missing a businessman who turns great technology into a successful idea,” Schultz says.

Fresh Surety has worked with three development partners—Whole Foods, Amazon Fresh, and Watsonville, Calif.,-based berry producer Driscoll’s—to prove the sensor-based solution’s viability, Schultz adds. At the Feb. 4th Food +City challenge event, the company will show in real time how it can track the changing freshness of produce. Win, lose or draw, based on past challenge prize winners, Fresh Surely likely will be in an even larger spotlight.

The 2016 challenge prize winner, True Made Foods, a New York-based manufacturer of high-quality vegetable-based condiments, received a $415,000 investment from Black Jays Investments two months after the competition. Colorado-based The Food Corridor, a 2016 Silver Prize winner, used the exposure to its concept to move forward in a big way.

“I got paired up with Trish Wesevich, who owns Capital Kitchens, a shared-use kitchen in Austin,” Food Corridor CEO Ashley Colpaart said in an interview in late 2016. “I couldn’t have asked for a better mentor match….One of the biggest things she helped me understand is that each region — and each public health department — has its own rules and regulations. Some cities are more willing to try a new idea than others. So for us to grow, we’d need to move into cities that want to support food entrepreneurs and are willing to work with you, instead of the more stringent ones that tend to have more barriers to entry.”

Other 2016 Silver Prize Winners were Garbage to Garden, Agruppa and Real Food Solutions.

Food + City’s Third Challenge Competition Aims to Empower Changes in Food Ecosystems

Food + City is an emerging voice to be reckoned with in the world of food tech. The organizations calls itself a “catalyst for supply chain innovation to improve how we feed cities.”  The process brings together visionary entrepreneurs to showcase their impactful ideas for creative solutions to the myriad issues facing the future of food.

As part of its work, Food + City holds an annual challenge prize that brings together the best of the best of emerging food tech from around the globe to compete for $50,000. The third annual event will be held 11 am to 4:30 p.m. on Feb. 4, 2017, at the McCombs School of Business at  The University of Texas at Austin. This year, the 17 finalists range from a logistics-based alternative to landfills to an innovation in portable refrigeration.

As Curt Nelson, an investor in food tech and new judge for Food + City’s third challenge prize puts it, “We seek the enablement of for-profit entrepreneurs to solve some of the world’s biggest problems in the food space. Our focus is on people, the planet, and profits.” The group’s mission takes on even greater meaning, considering many business-to-business food tech startups don’t have the sex appeal or lucrative investor exit strategy that most venture capitalists require for investment.

Nelson will be challenged as he examines this year’s finalists. They include:

Bucketload: High-tech harvesting using the cloud

Eat Pakd: Delivering healthy lunches directly to homes

Epicure: Health vending machines

Evaptainers: Portable, electricity-free refrigeration

Farm Fare: Mobile, logistics for expedient buying and selling of local food

Fresh Surety: Technology to improve tracking of produce shelf life

Hazel Technologies: Products that extend the shelf life of fruits, vegetables, flowers and plants

Joe’s Organics: Food recycling that turns food waste into compost to grow specialty produce

Local Libations: Barfly system for tracking location and volume of kegs

Nuweil: E-powered bikes for improving city travel logistics

Open Data Nation: Database of public health inspections of restaurants

Phenix: Waste reduction services

Origintrail: Facilitates product differentiation based on food origins

Rise: Turning spent barley into flour for bakers

Rust Belt Riders: Food waste logistics

Science for Society: Solar-powered food dehydration

Smallhold: Delivering partially grown mushrooms and leafy greens to farms for completion and harvesting.

Yarok: Microbiological testing to avoid bacteria-based recalls

What will Nelson look for as he works through the array of worth finalists for the challenge prize?

“It will be really important that the company has the possibility of fundamentally changing the way of delivering (products) through the value chain,” says Nelson. “It needs to be something that has the potential to crack open the nut or seed of an idea that can grow from there.”

The Spoon will be at Food + City this week so stay tuned for more updates.

How The Smart Kitchen May Help Induction Cooking Finally Heat Up In The US

In the world of food tech, induction burners and cooktops have an uncertain future, despite some of their obvious benefits. Known for their ability to save energy and offer precise cooking temperatures, the market is poorly differentiated and highly segmented.  This has confused consumers and led to slow growth and adoption in the home kitchen. For those looking to optimize their smart kitchen design, it’s difficult to determine whether an induction surface aims to be a platform for other devices or an intelligent loner. And for masses, the induction burner may be a costly, unnecessary luxury.

Induction cooking uses magnetic induction as opposed to the more common thermal induction used in gas and electric cooktops. Magnetic induction rapidly generates heat and is safer and more efficient than other heat sources. Restaurant and commercial kitchens have recognized the value of the burners, adding capacity when needed in peak order times.  Kitchen in revolving restaurants 50 stories up discovered the value of these burners, as have RV-ers and boaters.

It is important to note that not all cookware can be used with induction cooktops. The easiest way to determine if your pots and pans are suitable is to test them with a magnet. Many manufacturers of induction burners sell specially designed cookware to complement the overall purchase.

At issue is the confusing array of choices available, with variations coming among the options accompanying the burner itself. The entry level segment is those single burners that look to be fancy hotplates, often showcased on infomercials and home shopping shows. They frequently are on television cooking shows in food trucks or small kitchen operations. Because of general consumer unfamiliarity, a well-designed TV commercial can illustrate the benefits and versatility of the appliance.

