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Daily news and analysis about the food tech revolution

venture capital

Pitchbook: Food Tech VC Deals Inch Up After Receding For the Past Two Years

Like many segments across the venture investment landscape, the food tech sector has seen a significant pullback in investment over the past couple of years. However, according to a new report from Pitchbook, there are early signs that investors who have kept on the sidelines may slowly be pushing their chips back on the table.

According to Pitchbook’s Q2 2023 food tech investment segment analysis, total food tech deals for Q2 increased over the previous quarter by 13.3% to 268 total deals, up from 197 deals in the first quarter of 2023. Total deal value was down just a smidge, dropping to $2.2 billion in Q2 2023 from $2.3 billion in the first quarter.

The Pitchbook report states that the uptick in total deals in Q2 could be an early sign of a potential return of investors to the sector. According to the report, there are indicators that investors have “significant dry powder reserves and may be slowly returning from the sidelines to resume deploying capital.”

Looking at how the Pitchbook analysis breaks down the food tech sector by segment, the biggest overall sector in Q2 was food e-commerce, which accounted for over $1 billion in Q2. According to Pitchbook, food tech e-commerce deal values were driven by late-stage investment in companies like Getir, which nabbed a $475 deal in 1H 2023. Other big deals of note in the first half included a $230 million deal in meal replacement startup Yfood (a deal which had Nestle acquiring a majority ownership stake in the company) and a $172M series C investment in alt protein startup Meati.

Speaking of alt protein, the Pitchbook analysis is somewhat bullish on the sector, predicting that the global alt protein market will grow from $76 billion in 2023 to $423 billion in 2033, a compound annual growth rate of 19%.

If you want to read the Pitchbook report, you can download a copy here.

Prime Roots Raises $30M Series B for Deli Meat Made With Koji Mycelium

The average supermarket deli is a sad carnival of sulfites, nitrates, and preservatives that go bump in your belly. There have been a handful of upstarts in the plant-based food space attempting to create a healthy alternative to sliced cotto salami or chunks of smoked roast beef. One Berkeley-based company believes it has a healthy, tasty solution.

Prime Roots, producer of deli-style meat made from koji mycelium, announced $30 million in Series B funding this month from True Ventures, Pangaea Ventures, Prosus Ventures, Top Tier Capital, Diamond Edge Ventures, bringing their total funding to $50 million. The fresh funding will enable Prime Roots to scale and expand to deli counters and restaurants. The company’s alternative deli product currently is available primarily in the San Francisco Bay area.

Growing up with family in the food industry, Prime Roots founder and CEO Kimberlie Le knew that the focus had to be a multi-barreled approach: taste was a must; nutrition was also a consideration, and sustainability also was vital.

“Because I come from a food background, I really wanted to emphasize taste,” Le told The Spoon in a recent interview. “We wanted to make sure the products taste good first and foremost. When we started six years ago, we were also thinking about really the nutrition and the cleanliness of the products. At the time, legacy brands had long ingredient lists and a lot of unpronounceable ingredients. I really wanted to fix that because it wasn’t anything that my mom, who’s a chef, would want to serve in her restaurants or at home. And so really took it upon myself to find a solution that really met the consumer where they are and really solved a personal problem for conscience eaters.”

Prime Roots approaches the deli case with the identical microscopic texture of meat, along with its umami taste made from plants. Experienced chefs helped develop the most popular deli products-including cracked pepper turkey, black forest ham, hickory bacon, salami, and pepperoni to emulate the savory, meaty taste, and texture that consumers demand for meat substitutes. According to the company, Prime Roots’ turkey and ham have no nitrates, preservatives, cholesterol, soy, wheat and are lower in sodium than the leading brands.

Koji is a strain of a fungus used for various culinary purposes, including the production of alcoholic beverages like sake or invaluable condiments like miso and mirin. In the case of creating deli meats, koji ignites the fermentation process when added to other base ingredients. Other companies such as Meati and Aqua Culture Foods use koji in their production of alternative proteins.

Le said that as part of her due diligence, she toured a number of delis across the country including New York, the center for all things corned beef and pastrami. The goal was to see how receptive these landmark eateries would be to a new product.

