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Daily news and analysis about the food tech revolution

VC

PitchBook: More than $10B Invested in Grocery Startups This Year

We’ve been saying that investment in grocery startups is downright frothy this year, and now PitchBook has put a number to all this VC activity. CNBC reports that venture-backed grocery startups have raised $10 billion so far in 2021, according to PitchBook’s data, vaulting past the $7 billion raised in the sector last year.

Part of the reason for the big jump is the mega-rounds that some grocery startups around the world raised during the first half of this year:

And that doesn’t even count all the other, smaller fundraises that have happened for companies like Food Rocket and Fridge No More.

The pandemic certainly had a hand in driving all this frothiness. Lockdowns, social distancing and general fears around catching COVID-19 pushed record amounts of people into online grocery shopping in 2020. Additionally, there are a wave of startups like Gorillas, and Gopuff and Fridge No More that are creating an entirely new type of on-demand, speedy delivery model. These companies operate dark stores in neighborhoods with a small delivery radius, promising grocery delivery in as few as 10 minutes. This is a new concept for most shoppers, and the allure of tapping a few buttons on your phone and food arriving minutes later could upend the way we buy groceries.

CNBC adds that all of this massive funding is disproportionate to the opportunity in the online grocery category. As such, there could be a wave of consolidation coming soon. This is true whenever money floods a particular sector, and it is especially worth considering given the fluctuating state of the pandemic.

Questions around how much consumers will stick with online grocery shopping once the pandemic recedes remains unclear. Vaccines have helped abate the virus, but they are rolling out at different paces around the world, and viral variants threaten to bring resurgences in case numbers. Brick Meets Click reported that online grocery shopping dropped to $7 billion in sales this past May, down 16 percent year-over-year. But that $7 billion figure is still 3.5 times higher than pre-pandemic online grocery sales.

But none of what might happen can change what’s already been done. That $10 billion has been invested, now we’ll just see which companies can bring bring returns.

S2G Ventures’ Managing Director on the 4 FoodTech Trends That Will Rise Post-COVID (Spoon Plus)

I wanted to (virtually) sit down with Krishnan to discuss S2G’s recent white paper entitled “The Future of Food in the Age of COVID-19.” It outlines four foodtech trends that S2G expects will grow in the coming months and years: digitalization, decentralized food systems, de-commoditization, and food as as medicine. Krishnan and I unpacked these four trends — and speculated about how investors will change their focus post-COVID — in our call.

The Deep Dive interview is available for subscribers to Spoon Plus. You can learn more about Spoon Plus here. 

Food Tech News: CRISPR Blackberries and a New Nordic FoodTech Fund

Are you baking bread this weekend? (Hot tip: Even if you can’t find yeast at the store, there’s a simple way to make your own at home.)

In between your dough prooves is a great time to catch up on your latest dose of food tech news. This week we’ve got stories on fresh varietals of gene-edited berries, a new Nordic FoodTech VC fund, Burger King’s trouble over its plant-based burger ads in the UK, and more.

Pairwise partners to breed new type of berries
Agriculture and biotech company Pairwise forged a partnership with Plant Sciences Inc (PSI) this week to create new types of berries (via WRAL TechWire). Financial terms of the deal were not disclosed. Pairwise uses CRISPR gene editing to develop new varietals of food that are optimized for nutrition, have longer shelf lives or grow more quickly. First up, Pairwise and PSI will focus on black and red raspberries, as well as blackberries. They’re hoping to have their first round of berries on shelves within the next few years.

Lyft launches delivery program for orgs affected by COVID-19
Rideshare and last-mile logistics company Lyft launched a new COVID-19-related initiative this week. Essential Deliveries is a program that partners with businesses and nonprofits to help them deliver staple goods like groceries, prepared meals, and cleaning and medical supplies (h/t Techcrunch) to consumers. Partners can tap into Lyft’s platform to set up deliveries or schedule rides. The program will be available in at least 11 cities nationwide and drivers will be alerted about the nature of the goods they’re delivering. All deliveries will be contact-free.

