The amount of money invested in European “food tech” companies is expected to more than double year-on-year in 2019, according to venture-capital fund Five Seasons Ventures.
Based on annualised figures on the amount invested from the start of January to the end of September, Five Seasons Ventures estimates EUR2.3bn (US$2.56bn) will have been spent by the end of 2019, up from EUR1.1bn in 2018.
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Niccolo Manzoni, founding partner at Five Seasons Ventures, said some EUR1.7bn would have been invested in what the fund calls the “next generation of European food tech”, compared to EUR1.1bn 12 months ago.
Among this group of companies are Germany meal-replacement start-up YFood Labs, UK meal-kit supplier Gousto and Yinsect, the French insect-farming business that raised US$125m in Series C funding earlier this year.
“The next gen is really innovating across the value chain and it’s not just food delivery, it’s going as upstream as agriculture … all the way down to food brands and food products,” Manzoni told the Future Food-Tech conference in London today (17 October), where Five Seasons Ventures presented its The State of European Food-Tech report.
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Five Seasons Ventures groups these “next gen” businesses as distinct from what it calls the “first wave” of European food-tech companies, which were centred on food delivery, including HelloFresh and Just Eat. In 2019, the fund expects EUR600m to have still been spent on this cohort of businesses.
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By GlobalDataManzoni outlined to the Future Food-Tech audience two “rapidly-growing trends” in European food tech.
“There are two of areas in which we are looking at quite actively and in which we’ve actually got some investments,” he said. “One is alternative proteins. What’s really interesting is that finally in Europe we’re getting to a point where there are entrepreneurs and companies that have an ambition to become a European Beyond Meat. Maybe that’s driven partially by the IPO of Beyond Meat in the US but finally we have companies that have large ambitions. And the other one is direct-to-consumer, which is a big trend but it’s broader than just the channel.”
Manzoni cited direct-to-consumer companies such as Germany’s Foodspring – in which Mars acquired a majority stake in June – that sell online but are “digital native vertical brands”, businesses that are “able to build a tribe of followers and consumers” which sees the companies also sell in bricks-and-mortar retail.
The Five Seasons Ventures partner also said Mars’ investment in Foodspring was an example of how corporate players in the food industry are backing businesses in the space. He also pointed to Unilever‘s acquisition of Graze and The Simply Good Foods Co. buying US peer Quest Nutrition this year.