“When we were working on the concept, the deli concept,” Le recalled, “The first thing we did when we had initial prototypes was go to New York, which is really deli mecca and had prototypes which we would take into some of the most iconic delis and say, ‘Hey, try this’ to see how open and receptive these deli folks were and how the deli culture would be receptive to a plant-based product.”

 “Surprisingly, we didn’t get kicked out of a single place, and everyone was super excited to put the meats on their slicer. They were wowed by the texture, the slicing capabilities, and were just very open and excited.”

Is Kiwibot’s Sale & Leaseback Deal a Way For Food Tech Startups to Traverse the Venture Capital Winter?

Interesting bit of news today from sidewalk delivery robot startup Kiwibot: The company announced it has signed a $10 million financing deal in the form of a sale and leaseback arrangement with Kineo Finance, an asset financing company based in Switzerland.

According to company founder Felipe Chavez, the deal is structured such that Kineo will make up to $10 million available in financing to Kiwibot, and in return, Fineo will buy the robots built by Kiwi at cost and lease them back to the company. This arrangement enables Kiwi to have ready access to growth capital to build its robots and also limits the equity dilution of a typical growth-round investment.

 “It is a straightforward sale and leaseback,” Chavez told Tech Funding News. “Once we manufacture them and ship the robots to their final destination, we sell them to Kineo at cost.”

While this is the first time that I’ve seen this type of capital agreement in the food robotics space, it could be a sign of things to come. As we’ve seen from this month’s news from Picnic, the food tech hardware market is having challenges as more traditional venture investor appetites for large growth rounds have shrunk in the current uncertain economic environment. By using a sales and leaseback deal, startups can get access to a whole new type of financing and also limit how much of their company they need to give up in the process.

Of course, there are also downsides to these types of arrangements. Kiwi has to make sure they can find customers for their leased robots, as they’ll now have a monthly payment to service for the robots in the field. Kineo owns the robots and if Kiwibot can’t make the payments, the financing company can do whatever they want with them. Add in other complicating factors like the loss of tax benefits such as asset depreciation, and the conversation about whether to adopt this new model becomes somewhat nuanced.

That said, I applaud Kiwi for finding a new and creative way to fund their expansion, and I have to think other food robotics vendors might be taking a look at this type of financing arrangement.

Food Tech Funding Drops 21.5% in Q2, But Alt-Protein Proves Resilient With Only 9% Decline

According to a new report from Pitchbook, total food tech venture funding declined by over one-fifth in total deal value in the second quarter of 2022, dropping from $6.9 billion in Q1 2022 to $5.6 billion in Q2 2022.

The drop in deal value corresponds with a decrease in the total number of deals, which declined in the second quarter by 23%, going from 359 funding deals in Q1 2022 to 275 deals completed in Q2 2022.

Q2’s decline marks the fourth straight quarter in which food tech funding has dropped. Total investment is down 45% ($4.5 billion) from the sector’s high water mark of $10.1 billion reached in the first quarter of 2021.

Food tech isn’t alone in its pullback. The sector’s quarter-over-quarter decline in funding is just slightly less in relative terms than the overall venture capital market, which dropped 23% from the previous quarter. At $5.6 billion in total funding in Q2 2022, food tech represented about 5.2% of total venture capital in the quarter, compared to 7.6% of total funding in the first quarter of 2021 when food tech funding had reached its high point.

As usual, the total funding for the sector was dominated by a handful of mega-rounds, including Wonder’s $350 million series B. Other big rounds include Upside’s $400 million series C and Gopuff’s $1.5 billion, which Pitchbook says closed on May 18 (though word of the forthcoming round leaked late last year).

Gopuff’s funding comes at a time when many investors and industry watchers are reevaluating the business model for the ultra-fast grocery business, a sector responsible for many of the mega-rounds that pumped up the food tech sector’s total deal value over the past year and a half. Gopuff, like many of its peers, announced layoffs over the past few months and that they would shut down a good chunk of its distribution network. Essentially everyone in the ultra-fast-grocery is attempting to slash costs as they look to extend runways as they recognize they’ve seen their last big funding round for a while.

