Venture capitalists are hungry for food tech companies – and willing to pay a premium to take a bite. Investors plowed nearly $40 billion into the growing industry last year, more than double the $15.7 billion they spent in 2020, according to Pitchbook’s annual report on the sector.
While investments were spread across 1,358 deals, more than half of the funding was concentrated in two categories – online grocers and apps & marketplaces – reflecting consumers’ increased appetite for e-commerce and delivery during the COVID-19 pandemic.
Companies offering ultrafast, on-demand delivery were notable recipients of this shift. Gorillas, which has expanded to over 60 cities and hired 14,000 employees since launching in 2020, raised around $1.3 billion last year across two funding rounds. Gopuff, another instant delivery startup, brought in over $2 billion in 2021 at a valuation of $15 billion.
Pitchbook logged 34 venture deals in the ultrafast sector last year, but noted that activity peaked in the first quarter. Many of these companies are facing pressure from regulators and investors over the legality of their business practices and the sustainability of their steepening losses.
“It remains to be seen whether this trend can maintain momentum and deliver on its value proposition in 2022,” Pitchbook said in a press release.
Bio-engineered foods were also in favor, with funding for alternative-protein companies growing by triple-digits. While interest in alt-proteins and other non-traditional alternatives has been on the rise for years, the sharp uptick in investor enthusiasm is driven in part by technological advances which have made these alternatives more appealing to consumers.
Plant-based meat company Impossible Foods brought in $500 million in November, capping a burst of new product launches, from Impossible Sausage to Impossible Chicken Nuggets. Their products can now be found in 22,000 grocery stories – up from only 150 in March 2020.
High prices and tough competition have led to a slowdown in plant-based meat sales among many publicly-traded companies, but Pitchbook expects momentum for bio-engineered foods to continue in 2022 as startups continue to deliver more realistic alternatives to meat and dairy.
Seven weeks into the new year that prediction is holding water. As reported by Food Dive, three bio-engineered food companies have already announced $100 million or more in fresh financing: Redefine Meat ($135 million), Remilk ($120 million) and Next Gen Foods ($100 million).