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The Spoon

Daily news and analysis about the food tech revolution

venture capital

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.

Food Venture Firm Raises $42 Million To Advance A New Food System

PowerPlant Ventures, a year-old venture firm supporting plant-centric companies that deliver better and more sustainable nutrition announced the closing of a $42 million fund. Aimed at improving the global food system, the fund’s goal is to leverage the power of plants to support the next wave of better-for-you food companies and brands.

The firm was founded in 2015 by Mark Rampolla, founder of ZICO Coconut Water, which was acquired by Coca-Cola in 2013 along with Kevin Boylan and T.K. Pillan, co-founders of the largest vegetarian restaurant chain in the U.S. and Dan Beldy, former Managing Director of Steamboat Ventures, Disney’s VC arm. Powerplant Ventures plans to advance a portfolio of emerging companies across the intersection of food and technology and work with companies that are focused on impacting the global food system with transparency and sustainability.

Our Take: The food business right now is an investor’s dream: a multi-trillion dollar industry in the middle of some major disruptions. From food shortages and unsustainable food production methods to major innovation happening around food science and technology to generational demand for healthier foods to eat and easier and faster ways to eat them – there’s opportunity at every turn. PowerPlant Ventures wants to invest in companies that are tackling several of these core problems using plant-centric solutions.

Why plants? “Plant-based food companies are changing the world by providing better nutrition delivered in more sustainable and ethical ways,” commented Mark Rampolla, Co-Founder of Powerplant Ventures. The firm and its startup fund will look to tap into the demand created by millennials and younger generations for healthier, more transparent food sources and look for companies crafting efficient solutions that could help solve growing global food shortages. The fund’s initial investments include companies in both those categories, including organic online grocer Thrive Market and cold-press juicer startup Juicero. Food delivery might currently be netting the biggest slice of the food tech investment pie, but healthy and sustainable food investment is catching up.