So will food tech investment continue to decline? My guess is yes, at least in the near term, in large part due to recessionary fears, the continued tightening of monetary policy in the US, and broader geopolitical uncertainty. The absence of future investment into ultra-fast grocery may also lead to near-term drops compared to previous quarters over the next year, but the good news is that as the inflated valuations from the ultra-fast grocery recede into the rearview mirror, overall declines quarter over quarter should decelerate.

One particular sector I am keeping an eye on is the alternative protein segment, which has held up better than the overall food tech space. According to the Good Food Institute, alt-protein funding declined only 9% quarter over quarter, a much smaller decline than both the broader food tech industry and the overall venture market. Alt-protein has seen its share of late stage high-value deals (like Upside, Impossible, Eat Just, etc), something which looks to have continued into the most recent quarter. It’s also seen continued investment across all three major sub-segments (plant-based, precision fermentation, and cultivated/cell-based), which may have contributed to its relative resilience. If any of the three might be susceptible to potential pullback, it’s plant-based meat, a market that is proving to be both crowded and, in some cases, one in which some brands struggle to bring back repeat customers.

Long-term, I expect investors in future food to continue to be bullish, especially as we start to see government money start to enter the alt-protein market. Globally, governments are beginning to view future food as an important part of national security strategy, and while the US is lagging a bit in that regard – food was not a major part of the recent climate change-centric Inflation Reduction bill that just passed – we are beginning to see state governments start to invest in the space. While the alt-protein space has lacked the same type of government taxpayer support as that of alternative energy, a moderate amount of future growth in government support should catalyze future private investment in the space.

From Robotics to Alt Protein, Layoffs and Shutdowns Have Begun to Hit Food Tech

What a difference a year can make.

Last year, it seemed a day didn’t go by without word of a big new funding round in food tech. Alt proteins, restaurant tech, food robotics, food waste, and other sectors benefited from the combination of low-cost capital and a newfound urgency among investors to reinvent our antiquated food system post-pandemic.

But as the economic outlook darkens and investor eagerness gives way to caution, some startups and publicly traded companies in food tech find themselves in situations where they need to pare back their ambitions, tighten their belts to extend their capital runways and, in some cases, shut down altogether.

Here are some examples of bad news from the last couple of weeks:

Ghost Kitchens & Restaurant Tech: NextBite, one of the high-flyers in the virtual restaurant and ghost kitchen space, has laid off employees for the second time this year. The news comes a couple of months after Reef laid off 5% of its workforce. Restaurant payments app startup Sunday is shutting down operations in a number of its markets and laying off a large percentage of its team.

Food-Making Robots: Doordash, the publicly traded food delivery startup, is shutting down Chowbotics, the food robotics startup it acquired last year. The shutdown of the salad-making robot kiosk comes just a couple of months after we learned that Basil Street Robotics, a maker of pizza-making robotic kiosks, had put its assets up for sale.

Delivery Bots: Speaking of robots, the original sidewalk delivery robot startup Starship (which we started covering back in 2016), has recently laid off 11% of its workforce.

Alt-Protein: Last week, we learned that Motif Foodworks, the well-funded alt-protein ingredient spinout of Ginkgo Bioworks, has laid off an undisclosed number of employees.

Fast-Grocery: The ultra-fast grocery business has fallen further from its 2020-2021 highs than perhaps any other sector, as investors realize how much more capital is needed to build out their hyper-local dark store and delivery networks. Over the past few months, we’ve seen startups Buyk and Fridge No More shut down and others, like JOKR and Gorillas, pare back and exit some markets to preserve capital.

While some sectors (like alt protein) seem less impacted than others, the overall food tech market is recalibrating to a new normal after a year where post-money valuations were too high, and capital was still relatively cheap. In 2022, the rising cost of capital and pessimism about the economy has resulted in investors becoming more cautious, meaning new investments and follow-on rounds are harder to come by.

It also means investors are putting much more pressure on their existing portfolio companies to cut costs and get to profitability quickly. That can mean layoffs, bringing in professional manager types (as with NextBite), or exiting from new markets. For publicly traded companies like Doordash, which face the quarterly pressure of reporting to Wall Street, it means experiments that are not a part of their core business (like automated food kiosks) get dropped.

