One of the sectors which is largely absent from the burgeoning German start-up scene is Food and Beverage (at least if one discounts coffee bars and burger joints). In the US, however, food start-ups are increasingly being looked at by investors, and this trend is being carefully observed by German Venture Capital.
According to a study conducted by the CB Insights analysis platform, food start-ups have a good chance of attracting an influential smart money sponsor – companies that support start-ups at an early stage with advice and capital. CB Insights has looked at start-ups that produce packaged food products or work on new technologies in the food sector.
The result: Nine out of 24 VCs have been investing in start-ups since 2013, focusing on food or drink. In total, they sponsored 14 food start-ups. But VCs did not invest in all innovations in the food sector. They almost exclusively promoted companies that wanted to replace their products with ordinary food. According to CB Insights, these business models could be more easily scalable than, for example, innovations in flavour trends.
US food investors are focusing on these four food trends:
- Replacing Animal Products: Koshla Ventures spent $ 183 million on Impossible Foods. The start-up offers a vegetable burger that tastes like meat. Ripple Foods also received millions for its cow milk free milk. Hampton Creek was also sponsored for its vegan egg substitute and Kite Hill for its cheese based on milk from nuts.
- Future Foods: Futuristic products also received a lot of venture capital. A well-known example is Soylent which produces a liquid food which is intended to completely replace other foods. Andreessen Horowitz and Index Ventures believe in the company financed by more than $ 22 million. Nutek Food Science (sodium-reduced salt), aloha (plant-based protein and vitamins) and blue bottle coffee (cold-brewed coffee) also received millions.
- Food Safety: Roka Bioscience received more than $ 139 million for its test system which is designed to detect harmful substances in food. Another provider in this area, Clear Labs, received more than $ 20 million.
- Food from Fruit and Vegetables for the Consumer: Juicero, a luxury juice press manufacturer, received nearly $ 100 million, among others from Kleiner Perkins Caufield & Byers, Google Ventures and Acre Venture Partners. Hungryroot, which specialises in vegetarian ready meals, has collected more than $ 13 million.