Nordic FoodTech VC launches with €24.55 million
Nordic FoodTech VC, a new venture fund targeting early-stage tech companies making the food system more sustainable and nutritious, has launched this week. The fund will begin investing with €24.55 million ($26.7 million USD) in capital. It’s the first fund in the Nordic countries and plans to invest in “dozens” of companies innovating to improve the global food system.

Burger King’s Rebel Whopper (Photo: Burger King)

Burger King’s plant-based Whopper ads banned in UK
Three ads from Burger King in the UK promoting its Rebel Whopper have now been banned by the UK’s Advertising Standards Authority. Burger King launched the Rebel Whopper, which features a plant-based burger from Unilever-owned Vegetarian Butcher, back in January 2020. Since then, complaints came in stating that the ad was misleading consumers by suggesting that it could be eaten by vegetarians, vegans, and people with egg allergies, despite the fact that it’s cooked on the same grill as meat products and features mayonnaise. The ASA has sided with the complaints, stating that the small print at the bottom of BK’s ads stating that the Rebel Whopper is cooked alongside meat products was not sufficiently in informing consumers.

Video: Do Food Robot Startup Founders Need Restaurant Experience to Be Successful?

Say you’re a VC looking to invest in a company that makes strawberry-picking robots. There are three or four companies in the space, all vying for your capital to get off the ground.

How do you choose where to put your dollars?

That’s one of the questions that we tackled last week at ArticulATE, our inaugural food and automation summit. We closed out the day with a lively panel on the opportunities — and challenges — in the food robotics investment landscape. Our speakers were VCs from the foodtech, hard tech and IoT spaces: Brian Frank of FTW Ventures, Brita Rosenheim of Better Food Ventures, Rajat Bhageria of Prototype Capital, and Avian Ross of Root VC.

The Spoon’s Michael Wolf moderated the conversation on what these investors are looking for in a food automation startup pitch specifically — and where they see significant opportunities in the fast-growing market. (Yes, both Frank and Ross have invested in strawberry-picking robots — and Ross claims he made the right choice.)

It’s certainly an exciting time in the food robotics space: there are tons of entrepreneurs out there with lofty plans to build the next robotic sushi restaurant, the next automated food delivery bot, or the next burrito-rolling robot arm (which, apparently, really hard to do).

However, the panelists seemed to agree that food robotics is a trickier investment space than a lot of other tech areas. Sure, the basic building blocks of food robotics — AI, articulating arms, etc. — are pretty democratized. But Ross (who — fun fact — spent a former life building robots for the Food Network) said that “robotics feels special and different.” He pointed out that the food system is incredibly complex and that a whole host of players have to be involved to deliver even the most basic meal to the consumer. And that’s just logistics: getting a robotic system to reach parity with a basic human fast food experience in terms of taste or customer experience is really tricky.

Because there are so many complexities at play it can require more capital than some other tech investments. It can also take longer to bring food automation technology to market. Which isn’t a problem — unless, as Rosenheim pointed out, you’re working with investors who are looking for “the next shiny thing” and aren’t patient enough to be in it for the long haul.

Investors in food robotics have to be especially willing to take risks and play the long game. However, not all the VCs saw eye-to-eye on what it takes for a food automation startup to be successful. The panelists disagreed on whether or not startups need deep restaurant market knowledge to be successful, how high the capital investment has to be in food automation, and what sets one seemingly identical food robotics startup apart from another.

Check out the video below to see the whole conversation — it was a really fun one.

Articulate 2019: Investment Opportunities in Food Robotics

Look out for more ArticulATE 2019 videos rolling out on our YouTube channel over the next week! 

Video: For Big Food, ‘We’re Past Innovation and Onto Disruption’

Tyson Foods produces a massive one out of five pounds of protein consumed in the United States. Barilla isn’t any slouch either, with its 30% dry pasta market share in the US and 10% worldwide.

That’s a whole lotta chicken and pasta, so when execs for the investment arms of these two food giants took the stage last month at Smart Kitchen Summit Europe, you can bet all were listening intently to see what they had to say about the future of food and cooking.

