Technology companies tackling food waste raised $1.9 billion in funding in 2021, representing 101% year-on-year growth, according to a new report from US-based nonprofit ReFED. This takes investment in food waste tech and business models mitigating food loss to over $7 billion over the past 10 years.
The findings were shared at ReFED’s annual Food Waste Solutions Summit which is taking place in Minneapolis this week.
According to ReFED’s Food Waste Capital Tracker database, a record amount of private capital – including venture capital, private equity, corporate finance and spending, and commercial project finance – was invested in companies offering food waste and loss reduction solutions in 2021.
- Total private investment into food waste tech solutions reached $1.9 billion in 2021, representing 101% year-on-year growth
- For the previous period (2019-2021), year-on-year growth was 112%
- More than $7.2 billion has been invested into this space over the past 10 years
- Average deal size grows from $2 million in the early 2010s to $17 million in 2021
- So far in 2022, investment has reached just $289 million to date; could this indicate a slowdown?
Factors driving the increase in investment include “the growing number of food businesses making public commitments to fight food waste” as well as government policies “mandating partial or full organic waste bans,” such as California’s Senate Bill 1383, said Alexandria Coari, ReFED‘s vice president for capital, innovation, and engagement.
“We’ve seen an exciting increase in the flow of capital into food waste solutions in the past few years, but much more is needed to reach national and international reduction goals,” she told AFN. “We knew we had to provide a resource to support private, and eventually public and philanthropic, funders who want to use their capital to solve food waste challenges.”
What impact have these investments had?
Environmental and societal impact remains difficult to quantify, compare, and contrast between companies with differing technologies and business models.
“While we don’t have impact data on every single investment that was made, there are lots of examples where investments were made and companies had an impact,” Coari said.
As such, ReFED is able to use its dataset to compare the cumulative amount invested in companies over time with the cumulative potential impact they had over the same period:
Apeel (freshness/shelf-life extension tech)
|Year||Funds raised||Food diverted from waste|
Shelf Engine (demand planning platform, US)
|Year||Funds raised||Food diverted from waste|
Too Good To Go (restaurant/retail surplus app, Denmark)
|Year||Funds raised||Equivalent meals saved|
[Disclosure: AFN‘s parent company, AgFunder, is an investor in ImpactVision, which was acquired by Apeel.]
Where the money went
“We found that a majority of private capital last year went to solutions focused on preventing food waste from occurring in the first place,” Coari said. These areas included (with examples of startups which raised funds):
- “Active and intelligent” packaging (Hazel Technologies)
- Freshness-preserving edible coatings (Apeel, Mori)
- Sales/distribution channels for imperfect and surplus produce (Imperfect Foods, Misfits Market)
- Enhanced demand planning (Afresh, Crisp, Shelf Engine)
- Mealkits (Home Chef)
Solutions for recycling food waste ‘after the fact’ also scored some of the more significant funding deals in areas such as:
- Anaerobic digestion (Bioenergy DevCo, Homebiogas)
- Waste-fed insect farms (AgriProtein, Protix)
- Waste-derived biomaterials (Tidal Vision)
Where the money’s going
While ReFED expects all of these areas to continue to secure funding during 2022, Coari highlighted a few specific segments where her team is seeing particular interest from investors.
- Upcycling, especially manufacturing byproduct utilization. “We would expect to continue to see a growing amount of funders investing in this area, but continuing to spread those dollars out over a variety of companies and brands as more and more get into the space,” she said.
- Enhanced demand planning technologies that can “help food businesses be more resilient, especially coming off the experiences of the [Covid-19] pandemic.”
- Distressed sales and secondary marketplaces. These are meeting increasing “need and demand from retailers and manufacturers for alternative sales channels for the product they bought, but might not have been able to sell as originally planned.”
- Recycling solutions such as insect-farmed and waste-derived processed animal feed. These “have had some new approaches and models brought to light as of late,” Coari said, mentioning the example of Do Good Foods which distributes surplus grocery stock to local areas and animal feed producers.
With $289 million raised by food waste tech solutions so far this year, the sector is on track to miss the heights it reached in 2021.
“We don’t have a projected or estimated total for FY 2022 yet. If we annualize the current pace of investment for the year, both factoring and not factoring seasonality of transactions, we get to an investment level that may be 50% less than 2021; however, in-line with 2020,” Coari said.
“There are some caveats to this. Big deals will skew this and we have not seen too many in 2022 as of yet. We acknowledge there is a level of uncertainty in the broad market which would likely have entered private markets as well.”