The question facing the food tech industry (and, let’s face it, all tech-adjacent industries) is whether things get worse before they get better. My guess is the answer is yes, as some startups that benefited from the abundance of capital over the last few years will have a harder time raising their next round and will have to work hard to lengthen their runways. In some cases, those runways will run out.

Despite all of this, I remain optimistic about the future of food tech. There are too many inefficiencies and problems with the current food system, and, because of this, innovative companies will always find opportunities to reinvent an industry. And much like we saw with the first dot-com downturn, those companies that find ways to survive in moments of austerity emerge stronger and built for long-term survival.

But before we get to the other side, we would all be wise to prepare ourselves for a rocky year or two.

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.

The Week in Food Tech Funding: Perfect Day’s Big Raise & Gorillas Quits Monkeying Around

The week’s big news is a $350 million Series D raise by precision fermentation unicorn Perfect Day. There’s a whole lot packed into this announcement, so let’s get right to it:

First, the funding raises Perfect Day’s total to $750 million and sets the company on track for a possible IPO. The timing couldn’t be better, as tech startups continue to see rising valuations and the market is hungry for more food tech (see Oatly). And while Ginkgo Bioworks was the first company with significant precision fermentation (PF) capabilities to IPO, Perfect Day will be the first true future food PF pure-play to go public.

As part of the news, the company announced an expansion of its consumer products company, the Urgent Company (TUC). TUC, Perfect Day’s wholly-owned CPG company behind the Brave Robot ice cream brand, will add new “household staples” to its portfolio with Modern Kitchen, the second consumer brand under the TUC umbrella. Modern Kitchen’s first product will be dairy-free cream cheese, which the company will make with its animal-identical whey. As part of the announcement, TUC revealed Brave Robot is now in 5 thousand stores and that they’ve moved a million pints of ice cream.

Speaking of Brave Robot, it always struck me as a risky choice for a product name. Sure it stands out, but Brave Robot also doesn’t exactly make one think of tasty ice cream, which I think is the biggest challenge for a product that also wants to somehow communicate to the consumer it is made differently from traditional ice cream. With Modern Kitchen, I have to wonder if Perfect Day went purposefully conservative, choosing a brand this time around that doesn’t create extra work for itself.

Perfect Day also announced their third line of business (the other two being ingredient innovation and consumer products) in enterprise biology scale-up services. This move is a formalization of its enterprise biology efforts that started with the company’s 2020 acquisition of bioprocess scale-up facility SBF. With its new business line, Perfect Day hopes to help other food companies with technology transfer and scale-up consulting services.

“We first got into the ingredient business because food companies, big and small, were eager to work with the ingredients we had successfully scaled,” said Perumal Gandhi, Perfect Day co-founder, in the news release. “Today, something analogous is happening on the technology side. There are innovators all over the world with ideas and ambitions similar to our animal-free milk protein, but need help getting there. We’re standing up business models to be able to share our demonstrated capabilities in a way that maximizes upsides for all, yet ensures that Perfect Day remains at the forefront of our new industry.”

What struck me about the series of announcements is they illustrate how Perfect Day has matured in both its business and how it talks about itself. The addition of business services not only adds a new revenue line to the company, but it is a strategically savvy move that will set Perfect Day up with a pipeline of long-term IP licensing and ingredient supplier opportunities.

On the company messaging front, it wasn’t all that long ago that Perfect Day struggled to describe its technology and the animal-free dairy products that resulted from it. That’s changed, however, as this announcement brims with confidence. The company has clearly figured out how to communicate the benefits of its product while also giving just the right touch of details around the technology behind it all.

And now, the rest of this week’s funding news:

Cultured Meat

New Age Meats – $25 Million: California-based New Age Meats has raised a $25 million series A to help fund product development and ramp up production of its pork sausage products. Founded in 2018, the company hopes to bring its products to market next year as it uses the funds to double its workforce and build a first pilot production plant.

