After record-setting global food tech investments of $13.5 billion in the first quarter of 2021, dollar investments fell to $8.9 billion in the second quarter, according to the State Of Food Tech Q2’21 Report from CB Insights. The number of deals increased from 369 to 409.
This year’s overall food tech investment trend has been funding to create a safer, more reliable, and more sustainable food system, based on lessons learned during the COVID-19 pandemic. Other market drivers include issues around food waste and labor shortages.
The report identified trends in the five food tech sectors:
Food & beverage
Food & beverage saw 130 deals in the second quarter, with just over $1.5 billion in funding. Alternative proteins are hot. In the first half of 2021, investments in B2B and B2C companies developing alternative proteins were over 3½ times more than total 2020 funding. Winners included startups focused on texture and mouthfeel for eggs and dairy alternatives, like milk and cheese. The largest alt protein investment in the second quarter was $226 million for Motif, an ingredients company that offers sustainable alternative proteins.
Another segment that attracted significant funding was beverages with functional benefits, reflecting consumer demand for more wellness products. Two companies receiving investments in the second quarter were Sunwink ($8.6 million), which develops sparkling herbal tonics with ingredients like dandelion and burdock root, and Elements ($1.15 million), which makes tonics with adaptogens that help regulate and balance stress levels.
Agricultural tech funding in the second quarter was $2.1 billion, up from $1.3 billion in the same quarter last year. Investment in vertical farming startups has already surpassed 2020’s total funding. Two examples are Bowery Farming and Upward Farms, both located in New York state, which received $300 million and $121.67 million respectively. Also attracting funding were seed breeding companies attempting to make seeds cheaper and more nutritious and companies addressing food waste in the supply chain.
Alcohol tech investments surged in the first half of 2021, with a record $386 million in the first quarter, followed by another $318 million in the second quarter. The popularity of alcohol-free beers and liquors among health-conscious consumers led to funding for multiple alcohol-free beverage companies in the second quarter.
Restaurant tech received less second quarter funding ($598 million) than its peak of just over $1 billion in the fourth quarter of 2020, but the number of second quarter deals were the highest since the third quarter of 2018. Early-stage cooking robot startups attracted funding as the restaurant industry deals with labor shortages. Dark kitchens also saw more investment.
Food & beverage delivery
Food & beverage delivery has seen big deals and valuations in 2021, receiving a record number of rounds and funding in the first half of the year. Though deals and funding slowed in the second quarter, three of the top five deals were delivery companies: Swiggy ($800 million), Glovo ($528 million), and Gojek ($300 million). Two segments attracting investments are home chef delivery platforms and dark convenience stores offering delivery.