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Technically, $26 billion was invested, but AgFunder expects that there are some deals from 2020 that we just don’t know about yet. But let’s stick with that bigger, $31 billion number. Bigger is better, and for the purposes of this newsletter, I want to set the bar high because 2021 could be another record-breaking year for investment in food tech.
Before we get too far, I need to lay out a bunch of caveats. There is still a loooooong way to go in 2021 and lord knows what could happen. The pandemic accelerated a lot of technology adoption by grocers and restaurants last year. As grocery e-commerce rocketed to its own record-breaking highs, retailers looked to add automation while at the same time minimizing human-to-human contact. Restaurants that were forced to close down dining rooms pivoted hard towards systems that made takeout and delivery better and more efficient. This sudden pivot to pandemic-friendly tech drove interest in startups, which in turn, attracted the attention of investors.
With vaccines being deployed, the pandemic will start to recede, one can hope, by the end of this year. If that holds true, the question then becomes how consumers will react to new freedoms, and will those freedoms result in a retrenchment away from tech and thus from further big investments in food tech?
Alright, with those caveats out of the way, here’s why I’m bullish on 2021 being another boffo year for food tech. I did a quick search of the companies just we at The Spoon have covered getting funding from the beginning of the year. By my (back of the envelope) math, roughly $3.2 billion has been raised so far in less than two full months of 2021.
Granted, of that $3.2 billion, $2 billion of it was just for one company, Chinese online grocer app Xingsheng Youxuan. But even without that number there was still $1.2 billion raised by 30 different companies (around the world) in January and February of this year. And that’s just the companies that we covered here at The Spoon, which does not include hardcore ag tech, supply chain companies, and other downstream areas of the food system.
Now, $1.2 billion is an impressive number. But if we look at AgFunder’s numbers, at $31 billion, that’s an average of ~$2.6 billion per month (the lower $26 billion figure averages out to ~$2.2 billion per month). If you think AgFunder’s scope is too broad for our purposes here, Pitchbook reported that during the first three quarters of 2020, $8.37 billion was invested in food tech. That comes out to an average of $930 million a month. Measured against that figure, $1.2 billion over months this year (~$611 million per month) is trailing 2020. But it’s still early. January has the tail end of the holiday season where nothing gets done, and is the start of the year, so things are just getting warmed up.
Even if the beginning of 2021 is a bit slow (comparatively), there are signs that point to continued investment in food tech. Online grocery remains sticky with consumers, big grocers like Walmart are investing in more automation to meet that demand, and restaurants are spending money on enhanced drive-thru operations and advanced menus.
The point is that $1.2 billion is still a strong start to the year, and it looks like foodtech will continue to find its groove with investors throughout 2021.
Traeger Launches Apple Watch App to Monitor and Control Your Grilling – Slow cook those briskets directly from your wrist.
Survey: 91 Percent of US Restaurants Will Invest in Kitchen Automation in 2021 – Why the rush to digitize the back of house? “In order to take advantage of opportunities like multiple revenue streams and creative dining experiences, the back of house needs to be buttoned up,” notes the report.
Sweetgreen to Go Carbon Neutral by 2027 – The company says it will achieve this through its decisions around ingredient sourcing, building design, and energy usage, among other things.
Driscoll’s is Using Consumer Physics Technology to Bring Sweeter Berries to Market – Near-infrared technology takes over much of the manual work of finding the sugar content in berries.