Ghost Kitchens/Virtual Restaurants

All Day Kitchens – $65 Million: Ghost kitchen startup All Day Kitchens announced this last week they’ve raised a $65 million series D to expand its distributed network of satellite kitchens. The company, which launched in 2018, focuses on helping small independent restaurants expand their reach via a unique model; Unlike traditional ghost kitchens with often treat restaurants like a landlord, All Day Kitchens helps to launch its new restaurant partners across its entire network of kitchens in a given metro area.

Plant-Based

Ripple – $60 Million: Pea-protein alt-dairy specialist Ripple has raised a $60 million Series E. Ripple, which basically is to pea milk what Oatly is to oat dairy products, has continued to grow its products ever since its 2015 debut and plans to use the funding to expand into even more new products and markets. While not all pea-protein products from Ripple have succeeded – see our review of the pretty-bad and now discontinued Ripple yogurt here – I’m intrigued to see what new products they bring to market (well, of course, except maybe yogurt).

Food Delivery

Avo – $45 Million: Israel-based food delivery startup has raised a $45 million Series B. Avo, which offers white-label food and consumer products delivery to landlords and employers, says it plans to use the funding to expand into 10 new metro markets over the next year. From the release: Avo’s mission is to deliver everything from groceries and alcohol to electronics and personal care items to millions of people daily. The company’s customizable amenity platform enables residential and commercial customers to obtain everyday items, the same day, without any minimum order size or incurring any delivery fees of any kind. The platform also excludes a tipping fee, as Avo has a full-time salaried team. Stemming from the COVID-19 pandemic, Avo is currently adding a new major market every month – a dramatic increase in growth that has helped drive revenue 1000% over the past two years.

HUNGRY – $21 Million: Chef-powered catering delivery company HUNGRY has raised a $21 million Series C from a mix of athletes, reality TV talent show singers, and the usual mix of corporate venture capital funds. The company, which lets companies cater food from chefs, works with a variety of high-profile chefs such as Tom Colicchi and has claimed it allows chefs to earn up to half a million per year on the HUNGRY platform.

Swiggy – Half a $Bil?: Indian food delivery startup Swiggy is reportedly in talks to raise a $500-$600 million funding round that would value the company at one Oatly ($10 billion). Invesco will likely lead, while others like Softbank will also throw in capital.

10 Minutes Grocery Delivery

Gorillas – $950 Million: Gorillas, the fast-growing, fast-grocery delivery business has raised an eye-popping $950 billion in funding. The news comes even as the company has reportedly decided to stop monkeying around with a US expansion, at least for the time being. According to Business Insider Germany, Gorillas has decided to scale back its US expansion plans outside of New York City and is laying off employees beyond the Big Apple. This funding comes in large part from Delivery Hero as Gorillas continues expansion in as Germany, the United Kingdom, Spain, and France.

Plant-Based Fish

Hooked – €3.8 Million: Sweden’s Hooked has raised €3.8 Million for its plant-based fish products. Like many new alt-protein funding rounds nowadays, Hooked’s with news of a celebrity backer, Swedish music star Danny Saucedo. The company launched its plant-based tuna brand Toonish into retail last month in the Swedish market.

Food Robots

Piestro – $4.7 Million: Piestro, a maker of robotic pizza-making kiosks, has raised just under $4.7 million via equity crowdfunding. The campaign, which the Wavemaker Labs portfolio company ran using StartEngine, will be used to fund the second-generation Piestro, which will be the first pizza robot from the company to be deployed in consumer-facing locations and take payments. The company hopes to have its new prototype deployed by December of this year. Wavemaker Labs, which describes itself as a “robotics and automation corporate innovation studio”, has shown a preference for using platforms such as StartEngine and SeedInvest to raise funds with its portfolio companies like Piestro, Miso Robotics, Future Acres and Bobacino.

The Week in Food Tech Funding: Double (Alt) Cheese Funding & Big Money for Misfits

Fall is upon us in the Pacific Northwest, and alongside autumn colors and windy weather is lots and lots of food tech venture capital. This week’s funding news includes not one but two alt-mozzarella startups, a monster round for ugly produce online retailer Misfits Market, and three pieces of food robot funding news.

