Editor’s Note: Danny O’ Brien is founder of Idea 2 Scale and the Field Academy. Idea2Scale operates virtual accelerator programs for founders around the world regardless of their resources or background. They don’t invest, don’t take any equity or charge the startups for participation. AgFunder is partnering with Idea2Scale with on an agri-foodtech investor sentiment survey. Take part here!
The pace of change in consumer preferences has caught big food off-guard, giving rise to once nascent brands and movements. The terms plant-based foods, alternative proteins, flexitarian and others have entered the mainstream lexicon and the adoption of these lifestyles is accelerating. The hype was reaffirmed by the Beyond Meat IPO earlier this year, something which led to a 734% spike in the stock price over the summer months. This instantly felt like a watershed moment for the industry; a company yet to make a profit taking home the biggest IPO of the year to date. This was not simply a mark of investor confidence in the company itself, moreover a mark of confidence in the potential of the alternative meat category.
As the industry attracts more and more attention from mainstream investors, is this investment category here to stay? Will it continue to build on this success or will investors show the same reticence it showed to the non-dairy milk industry, which remained a niche market for years before a surge in popularity in almond milk catapulted the nut milk category from 5% of the dairy industry to close to 15%.Worse still, will it join Cleantech, VR, Wearables and others as industries that were overhyped and have so far failed to reach their full potential.
The numbers speak for themselves, as AgFunder readers will be aware. In 2018, startups raised 43% more funding across 11% more deals year-on-year. Last year there were 1,700+ investors who committed almost $17 Billion to the space. Unlike other tech industries that are centered around traditional tech hubs like Silicon Valley, New York, London and others, food is a truly global supply chain and innovators around the world are attracting investment.
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Another factor is sustainability. The AgTech sector has the potential to completely reshape global agriculture, radically increasing the productivity of the agriculture industry while reducing the environmental and social costs of current ag production practices. It has the potential to have a positive impact on so many levels such as climate change, hunger elimination and healthy lifestyles, all common motivating factor for founders and investors. As a result, alternative forms of capital, including impact investors, will continue to be attracted to the space.
By its very nature the future of Food and Agriculture is truly exciting, we’re seeing the convergence of technology and science, together with new business models to create new categories. The amount of data collected will grow exponentially, making it an attractive space for AI, Blockchain and Big data start-ups to prove the value of their tech. A myriad of applications have already been unearthed, including sensors, artificial intelligence, big data, biotech and robotics. These are being used by progressive start-ups to boost global food supplies, something that of course will further boost the organic growth of the industry. So much has this trend been embraced it has already given rise to a new nomenclature, which includes terms such as ‘the plant internet of things’.
Shifting Consumer Preferences
Finally, no one can ignore the consumer demand for cleaner, more natural food, which is growing relentlessly in recent years and shows no signs of yielding. Further confirmation of this has come from the assembly of some of the biggest names in the world such as tech giant Amazon, a superpower that has plans to overhaul the way in which we purchase food products both in store and online, following its acquisition of Whole Foods, together with the inroads its making with Amazon Go.
As the number of investors in the industry increases, we want to understand more about what’s happening. What are the drivers and what is the sentiment of investors in the space at this moment in time? What countries and categories are of particular interest and what’s overhyped?
To develop a further understanding of the motivations of investors in the current market in collaboration with AgFunder, Idea 2 Scale is interviewing investors across the world at multiple stages who invest in the space to gain an insight into their decision-making process, what’s hot and what’s not. The team has also created a short survey for Food & AgTech investors to produce some statistically valid figures on sentiment in the space and would very much appreciate your time in answering (click here to take part). The forthcoming report is expected to be released in October and participants in the survey will receive a copy.
The research will help inform the curriculum of Idea 2 Scale’s forthcoming accelerator program ‘The Field Academy’ which opens applications next week. The program is delivered virtually to founders around the world seeking to help them become market and investor-ready.