Source: Five Season Ventures | dealroom.co
2020 marked an inflection point for foodtech, as consumers reassessed how they eat
The pandemic has driven radical changes in consumer behaviour and accelerated adoption of meal and grocery deliveries, some of which is here to stay. It also highlighted big inefficiencies in the food supply chain and raised awareness for a healthier and sustainable food system. 2020 saw continued growth in food startup investor interest, with €2.4bn invested in 2020 (+12x vs 2013) and an increase of foodtech startup valuations (+156% vs 2019). European foodtech unicorns are now large, international players, catching up with their US counterparts (i.e. valued at 48% of US foodtech unicorns, compared to 10% for tech overall).
Covid-19 accelerated egrocery adoption, and the emergence of new food distributin models
We believe the egrocery to be bigger than food delivery, as total market for groceries is $2.1tn compared to $0.6tn for restaurants. Egrocery companies have seen skyrocketing growth in 2020 (3x to 10x vs 2019), as convenience turned into necessity. As demand shift ed away from food services, meal kits companies efficiently stepped in together with virtual/dark kitchens, and
removed previous doubts over these models. Quick-commerce startups (the 15 minute delivery from local dark stores), the last newborn in the grocery space, drew most attention, with €262M raised in the first quarter of 2021 already . D2C food was the winner of Covid-19, creating an astonishing €84bn in value.
Food production and transformation is catching up with consumer-facing foodtech
B2B food companies may take longer to unlock growth than B2C but the opportunity could be bigger representing €1.7bn of capital investment in 2020 .
The pandemic highlighted inefficiencies in the food supply chain and the need for new technology solutions. Investments to enable supply chain automation, or funding to indoor and vertical farming have been on the rise. Insect production and food waste management also attracted large VC funding.
As consumer interest in sustainable alternatives grows, so do investments and valuations in the plant-based and cell-based sector (10x in 5 years) throughout Europe (and beyond).