On to it:

Plant-Based Food

Sophie’s Kitchen – $5.6 Million: Sophie’s Kitchen has raised $5.6 million to fund the growth of its plant-based seafood lineup of products. The company, founded in 2010, offers a line of alt-seafood products, including crab cakes, shrimp, salmon, and tuna. Billy Goat Brands led the round, a Canadian venture fund focused on sustainability. Sophie’s Kitchen products can currently be found at Walmart, Sprouts, and Wegmans. The funding continues the momentum for the plant-based seafood category, which saw $116 million in funding in the first half of 2021 (compared to $26 million for the whole of 2020).

Growthwell – $22 Million: Singapore-based plant-based seafood and chicken maker Growthwell has raised a $22 million Series A led by Creadev. The company, which raised $8 million last year, “owns a portfolio of alternative protein companies aimed at Southeast Asian consumers, including OKK (plant-based meat), Su Xian Zi (vegan mutton), and gomama (ready to eat dishes made from plants).” They also sell a chickpea protein powder called ChickP for use in meat and dairy alternatives.

NUMU Food Group: Plant-based cheese startup NUMU has raised early in September. The amount of the funding was undisclosed. The company makes plant-based mozzarella from potato starch, soybeans, and coconut oil. Started a former DJ named Gunars Elmuts, NUMU sells its cheese to food service providers in shreds and blocks.

Precision Fermentation

Formo – $50 Million: Berlin-based Formo announced it had raised $50 million in Series A funding. The investment in the maker of animal-free cheese was led by EQT Ventures, with Elevat3 Capital and Lowercarbon Capital. Formo uses a precision fermentation process to make animal-free dairy cheese with animal identical proteins. The company plans to use the funding to “With the resulting increase in R&D capacity, Formo intends to expand its product portfolio to represent a wide variety of European dairy specialties such as mozzarella and ricotta, with techniques designed in collaboration with artisan cheesemakers.“

Food Robots

Pudu Robotics – $78 Million: China-based Pudu Robotics announced this week it had raised a $78 million C2 found of financing, matching the same dollar amount for its May C1 funding round. In total, the company has raised $156 million in Series C financing. The company makes a few different types of bots, including a front-of-house bot called the Bellabot, a cleaning bot, and two models of delivery bots.

Keenon Robotics – $200 Million: Another China-based robotics startup Keenon Robotics has raised an impressive round with its $200 million Series D. Its round was led by Softbank. Like Pudu Robotics, Keenon also makes food delivery and front-of-house food service bots and robots for hospitals.

Daxbot – $211 Thousand Crowdfunding: This week, Daxbot, a maker of sidewalk food delivery robots, launched its equity crowdfunding raise. Like many food robot startups, Daxbot is using StartEngine for its raise, and the company has already (as of this writing) raised $211 thousand from 136 investors. Today the company’s robots are being used for food delivery in Philomath, Oregon.

Online Grocery

Misfits Market – $225M Series C-1: Online grocer Misfits Market announced it had raised almost a quarter billion in new funding via a Series C-1 round. It’s a quick turnaround for more capital for the sustainability-focused online grocer that works with farmers and food producers to save ugly produce and food that otherwise would go into the compost bin; the company raised a $200 million Series C in April. Misfits Market joins fellow ugly food retailer Imperfect Foods as one of the companies that have tapped investor interest in the food waste space.

Smart Vending

Foodles – €31 million: Smart corporate food vending/catering startup Foodles has raised a €31 million Series B round from InfraVia Growth and Bpifrance via its Large Venture fund, and follow on rounds from existing investors, Creadev, DN Capital, and Adelie. The French company offers connected fridges, which it calls canteens that it supplies with food. According to the company, each fridge can provide food to up to 59 employees. The company hopes to disrupt a European contract catering market worth 240 billion euros.

Food Supply Chain Software

Grubmarket – $120 Million: Grubmarket, a provider of software and services to enable food producers, has raised a $120 million Series E round. The company’s software enables food producers and distributors to manage inventory, pricing, customer relations, and other company-related operations. The company’s announced hinted in the announcement that they will likely expand from just software into robotics in the future: “GrubMarket will likely also start to explore connected hardware to help those customers, too: robotics for picking and moving items” related to those activities managed by its supply chain oriented software.

