Why a Venture Capitalist of the Year is Building a Food Tech Ecosystem in Sweden

There are a growing number of regions of the world and within the US that are vying to become the Silicon Valley of food and agtech, each of them with different resources to offer startups and investors from investment capital, customers, accelerator programs, conferences, and more. There’s still a large funding gap in the food and agriculture industry, which has, in many ways, been left behind technologically and is still inefficient and opaque at several points in the supply chain, not to mention the world’s biggest greenhouse gas emitter.

Two weeks ago I headed to Stockholm, Sweden to speak at and attend the Sweden Food Tech “Big Meet” conference and I was impressed by the small but growing level of activity in the country. One of the organizers, Johan Jörgensen, is a Swedish entrepreneur and investor, once named as Sweden’s venture capitalist of the year after investing across different tech industries for several years. Over the last few years, he has focused purely on food tech. So, in this week’s podcast, I’m speaking to Johan about why he’s building a food tech ecosystem in Sweden and his main takeaways from the conference on how traction is growing.

Below is an abridged transcription of our conversation.

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Louisa B-T: What brought you to food?

Johan Jörgensen: It was after I received the title of venture capitalist of the year in 2010, because suddenly I was being inundated with all types of business ideas and pitches, and they had one thing in common; they were very small and insignificant and that frustrated me because if you take a look at the tech sector you have some of the smartest people on the planet, and they should do the most important things. When I started looking into food I saw nothing, no innovations, no tech whatsoever, which is fascinating coming to think of it, that it is the largest sector on the planet and it’s really killing the planet and everyone on it, so it’s full of problems. And the tech sector should be there in order to solve those problems, and of course, make a good business doing that.

So I took this secret vow to my friends in the tech sector, “From now on, I’m only going to do food tech,” and I’ve kept that since.

Louisa B-T: Was it that you weren’t seeing any food tech anywhere globally? Or are you talking mostly Sweden and Europe?

Johan Jörgensen: Well, I did see some stuff starting to happen and I think we have seen that all along the tech development. Online sales of food, for instance, some delivery solutions. But, what I think are the most interesting parts are the digital layers around food and the data services that enable you to be healthy or sustainable. The current food system doesn’t enable consumers to understand what it is they’re eating, and how that affects the planet. We need some help doing that because a couple of generations back we lost the connection between man and food, we moved into cities and we weren’t as engaged in food production anymore as we used to be. And so we need some help understanding food and what it does to us and our planet.

Louisa B-T: Why do you think we lost that connection with our food?

Johan Jörgensen: First of all, it’s the pure physical loss of connection; we weren’t working with food anymore. And then, of course, the logic of distribution and industrial scale is another thing; we started packaging food, taking it into cities where over-exhausted workers could easily pick it up at the retail store and go home and cook it fast and easy.

Louisa B-T: Do you also think there’s been a bit of a miscommunication about what is healthy food? Obesity rates are higher than ever.

Johan Jörgensen: It’s ridiculous; we’re subsidizing cheap cookies with expensive healthcare today and that cannot go on. I think in the U.S. more than 50% of the population has non-communicable diseases, most of which can be tracked back to what they eat. Same thing goes for Europe as well, and for Asia as well. So, of course, food is the solution not only to the food sector but also to the health sector.

Louisa B-T: So tell us about the ecosystem here in Sweden. Last week you had the first food tech conference for Sweden?

Johan Jörgensen: Actually, I had one last year but it was not as large as this year. So, after having received this Venture Capitalist of the Year type of award and being overflowed by bad business ideas, I started to look around and I started traveling around and I also had the joy of running the innovation program for the US at the World Expo in Milan back in 2015. I was running around trying to look for where the ideas came from, and of course, you see a lot of development happening in many places, but if you look at it systematically, what you need in order for the food system to change is a strong tech sector, which we have here in Stockholm. You also need to have a health-minded and sustainably interested population, which we have here. And they also need to be change-minded, and that’s key because if people aren’t willing to change, then we can put as many tech companies onto them as we want to, but nothing will happen. Change is what we need to see because the food system is killing the planet and everyone on it, and it can’t go on.

Louisa B-T: How does Sweden compare to other parts of the world? So, you’ve mentioned some of the new attitudes here in terms of change. How do you think that compares to the US or to London or maybe Australia?

Johan Jörgensen: I think you just mentioned a couple of the most forward-thinking places on the earth when it comes to food. The food system of the future doesn’t resemble the food system of the past and it will be driven by other factors than what drove the food system of the past. And you’ll find that in those tech hubs that you just mentioned, and Stockholm is definitely one of those tech hubs. It’s a super strong tech sector, I mean it’s probably on par with Silicon Valley in some aspects. But, again, I think that tech people are doing the wrong things, they’re into mobile gaming or dating or whatever have you, but they’re starting to realize that food in Sweden alone is twice the size of the global music market, for example. But the music industry is super competitive and really not a place where I would ever want to be.

Louisa B-T: That’s amazing. So the food sector in Sweden alone is double the music industry globally?

Johan Jörgensen: Yeah. The food sector is really so huge. And when you start to understand that and when you see the non-existence of tech and innovation in this sector, then suddenly you start to realize that this is something where you, with relatively small means, can make major change happen.

Louisa B-T: Do you think that food and agriculture has suffered from not being very cool or hip, when compared to music and other industries, despite being such a massive sector?

Johan Jörgensen: Of course, it’s the coolness factor, but I think it’s fine now because people are getting more and more concerned about what they’re eating and a lot of those old food habits are dying off. So I think food is getting cool again, and especially when people are realizing through other types of tech solutions like health apps that they have an increasing amount of conscience regarding both sustainability and also how food affects you.

