Every week there seems to be news of a new farm robotics startup getting launched or an “alternative protein” company raising a seven, eight, or nine-figure funding round. But it’s not enough and the agrifood industry needs more qualified entrepreneurs to enter the space, according to a new initiative from the European Union (EU) that wants to propel more entrepreneurs and innovators into the sector.
Its inaugural “pre-accelerator” agrifood tech program will offer entrepreneurs support at the earliest stages of development.
“Food tech is a really trendy sector to develop new business ideas, [but] there is really a lack of trained entrepreneurs that are entering the entrepreneurship journey in the food space. Many more in Europe are starting in the IT world and in health,” said Benoit Buntinx, who leads business creation at the European Institute of Innovation & Technology’s food department: EIT Food, dubbed the EU’s “Knowledge and Innovation Community” for businesses, universities, research centers and institutes in the food sector.
Startup funding supports Butinix’s observation. European food startups aren’t attracting investor interest at anywhere close to to the levels of their peers in health, financial technology and enterprise software. Of the €28 billion of venture capital invested in Europe and Israel in 2018, according to Dealroom, just €1 billion ($1.1 billion) went to agrifood tech companies, according to AgFunder data. That compares to nearly €6 billion in health, €5.5 billion in fintech and €5.4 billion in enterprise software. The sector didn’t even make the top 10.
In fact, of the top 17 sectors, the food sector saw the steepest drop in venture capital funding from 2017.
AgFunder Co-Investment Fund III is now open for investment. Closing June 15, Spots are limited.
Fusing food and entrepreneurship
EIT Food wants to change the food entrepreneurship landscape by training, building and funding entrepreneurs. The community launched in 2017 to address a food system that is “not working,” according to Buntinx. “It’s not sustainable. The challenges we know about: we waste one-third of the food produced, and many in the global population are under- or malnourished,” he explained.
While the food industry was the original point for solving these issues, Buntinx added, now, the food value chain has become too fragmented for any one actor to tackle all of the issues alone.
EIT Food has identified six issues in Europe’s food system that it’s committed to addressing: overcoming low consumer trust; enabling individuals to make informed and affordable personal nutrition choices; creating consumer valued food for healthier nutrition; building a consumer-centric connected food system; enhancing sustainability through resource stewardship; bolstering food system skills; and catalyzing food entrepreneurship and innovation.
EIT Food does this through programs that stretch across the innovation “journey”. It runs a startup accelerator (EIT Food Accelerator Network), a venture fund (FoodSparks), and a group of established startup founders that are working to build and launch new food-related products and services (Rising Food Stars). It also offers innovation grants and connects entrepreneurs to its network of investors, funders, and business support providers.
This year, the community has secured €56.4 million through Europe’s Horizon 2020 research and innovation initiative that it will invest across its programs. One of these will be the launch of a pre-accelerator program focused on recruiting and training new food sector entrepreneurs.
“If we are talking about business creation, we start with someone with an idea or an existing technology that could be transformed into a new product or service,” Buntinx explained.
Building an innovation loop
EIT Food will recruit entrepreneurs for a two-month program to equip them with the skills and early contacts needed to start a new food venture, to validate their business models, and ultimately stock the pipeline for accelerator programs, including EIT Food’s own, which will soon begin working with its second cohort.
The goal is for some of these entrepreneurs to eventually scale to the level of EIT’s Rising Food Stars. The network is currently comprised of 50 startup founders that have already helped one business achieve a measure of scalability and are applying their skills to driving new innovations.
“We have a network of huge corporate partners and universities who want to change the agri-food ecosystem, but they lack some of the tools to drive innovation,” Rising Food Stars’ manager Annick Verween told AgFunderNews. Rising Food Stars recruits entrepreneurs that can partner with university and corporate partners to help academic and lab-based research transition into commercial products and services.
For example, Israel-based DouxMatok develops flavor technology to help food producers reduce their products’ salt and sugar content. The company is part of the Rising Food Stars network and is working with a corporate partner to reduce the amount of sugar in chocolate without compromising the taste.
A portion of the new funding allocated to EIT Food will be used to grow the Rising Food Stars network. EIT Food is launching the application process on April 1 and will look to recruit and additional 10 teams this year.
The expansion of EIT Food’s programs exemplify its commitment to bridging and fixing Europe’s food system. The only way to do this is to develop a community that closes the innovation circle, said Butinix. “We have to pull all forces together and look at food like a system and not a fragmented chain. Only together can we transform it.”
Catch Annick Verween and CEO of EIT Food Andy Zynga at Seed & Chip’s Global Food Innovation Summit in Milan next month! For 50% off ticket prices, use discount code AGFUNDERSAC19, applicable to the first 50 registrants only!