The next segment is the market for standalone induction burners with some degree of IoT smarts. Offerings in this area are quickly “heating up” with products from established manufacturers (Salton and Hamilton Beach) to crowdsourced-based hopefuls and newcomers such as FirstBuid’s Paragon and the Oliso Smarthub. Cookware giant Meyer has bet on the pairing of induction heating with Bluetooth pan and app control and guidance to present a “guided cooking” system in the Hestan Cue, which the company plans to finally roll out to customers in the spring. Using Bluetooth or WiFi, a sensing probe and in some cases proprietary pots and pans, these induction burners can be controlled using apps on your smartphone tailored to individual recipes.

The move from standalone burner where the home chef provides the smarts to those controlled by sensors and apps adds cost. Entry level units, such as the NuWave (the one As Seen on TV), are priced as low as $70, but the addition of IoT features takes the price up to $500. For those on an unlimited budget, there is the Breville PolyScience model (with the apt name Control Freak) with a special probe and precise temperature control for $1,800.

Moving up in price, but down in intelligence, are the induction burner cooktops that are sold either separately or along with a stove. Whirlpool and General Electric, along with other major appliance manufacturers, are in on this part of the market with prices ranging from $600 up to $7,000 (for the Wolf induction cooktop and stove) and beyond. Many induction cooktops offer timers and precise heat controls but little more in additional functionality. The exception is the Samsung version which projects an artificial flame to show consumers the level of heat being generated. Samsung does have a few induction models that can be controlled with a smartphone app, but that functionality is limited to such features as a virtual on/off switch.

At CES 2014, Whirlpool showcased an interactive cooktop that functions as a platform similar to Samsung’s Family Hub which currently is baked into their newer refrigerator lines. The vision for the interactive cooktops is one in which the home chef can find recipes on a stove-top screen and use built-in heat-controlling sensors to facilitate culinary greatness.  The induction range in this scenario becomes an IoT platform to control and interact with other smart appliances. That was three years ago and now, with the fridge a more popular choice as an IoT hub, the cooktop may be reduced to a lesser role in the smart kitchen.

And finally, at this year’s CES Panasonic introduced a unique spin on induction with a countertop induction oven. Unlike other induction heating products, Panasonic’s Countertop Induction Oven (CIO) is a fully enclosed cooking unit that is the size of a microwave oven. According to Digital Trends Jenny McGrath, the CIO was able to cook a full meal of chicken cutlets in about 23 minutes.

There have been past concerns about adoption of induction cooking in the U.S., compared to its popularity in the European market with smaller kitchen spaces. That appears to be changing.  Poor uptake was based on the limited consumer choices and consumers figuring out how the burners fit into their personal culinary style. The smart induction cooktop will have a challenge finding its market niche, most likely needing to capture the imagination of architects and designers seeking low energy, smart kitchen functionality. The fastest growing segment, souped-up induction hotplates (with or without IoT functionality) appeals to the niche of those in search of nice-to-have gadgets like sous vide machines. For the massive Blue Apron recipe-in-a-box crowd, however, it’s a bright shiny object that looks cooler in a YouTube video than on a ceramic countertop. The most obvious appeal is to provide an extra burner when you have your friends and family over to cook together.

VCs and Big Food Sink Money into Future of Food Startups

A clear sign of maturation for the startup food-tech sector is reflected by the entry of new venture capital from tradition VC firms as well as big names in the food industry. Along with an array of global venture capitalists, Campbell’s, Tyson Foods and General Mills have established multimillion-dollar funds to support new companies in a myriad array of future of food entrepreneurs.

Two areas within the food technology sector that are the focus for investment are meal delivery and grocery delivery. According to VC tracker, CB Insights, in its November 2016 report, the market shifted in Q3 2016 when 30 deals related to meal delivery surpassed the 27 in the grocery delivery sector. The individual investments for the meal delivery marketplace appear to be smaller than grocery delivery, as the total for grocery delivery was higher at $406 million, compared with $376 million for meal delivery. In addition, one deal for a meal-delivery startup, London-based Deliveroo, was for $275 million –accounting for 70% of that area’s Q3 dollars.

Others food-tech firms receiving large Q3 VC investments were Fresh Direct with $189 million and meal service Home Chef with $40 million.

Between the meal delivery and grocery delivery space lives another emerging space receiving more than its share of funding. Companies such as Blue Apron, which offer meal-kit subscriptions, sell pre-packaged groceries that align to specific step-by-step recipes. Satisfying the grocery and meal delivery crowds, meal kits offer the convenience of skipping the supermarket combined with the joy of simple cooking. Blue Apron has received more than $500 million in VC funding today, including money from Bessemer and First Round Capital. The company is reported to have more than a $1 billion valuation.

Not to be left behind, major food brands have set up venture funds which serve the dual purpose of protection against future market trends as well as smart capital management. Tyson Foods launched Tyson New Ventures in December 2016 to expand beyond its 5% interest in plant-based protein startup Beyond Meat. The Tyson fund will be managed by Mary Kay James, a former managing partner in DuPont Ventures. Her previous interest was in biotech and specialty food products. In the case of Tyson, a leading producer of poultry and meat, investing in new forms of proteins protects, and simultaneously positions, the company against major consumer shifts in eating habits.

In February 2016, New Jersey-based Campbell’s Soup Company launched Acre Venture Partners with initial fund totaling $125 million. To date Acre has invested in food safety startup, Sample6; agricultural data provider, Farmers Business Network; urban farming’s Back to the Roots and home juicing manufacturer Juicero. As with other food companies investing in startups, this lineup provides Campbell’s access to either distribution opportunities, new channels or expanded uses for its existing products.

In October 2105, General Mills launched 301 Inc, a business development and funding arm focused on early-stage food companies. To date, 301 Inc has invested in Beyond Meat, Kite Hill (vegan non-dairy products), and Tio Gazpacho, a bottled-soup manufacturer.