Louisa B-T: At AgFunder, we focus on agriculture as well as food, and if I say to someone that I write about agriculture technology, I don’t get as good a response if I say I write about food innovation; apparently that’s cooler! Where do you sit on the agriculture technology side of things? Is that part of your wheelhouse and interest?

Johan Jörgensen: Well, I think it’s a really good question. So, when we started building this ecosystem here in Sweden, which we have done now the past few years, we thought about two distinct directions for Sweden and Stockholm to go in terms of getting people on board with the industry. The first is urban food systems; Stockholm is growing at a tremendous pace and will add something like 50% in population over the next 20 – 30 years if projections hold.

So that means that we have the chance of building a city where food has been integrated from the start. That means everything from the distribution methods that we have to how food is actually grown and produced. So you could say yes, that’s ag, and urban farming is definitely a huge part of the food system of the citizens of the future.

The second sector that we’re aiming for here is health, where we have a very strong health system not least through the strong public health system but also when it comes to research institutions. So, we hope to be able to make connections between the medical part of the world and the food side of the world and have everyone understand that in biology there is no such thing as a specific sector, everything is connected.

Louisa B-T: With urban farming, one of the things we’ve seen in the U.S. is that a lot of these indoor farms, that’s a big infrastructure type project and I think there are some question marks around the suitability of that for a venture capital investor. How do you think about that? How would you be investing in urban farming? Would it be in services to urban farms and indoor farms or would you actually be investing in large indoor farms themselves?

Johan Jörgensen: Services to indoor farms. When it comes to the investment part of it, I think urban farms are not for VCs. I think it’s for other types of investors. You need to have a longer perspective, but then again you can reap good returns on your money, but it’s not going to be the VC type of returns that they’re looking for. So, no, urban farming is not for VCs but VC is not the only type of money that’s looking into the food sector. Family offices, it could be universities and other people who usually invest in VCs perhaps can think of investing in urban farming instead.

Louisa B-T: We were talking at the conference about what makes a good food tech ecosystem, or what you need. You mentioned a few of those things, did you have any takeaways from the conference on that discussion that you’re going to think about and maybe bring into your own model for building an ecosystem here? Because you had people speaking from Italy, the U.K., Germany and then myself from the U.S.

Johan Jörgensen: Yes, two things. When you talk normally about the ecosystem in a tech sector, it’s kind of a limited ecosystem. It’s entrepreneurs and then it’s investors, and that’s the ecosystem. But when it comes to the food world, which is infinitely more complicated and complex, you need to bring other people into the equation as well: the retailers, food producers, the health professionals, and so on, so everyone needs to be on it.

And then, of course, it’s also about legislation and how you support certain industries. We’ve been pushing hard to have the politicians and the public sector on board as well because in Sweden we have something like 50% of all meals that are served outside the home are served in the public sector, which means that if you can get the public sector on board that means you have a tool for change that is tremendous, so that’s super important.

Louisa B-T: What would you say is Sweden’s unique selling point as a destination or a home for food tech startups?

Johan Jörgensen: I’d say it’s mostly the fact that we’re pretty good at getting together around certain topics and then everyone from the industry, from the politicians and the entrepreneurs and the investors, as soon as we unite around something we tend to jump at it together. And I think that’s a very strong part of Sweden. We’re good at working together here, that’s probably the best part of it.

And the tech sector is phenomenal. Entrepreneurs just need to understand the opportunities in the food sector.

Louisa B-T: What are your strengths in the tech sector? You’ve mentioned that it’s very high quality, what sort of types of technologies is Sweden really known for?

Johan Jörgensen: I think, looking at the city of Stockholm for instance, that they define themselves as a hub for FinTech, for gaming tech and music tech, and now they will add food tech as well. If you look at Stockholm as a city, the most common job description in Stockholm is programmer. There are more programmers than any other type of job. The whole city is vibrant when it comes to the tech scene, everyone wants to become an entrepreneur. Everybody wants to invest in the tech companies too, from business angels to the funds. And we have a pretty strong financial backing of these tech companies, huge funds, mid-sized funds, business angels, family offices who have learned over the past few decades how to invest in tech companies. So there’s a pretty mature and well-heeled funding part of it.

Louisa B-T: So tell us a bit about your Sweden food tech alliance? Do you have different types of investors, as you’ve just described, all involved in that? Or is it an alliance mostly of VCs?

Johan Jörgensen: So, when we started up the food tech scene here in Sweden, we realized we needed a couple of things. We needed a yearly conference where we can gather everyone and have people listen to interesting speakers and learn more. And then we needed to have a system of individuals that can work with these food tech entrepreneurs on a more ongoing basis. The food tech sector globally is still a small pond and here in Sweden it’s a yet smaller pond, so we know each other pretty well. So we said why don’t we pool our interests here and find a way of working together because that’s when we can really give these companies the networks and the strength they need in order to grow fast, go global and really succeed?

As a group, I think we’re pretty strong.

Louisa B-T: What would you say was your key takeaway from the conference? You gathered together some excellent speakers, had some great pitches: did you learn anything new and what were your thoughts coming out of it?

Johan Jörgensen: I think it was the massive enthusiasm afterward. People are really understanding that the food sector can change and that we do have the tools to change it. And that fascination came not just from the tech companies, but most importantly from the food companies. Because I think many of them have been silently wondering “How can we change the food sector?” And also, “But we don’t have the tools to do that.” And suddenly they realize that the tools are out there and the people are out there that can help them with this, and I think that was the most stunning part of it.

Louisa B-T: Great, thank you so much for your time and thanks for inviting me here. It’s been great!

Johan Jörgensen: Thank you, it was fantastic to have you here and I hope you come back next year!