Startups developing innovative food and ingredients, including alt-proteins, raised more funding in the first half of 2020 than all of 2019, according to AgFunder‘s recent Agrifoodtech Mid-Year Investment Review.
Investment into Innovative Food — an AgFunder-defined category which includes startups working on cultured meat, plant-based and fermented proteins, and novel ingredients — has been bolstered by Covid-19’s impact on food supply chains, as well as the animal meat industry more specifically.
Innovative Food was the third most-funded category in H1 2020, replacing Restaurant Marketplaces which had taken the number three spot in FY 2019.
By the end of June it had already surpassed its total funding figure for the whole of 2019. It accounted for 13% of all H1 2020 funding, raising a total of $1.1 billion across 93 deals versus FY 2019’s $1 billion across 158 deals.
Admittedly, a very large chunk of that total went to just one company: US plant-based protein pioneer Impossible Foods, which secured $500 million in Series F funding in March.
That said, several smaller startups appeared to do well out of the funding bonanza; the median Innovative Food deal size for H1 2020 stood at $2 million.
A couple of factors likely explain the surge into alt-proteins and other innovative foods. Prior to Covid-19, consumer interest in such products had already been on the rise; the disruption to food supplies brought on by the pandemic — and its apparent origin in the animal meat chain — seems to have had a compounding effect.
On the VC side, investors may see the category as having more defensible qualities compared to standard consumer food products.
Alongside Impossible, relatively mature players like Memphis Meats, Nature’s Fynd, Good Catch, and MycoTechnology raised sizable rounds. Several newer entrants, like AgFunder portfolio company Alpha Foods, also made it into the top deals list [Disclosure: AgFunder is the parent company of AFN.]
Outside of meat and dairy alternatives, ByHeart is conducting breastmilk research to make better baby formulas, while YFood is addressing personal nutrition with snack bars and drinks.
Of the 10 highest-funded Innovative Food startups in H1 2020, the top nine are from the US. They’re listed below – for a longer, more detailed breakdown, check out AgFunder’s full Mid-Year Investment Review here.
- Impossible Foods (US) – This juggernaut of the plant-based boom no longer needs any introduction. In March it raised $500 million in Series F funding from a bevvy of mainly Asia-based investors, including Mirae Asset, Temasek, and Horizons Ventures, to fund its expansion in the region. Last month many of those same investors re-upped in its $200m Series G round.
- Memphis Meats (US) – Temasek was also involved in this Californian cultured meat startup’s $161 million Series B round, which it co-led alongside SoftBank and Norwest in January. Other backers included agribusiness giant Cargill and billionaires Richard Branson and Bill Gates.
- Nature’s Fynd (US) – Formerly known as Sustainable Bioproducts, this Chicago-based startup is using a microbe discovered in the volcanic features of Yellowstone National Park to create alt-protein food products. In March it rebranded and closed an $80 million Series B round led by Branson and Gates-backed Breakthrough Energy Ventures and former US vice president Al Gore’s Generation Investment Management.
- ByHeart (US) – With its products, this New York-based venture is aiming to emulate the composition of human breastmilk to make its nutritional benefits available to all babies and mothers, including those who can’t breastfeed or prefer not to. It raised $70 million in Series A funding this April.
- MycoTechnology (US) – Based in Colorado where it develops alt-proteins and ingredients through a mushroom-based fermentation process, MycoTechnology raised $39 million in its June Series D round from the VC arms of major agrifood corporates including Tyson, Bunge, and Kellogg’s, among other investors.
- Good Catch (US) – A brand name of New York’s Gathered Foods, Good Catch raised $32 million in January for its plant-based seafood analogs, with Greenleaf Foods and 301 INC — the venture arm of General Mills — among the participating investors.
- Alpha Foods (US) – The Californian company, which makes prepared, plant-based food items ranging from burritos and tamales to burgers and pizzas, raised $28 million in a February funding round.
- Puris (US) – This Minneapolis-headquartered pea protein producer raised $25 million from an undisclosed investor in February. It supplies ingredients to Beyond Meat and Cargill, the latter of which invested $75 million into the company in August 2019.
- Kate Farms (US) – California’s Kate Farms provides its plant-based liquid meal formula to hospitals as a nutritional supplement for patients who have difficulty eating solids. It raised $23 million in April from angel investors including Silver Lake Partners co-founder David Roux and former Lazard CEO William Loomis.
- YFood (Germany) – The Munich-based maker of ‘complete meal’ drinks, powders, and snacks banked close to $17 million in April from London VC Felix Capital, France’s Five Seasons Ventures, US-based New Ground Ventures, and New Zealand dairy giant Fonterra.
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