SOSV is a prolific early-stage investor in agrifood tech with a unique model for supporting this growing sector. The firm topped our mid-year investor leaderboard once again for H1-2017, although it invested in less than half the number of deals it had this time last year. Investments by the “accelerator VC” varied, covering the following categories: Bioenergy & Biomaterials, Innovative Food, Novel Farming Systems, Ag Biotechnology, Farm Mgmt SW, Sensing & IoT, and In-Store Retail & Restaurant Tech.
We caught up with Elsa Sotiriadis, chief futurist, and director of RebelBio UK at SOSV, ahead of her speaking slot at Future Food Tech‘s London conference October 18-19.
SOSV was the most active investor in agrifood tech startups (innovating all the way from farm to fork) in H1-2017. Is that a surprise to you?
Yes and no. As we invest through accelerators, the mothership sometimes remains in the background. I’m delighted that this is changing, as SOSV’s investments have gained more visibility.
I’m thrilled that we’ve been recognized among the top ten most innovative companies in food 2017 by Fast Company for ‘betting on the artificial future of food’ – something that demonstrates the combined drive of the RebelBio, IndieBio and Food-X accelerators.
Under today's unique circumstances, AgFunder is re-opening Fund III for a limited time to enable investors to join our mission and invest alongside us as LPs in a second close. Learn more here.
Accelerating startups with these three programs helps to invest in agrifood tech innovation broadly, supporting them from both perspectives and networks, while also bringing the deep expertise within each vertical to best help the founders technology-wise.
Over the last few years, through those three accelerators, you must have seen a vast range of startups in the agrifood tech space apply to join the programs. What trends in the types of startups cropping up have you noticed? And have those trends changed at all over those years?
The future of food will be sustainable, personalized, and cellular.
An overall pattern is the increasing cross-disciplinarity: many startups in the space are pursuing greater deep-tech and digital components than ever before across some key trends:
- Personalized food that makes us healthy and happy
There’s a lot of activity around AI-devised recipes and a new drive to take cues from our microbiomes to ‘curate’ the best diets in an individualized way, a superfoods and probiotics revolution (LiveKuna) and generally healthier foods that are sugar-free and nutrient-infused (All Beauty). Many entrepreneurs are developing plant-based proteins, like artificial sweeteners (MilisBio) or healthier, functional sugars (Sugarlogix). Food delivery and payment solutions are getting micro-segmented (Eattiamo, Foodieforall, Green Blender).
- Food production may come to look a lot like breweries
One of the biggest new focus areas of applicants across our accelerators are fermented foods and beverages. Memphis Meats makes lab-grown chicken and beef meat and has just raised $17million from investors including Richard Branson and Bill Gates. A new wave of our portfolio startups are driving forward foodtech ranging from sushi-free sushi (Finless Foods), cow-free milk (Perfect Day) and egg-free egg whites (ClaraFoods) to fermented coffee (Afineur), microalgae-based drinks (Spira) and plant and algae-based shrimp (New Wave Foods).
- Food is getting more sustainable, transparent and grown locally
More startups are tackling challenges around sustainability: solutions for recycling and up-cycling (FruitCube, RISE), biodegradable packaging, zero-waste stores, vertical farms and hydroponics or letting users make their own customized yogurt, even vegan ones, from dissolvable probiotic culture pods – just like Nespresso (Lecker Labs with their product Yomee).
New camera-based apps and mini spectrophotometers let consumers analyze what’s on the plate and RFID sensors (Wasteless) or nanotech-based sensors can now better facilitate logistics, monitor freshness, or enable location-based pricing.
In the next years, we will eat better, personalized foods built molecule by molecule at bigger and bigger scale. Millennials are a significant part of driving these new markets.
What categories of agrifood tech really excite you today?
I’d love to eat food that’s grown or printed or fermented, anything really, rather than slaughtered. I’m therefore hopeful about the field of cellular agriculture and the prospects of a post-animal economy. Scalable meat can ensure better food security and alleviate the environmental impact of livestock farming, which is responsible for 18% of greenhouse gas emissions.
Are there any key challenges to the agrifood industry that you think entrepreneurs are NOT yet solving?
It’s a good time to re-examine the conversations around a key topic in food: health. It seems unacceptable that still, healthy food is expensive, the least accessible, and is attached to a high carbon footprint. Hence, I would love to see more entrepreneurs addressing the global abundance issues of healthy, affordable food to feed nine billion people in the coming years.
One solution could be around high-efficiency crops. Our early stage portfolio startups, for instance, are creating high-efficiency designer foods for a growing world (PlantEdit). These CRISPR/Cas9 genome-edited crops are non-GMO. Another, NuLeafTech, is creating scalable modules that are a mix of microbial fuel cells and miniature high-tech ecosystems, to let you grow crops and veggies at home. I hope to see more of those.
How are you thinking about the Amazon/Whole Foods deal and its potential impact on the startup community, particularly as it relates to the eGrocery/food delivery and CPG brand segments?
It was a deal that has certainly shaken up the food industry. It shows that food is no longer just food, but food + delivery + e-commerce.
As grocery stores and CPG companies are now facing competition with Amazon, the valuations of a few young companies have suffered as a result, while it is likely to prompt new acquisitions by retailers to keep competing.
This means startups in the space of delivery solutions and smart logistics should make their place in that value chain clear if they’re hoping to partner or get acquired.
High-quality organic food brands are now becoming more valuable if they can be shipped directly to people’s doors so this could result in a few pivots in the startup space.
Amazon’s decision (and ability) to cut prices has spiked visits to the physical stores -this creates pressure for competitors. It’s a strong signal that the combination of both channels is the future.
(I don’t think Amazon is quite done yet – health could be next to be transformed.)
How do you see the agrifood tech startup space maturing? Is it going to be a long road for some startups over others? Any major challenges /concerns you see across the space or in certain categories?
It’s easier than ever today to start a company, but it’s hard to compete – the key isn’t just winning, but staying the winner.
Some challenges are very similar for peer groups of startups, for example for clean meat & fermented foods/beverages: Scalability to reach the economics of scale, even though their respective scientific challenges vary (across algae, cell culture, yeast, and other systems of culturing), the other is regulation. While the US is one market, the EU is many different markets. I think proving these key points is critical to the maturation of the space and ad interim, the key is to make continuous improvements to keep financing the next rounds.
The space is increasingly interdisciplinary, hence the market around them matures in different ways. For the insect farming trend, it might come down to consumer acceptance. For vertical farming, it might not just be the efficiency of hydroponics, LEDs and photosynthesis, but real estate prices in urban areas. For upcycling, it might be food perishability and logistical bottlenecks, for ‘genomic diets’ informed by consumer genetics, it might the limited availability of evidence-based data, and so forth.