The panel featured Thomas Mastrobuoni, CFO of Tyson Ventures, and Michela Petronio,  Director at Barilla’s investment arm, Blu1877, who took the stage to discuss food tech and connected kitchen investment in our closing panel which was moderated by Beatriz Romanos of TechFood Magazine.

The three had lots to say about technology, the food business and how they are investing in the future as these two worlds increasingly intersect.

Mastrobouni talked about one of their recent investments and how it’s a sign that technology is having the same disruptive impact on food now it had on media and finance over the past decade.

“We’ve said innovation, that boat has sailed, and we’re on to disruption now,” said Mastrobuoni. “The startups that we’re focusing on are, in some ways, out to get us. For the largest protein company in the US to invest in a plant based protein and two cultured meat investments… for us to go out and do that sends a message that the technology is starting to hit the food industry.”

There are lots of other great insights in the video, including discussion of why companies like Barilla and Tyson decided to launch their own investment arms, why they are interested in the connected kitchen and many more, so you’ll want to make sure to watch the entire session below:

If you want to hear more from VC’s and investors in the connected cooking space, join us at the Smart Kitchen Summit in Seattle this October!

Where in the World is Food Tech Investment? Apparently, It’s Global.

Is it just us, or has this past week been a hot one for international food tech startup funding announcements?

A few days ago, British ‘virtual farmers market’ grocery delivery service Farmdrop raised £10 million ($13.3 million) to expand their territory. And just yesterday French meal replacement company Feed raised €15 million ($17.4 million) to grow their reach into the U.S.

Here are a few more international food tech and innovation startups that have raised some serious funds in the past few days — because the food tech investment bug expands way beyond the U.S.

India: Food delivery service Swiggy adds to sizeable war chest

Earlier today, Indian food delivery service Swiggy announced that it had raised $210 million. The funding round was led by South African media conglomerate Naspers Ltd and Hong Kong-based DST Global, with participation from Meituan Dianping and Coatue Management.

This was a Series G round for Swiggy and their largest capital raise yet. This brings their total investment to $465 million, making them the most-funded food delivery company in the fast-growing Indian market.

Founded in 2014, the Bengaluru-based Swiggy now has 35,000 restaurant partners and 40,000 delivery workers across 15 cities in India. The company will use their new capital to expand into new markets and ramp up their supply network.

 

Italy: Supermercato24 raises funds for same-day grocery delivery

Italian same-day grocery delivery service Supermercato24 just raised €13 million ($15 million) in Series B funding. The round was led by FII Tech Growth, with participation from current investors 360 Capital Partners and Innogest, and new investor Endeavor Catalyst.

Like Instacart and Amazon Fresh, Supermercato24 offers same-day (or, for an added cost, same-hour) grocery delivery from local supermarkets. The company currently has 15 merchant partners and delivers to more than 23 Italian cities. It plans to use their new funds to expand their marketplace and reach.

 

Canada: Restaurant POS system TouchBistro closes hefty Series D round

Toronto-based TouchBistro announced today that it raised a C$72 million ($54 million) Series D funding round led by JPMorgan Chase and OMERS Ventures with participation from Relay Ventures, Recruit Holdings, and others. The company makes an iPad-based POS system that can integrate into restaurants to manage payments, menu options, accounting, orders, inventory, and more.

This new fundraise bumps TouchBistro’s value to approximately C$117 million ($88 million). It currently works with over 12,000 restaurants throughout 100 countries.

TouchBistro recently teamed up with Chase to power their WePay payments; the partnership is scheduled to go live this summer. According to TechVibes, the company will use their new capital to grow operations, increase employees, and look into expansion into Europe and South America.

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.

Tea Startup Teforia Gets $12 Million Infusion In Series A Round

Last year at the inaugural Smart Kitchen Summit, there was a small team gathered around a high-top round table pouring delicious tea for Summit attendees. Their startup, Teforia, was still relatively unknown, having officially introduced itself only a week earlier. A few months later, Teforia announced a $5.1 million seed funding round and began the work of evangelizing the magic its technology was attempting to bring to tea drinkers everywhere. Accepting around 500 pre-orders to early backers, the company is now about to start early shipping and has just announced a $12 million Series A round led by Translink Capital.

