A year after a record amount was invested in food technology, a panel of investors at Future Food-Tech in San Francisco last week said the money will keep coming in 2022 to help fund an expensive growth plan for the sector.
In 2021, a total of $12.8 billion was invested in food tech through almost 1,000 deals, according to statistics Crunchbase presented at the conference. This doubles the amount invested in 2020. Food tech is defined as companies that are bringing technology to improve the way food is made and its longevity, as well as improve agricultural outcomes and efficiency.
Phil Erlanger, co-founder and managing partner at Pontifax Agtech, described last year’s food tech investment climate as “a massive amount of capital” and “a huge amount of exuberance.”
Chuck Templeton, managing director at S2G Ventures whose firm participated in 45 funding deals last year, told conference attendees that food technology is getting to the point where there are tangible results tied to raising money, and the potential of some of these companies is becoming apparent.
“Every time we think something has been invented, there’s this leapfrogging technology or capability,” Templeton said. “We’ve seen the technology from Silicon Valley and Austin and Boston start to move over to food and ag, like a lot of the computational capabilities, machine learning or AI. It’s really interesting now.”
The panel at the conference talked about how the enthusiasm for food tech is not likely to end anytime soon. As the session continued, a massive screen behind them filled with sketches illustrating some of the things that need investment, including bioreactors for fermentation and scientists to work on R&D. It also included reminders about what investors are looking for in food tech companies.
More money, more investors
It’s not just that 2021 was a huge year for traditional food tech investors. The segment attracted interest from more traditional banks and financial firms, said Matt Spence, a managing director with Guggenheim Partners, who was on the panel. The reality that food tech will help the planet in terms of sustainability and feeding the world’s expanding population has inspired more traditional funders to diversify into food, he said.
Food tech companies definitely need the money. The equipment to do the kind of science needed to produce different kinds of protein — including equipment for plant-based protein, fermentation to make meat analogs or common animal proteins, or growing meat or fat from cells — is extremely expensive.
Templeton estimated for alternative proteins alone, another trillion dollars worth of infrastructure needs to be built in order to meet the demand that exists. And while he said the companies that can do this most efficiently are likely to succeed in the …….