Restaurant Tech

SpotOn – $300 Million: Payments software startup SpotOn announced this week it has raised a $300 million Series E to help finance the acquisition of Appetize, a mobile and digital payments startup focused on sports and entertainment venues, amusement parks, and zoos. Mega-VC Andreessen Horowitz led the deal (as they did SpotOn’s last round). A16z’s eagerness to inject more capital into SpotOn probably has a lot to do with the company’s tripling of revenue over the past 18 months. SpotOn, which has traditionally focused on SMBs (the segment of the restaurant space that has been the most aggressive in modernizing its tech stack during the pandemic), will now be able to sell into the enterprise market with the newly acquired Appetize.

Supply Change Capital Aims to Diversify Investments in Food Companies

Too often, women and minority-owned start-ups are overlooked by venture capital firms, and most venture capital money goes to college-educated white males. Specifically in the food tech, less than 3% of funding went to female founders in 2020. Supply Change Capital, founded by Shayna Harris and Noramay Cadena at the end of 2020, aims to flip this standard and invest in food and food tech companies with female, BIPOC, and LGBTQ founders.

To learn more about Supply Change Capital, I spoke on the phone with Shayna Harris, one of the cofounders. Harris said there is essentially a $100 billion opportunity to invest in companies that are making food products that appeal to the growing minority population in the US, which is currently estimated to be around 40% of the total population but will increase to over 50% in the next 25 years.

“With the demographic shifts in this country and a new majority that we will have by 2045, basically with the demographic trends flipping for the first time in our country’s history,” said Harris, “There’s a huge opportunity to ensure that the founders of food companies and food tech companies mirror the demographics of this country.”

There are existing food companies and products that appeal to Black, Latinx, and Asian consumers but many might be considered generic or inauthentic. Harris also shared that through the firm’s research, these minority groups have a strong preference for foods considered “natural and healthy.” Therefore, Supply Change Capital is essentially looking for a few traits when investing in a food company, including sustainable ingredients, unique and flavorful ethnic ingredients, and the ability to appeal to the masses.

Since the firm is just a few months old, it has not yet invested in any start-ups. Harris said the company will be investing in early-stage food start-ups, including both consumer-facing brands and ingredient companies, cutting checks for up to $1 million.

Delivery Hero Launches its Own VC Fund, DX Ventures, to Invest Across Food Tech

Global food delivery service Delivery Hero announced today the official launch of its own venture capital fund that will invest in food, delivery, and other areas of the food industry. Called DX Ventures, the fund has a dedicated pool of long-term capital to devote to companies working in on-demand services, food tech, fintech, artificial intelligence, and logistics, according to a press release sent to The Spoon.

Duncan McIntyre, Managing Director of DX Ventures, said the fund was something Delivery Hero has been thinking about for a number of years, and that investments into other companies is a strong part of how the service has been built over the years. “We’ve made about $500 million [in] minority investments over the last couple years,” he told me over the phone recently. Out of the success of those investments came the next obvious step: formalizing the concept of Delivery Hero as an investor. Hence, DX Ventures.

The fund will start off with a focus on early-stage companies, such as those at Series A level. “The aim of the fund is to look at industries and areas that are going to be disruptive over the next 10 years,” McIntyre said. That could include food delivery, but it might also include adjacent areas, such as alternative proteins, packaging alternatives, or supply chain features.

He added that DX Ventures will also look for companies that compliment the core Delivery Hero platform. Delivery Hero, for example, has added grocery delivery to its list of services (see the company’s $360 million acquisition of InstaShop last year). McIntyre suggested that companies contributing to the grocery delivery sector might be appropriate candidates to receive investment from DX Ventures. Other examples might include companies that can improve the restaurant delivery experience by providing better tracking, shorter delivery windows, lower price points, or healthier food options. “There’s a lot of efficiency to be gained in the food system,” said McIntyre.

All of the above examples are hypothetical at this point, as DX Ventures has yet to announce any companies it is investing in. At the moment, the fund is actively looking for companies in which to invest over the long term.

Potential companies can be located anywhere geographically speaking, though the fund will also focus on markets where Delivery Hero already has a presence. At the moment, that includes no less than 50 countries across Asia, Europe, Latin America, the Middle East, and North Africa. 