Teforia’s premise is based on a propriety technology and sleek design. Using what’s called the “Selection Infusion Process,” users can customize their tea’s caffeine levels, antioxidant levels and flavor profiles. Teforia’s infuser will know exactly the right brew time and temperature and the result is a unique twist on an ancient drink.

The company has enjoyed early success in part based on founder Allen Han, who in a previous life was one of the designers behind the original XBOX. A trip several years ago to Asia and an excellent cup of tea led Han to explore the niche beverage industry and discover a significant lack of innovation or modern investment.

“…the $90 billion dollar global tea market largely consists of commercialized brewing methods and treatments. Most tea drinkers don’t know what they’re missing, so I wanted to create a way to perfect the process of brewing tea while honoring its tradition.”

Teforia’s device uses a pod-based system, made popular first by Keurig but then replicated by many modern beverage machines. The difference in Teforia’s model lies in the customization features. The pre-packaged “Sips” are filled with gourmet teas that can be “read” by the Teforia infuser and the companion app allows tea drinkers to personalize infusions of any loose-leaf tea to their preferences.

Teforia is banking on the continued popularity of tea around the globe, but particularly within the Millennial generations. While older generations typically prefer coffee, surveyed Millennials drink tea and coffee equally – and while the company is currently only shipping in the U.S., the opportunity abroad may be even bigger. Jay Eum, co-founder and managing director, Translink Capital commented, “As the tea market continues to grow globally, we know that as the company gears up for a successful launch in the U.S., that will only be the beginning. We believe the opportunity for the company could be huge in Asia where tea is deeply integrated into the culture.”

The startup’s Series A round included participation from returning investor Upfront Ventures and Lemnos Labs along with new investment from Mousse Partners and Correlation Ventures, bringing total funding to date to over $17M.

Campbell’s Soup Co Invests In Food Tech Startup Aimed At Nutrition And Wellness

Campbell’s Soup Co. is arguably one of the most forward-thinking food giants in the industry today, at least when it comes to food tech investment. Earlier this year, Campbell’s announced the creation of Acre Venture Partners, the VC arm it plans to use to “aggressively participate in the disruption in food trends.” The fund includes $125 million to invest in startups that are looking at new approaches to food growth and development and using technology and innovation to change the food industry.

This week, Campbell’s announced its investment in Silicon Valley-based tech startup Habit. Habit is a newly launched company that will deliver a “complete personalized nutrition solution” based on factors like someone’s biological makeup and metabolism. The CEO of Habit, Neil Grimmer, is also the founder of Plum Organics, a company that he sold to Campbell’s back in 2013. Despite having the VC fund, Campbell’s invested directly in Habit and is the startup’s sole funder, according to a Habit spokesperson.

The company will deliver a testing kit to users and together with the app, users are instructed to gather DNA samples to ship to their certified testing lab. The data collected is combined with the user’s reported lifestyle and personal goals and thrown into their priority algorithm known as the Nutrition Intelligence Engine. The algorithm spits out recommendations for what to eat from registered dieticians and a wellness guide along with fitness goals.

But the company doesn’t just stop at recommendations – they’ll also ship you a Habit meal kit, based on your personal nutrition blueprint and give you access to certified wellness coaches to help you meet your goals.

“The entire food industry is being transformed by the fusion of food, well-being and technology,” said Denise Morrison, Campbell’s President and Chief Executive Officer. “Habit is well positioned in this wired for well-being space and poised to lead the personalized nutrition category.”

Meal delivery is a crowded space within food tech, but the areas of food data, transparency and nutrition are growing, and the combination of the two is a unique model. There are a lot of questions about how Habit – and perhaps Campbell’s, as its major investor – might use that data and how willing consumers are going to be to give it up so freely. But having deep, biological insight into what types of foods your body needs to be healthy is a pretty compelling message. Habit is currently collecting interest via a waiting list, and promises to start shipping in beta in January 2017.

Read more about Habit and Campbell’s investment.