DX Ventures will be independently managed from Delivery Hero.

Report: $8.37B Invested in Food Tech During First Three Quarters of 2020

Venture capital flowed into both ag tech and food tech investments during the first three quarters of this year, according to a new report out today from Finestere Ventures.

Created in collaboration with PitchBook, the report found that AgriFood tech startups raised a total of $11.6 billion as of the end of Q3 2020. AgTech investment totaled $3.07 billion during that time (up from $2.7 billion invested in all of 2019), and food tech investment totaled $8.37 billion through Q3 (up from $7 billion in all of 2019). Finestere said that the majority of capital invested in both sectors went to later stage deals, illustrating market maturation.

Like everything else in 2020, the COVID-19 pandemic was a big influence on where investments flowed. Finistere said in its report that indoor farming was a big beneficiary of funding as demand for fresh produce increased along with insecurities around food supply chains. On the food tech side, the pandemic spurred investment in startups in e-commerce delivery and meal kits.

Finestere’s analysis correlates with the more general back-of-the-envelope-style tracking we at The Spoon have been doing around food tech investment. Just between May and June we tracked more than $699 million in funding announcements from food and ag tech companies. More recently, we reported on nearly $1 billion in food tech funding just in the month of October.

“With more than $46B of venture capital flowing into ag and food advances over the past decade, AgriFood tech has become a focus of tremendous investor interest. As COVID shone a light on some of our food and agricultural production system fragilities that need strengthening, capital flowed in to support the trend to dine at home,” Arama Kukutai, co-founder and partner, Finistere Ventures said in the press announcement. “While substantial progress has been made, there is still a long way to go. The investment trend we are seeing is long overdue in a massive sector that has been under-invested, and there is a lot of room for further growth. Building a sustainable ag and food ecosystem is absolutely critical, and it will take a lot of time and more capital.”

FoodShot Global Launches Fund to Land Food Moonshots

We know that there is no shortage of food-related accelerators helping get the next generation of startups off the ground. But FoodShot Global, a new investment platform that launched today, doesn’t just want to get startups off the ground: it wants them to aim for the moon.

FoodShot Global is a consortium of venture funds, banks, corporations, universities and foundations including Rabobank, UC Davis, The Rockefeller Foundation, and Generation Investment Management, looking to fund “Moonshots for Food.” FoodShot Global has a $10 million fund that will be investing in innovative businesses in the form of either equity or debt financing. Those companies accepted into the main FoodShot Global program will also receive industry expertise, mentorship and other resources available through the FoodShot partner network.

At the same time, FoodShot Global will have a separate “Groundbreaker Prize” every year, awarding $500,000 in philanthropic capital to researchers, social entrepreneurs and advocates working in a specific field in food or agriculture. This year’s challenge is “Innovating Soil 3.0,” and they are looking for science and tech projects that “address the crisis of soil deterioration.”

From the press announcement:

Through Innovating Soil 3.0, FoodShot Global aims to identify breakthrough solutions that create the new soil operating system. Though soil began as a mixture of organic matter and minerals that enabled agriculture to take root (Soil 1.0), the advent of synthetic fertilizers and industrialized farming created a soil system (Soil 2.0) that improved global food security but wasn’t designed to maintain soil nutrient integrity, resulting in yields that have not continued to increase at the rate to meet the demands of a growing global population and a resource-constrained planet. A new soil system, Soil 3.0, is essential to nourish and sustain the planet as a whole. Focus areas for the Innovating Soil 3.0 Challenge can include input efficiency, reduced deforestation, improved crop resistance, and carbon sequestration. To develop a 21st century soil operating system, FoodShot is seeking innovators tapping into advances in biology, genetics, and chemistry, and solutions that lean on big data, smart sensors, blockchain and robotics to set the framework for a global food system that can sustainably and equitably produce healthy food for all.

Applications for either investment from FoodShot or the Innovating Soil 3.0 prize are due December 1, 2018, and can be submitted through FoodShot’s website.

The FoodShot website aims “To feed 10 billion people by 2050.” Hopefully finding and funding promising moonshots will give everyone on the planet a shot at more healthy living way before then.