Foodtech 2023 - What did We have?

What a year was 2023 ! filled with ups and downs, which one can say it’s true for every year…. But this notion is especially true for 2023 in foodtech.

Throughout the year, I regularly compile a database of foodtech deals sourced exclusively from public channels. I do this every year, as a mean to learn and implement in my own work, but it’s also interesting to share with others and get additional feedback, which is why I’m posting this article. Happy to hear your thoughts and discuss how can we take this industry forward in 2024, and beyond.

As this is based on public information only, it obviously does not contain all deals (those not published), or deals I may have missed, and if I did miss any – please enlighten me.

The tally stands at 226 deals (up from 221 in 2022): 78 in plant-based (down from 96), 73 in cell-cultivation (down from 70), 23 in fermentation (no change), 6 related to funds, and 46 in tech.

A few early observations:

• Plant-based deals experienced a significant decline compared to cultivation and fermentation, suggesting challenges on the path ahead for the entire alternative protein industry
• Number of investments in plant-based dropped by approximately a third, while fermentation and cultivated maintained a relatively stable figure (number of investments, not total $ value)
• Partnerships in the cultivated industry increased in 2023, yet if excluding pet-food deals, the number is similar to last year
• There were nine grants awarded in the cultivated field (with some companies securing both grants and VC funds), with only 5 in plant-based and 4 in fermentation, highlighting the demand for alternative funding amid diminishing VC sources (2022 had 5 total grants, 3 to cultivated companies and 1 each for plant-based and fermentation)

Who are the most active companies in foodtech?

ADM continues its robust presence, announcing 6 deals in 2023, dealing with functional food, a deal with Air Protein , plant-based and flavors related deals. Following closely is CJ CheilJedang engaged in 4 deals, focusing on fermentation for colors, plant-based seafood, and 3D printing. Nestlé announced 3 deals, encompassing packaging, plant-based meat, and microbiome research, while Cargill unveiled 2 deals in plant-based and salt.

Among startups, CULT Food Science takes the lead with 9 announcements, primarily in the pet food sector. Aleph Farms and Umami Bioworks follow with 5 announcements each. Aleph's focus is predominantly on scale-up activities, while Umami Bioworks presents a more diverse portfolio, ranging from a commercialization partner to cells, pet-food, a collaboration with a CDMO, and 3D printing.

Cultivated

Interestingly, we saw very little involvement from CPG companies in cultivate in 2023, with only 2 partnerships: by 풀무원 (Pulmuone) from South Korea with Simple Planet (Pulmuone partnership with BlueNalu was “strengthen” in 2023) and Maruha Nichiro Corporation from Japan partnering with Umami Bioworks. Interesting to see both are made by Asian companies.

Generally, cultivated partnerships primarily focused on scale-up (11 deals) and technology-related ventures (12 deals).

Examining investments in the cultivated sector reveals key trends:

1. Most investments concentrated on seed and A rounds, with only 3 in later rounds ( Meatable , Eat Just, Inc. , BlueNalu )
2. The largest investments were Omeat with $36.5M, Meatable with $35M, BlueNalu with $33.5 and Uncommon with $30M
3. Not surprising maybe, most investment went to companies with tech that can support scale-up, mostly media-related, or for scale-up needs
4. When looking at large companies investing in the field, we find only 4 deals out of a total 38: Asahi Kasei from Japan (investing in Multus ), Danone (investing in Wilk (TLV: WILK) ), Tyson Foods (Tyson Ventures) (investing in Omeat ) and NH Ventures, Genting Ventures and Daewoodang Healthcare (investing in Cellmeat )
5. An uptick in investments is observed in seafood companies, such as BlueNalu, Cellmeat, Wanda Fish , cellqua , Klevermeat, BLUU Seafood , and Umami Bioworks

Plant-based

1. Similar with the cultivated sector, plant-based investments predominantly favored companies with scale-up requirements
2. Main investment were Ripple Foods with $49M, DAIZ, Inc. with $47M and No Meat Factory Inc. with $42M
3. Another interesting point is the number of investments towards seafood plant-based companies, including The ISH™ Food Company , ALGAMA Foods , AQUA Cultured Foods , and Konscious Foods
4. Noteworthy deals in the plant-based domain include AB InBev venture into vegan side-stream by investing in PLANETARIANS , a whole cut meat company, Wicked Kitchen 's acquisition of Current Foods 🌊 , a plant-based seafood manufacturer, and Thai Union Group PCL. CVC fund investing in ALGAMA Foods for the development of algae-based products, including vegan salmon and tuna

Fermentation

Given the somewhat straightforward path to market for fermentation-based companies, together with the technology’s innovative attractiveness, we do find notable developments. For example:

• Main investments were ENOUGH with €40M, Liberation Labs with $30M, Chunk Foods with $15M, and Paleo with $13M
• The announcement of General Mills adopting Remilk 's animal-free whey protein
• Shake Shack 's shift to Zero Acre Farms for replacing soybean oil in fryers at several outlets
• A collaboration between "Colombia's Largest CPG Food Company Compañía Nacional de Chocolates de Perú - Grupo Nutresa " and The EVERY Company to pilot EVERY EggWhite™ in Nutresa's alternative meat product line
• Additionally, Daiya Foods Inc has made an undisclosed investment in fermentation technology with the aim of developing plant-based cheese.

It is worth noting that the majority of partnerships are focused on sourcing alternatives for dairy products.

Funds

We see a total of 6 funds-related announcement, with the main ones being:

• Smart Protein Fund, with $300M by Milltrust International and Ireland's Earth First Food Ventures
• Innova Memphis with a $40M first close of its Ag Innovation Fund VI
• Joyful VC announcing it closed $23M of its $25M sustainable protein fund

Other

Main investments in this category were Bactolife with €30M (‘Binding Proteins’ to enhance the gut microbiome), Incredo with $30M (sugar), Moolec Science with $30M (molecular farming), Cradle with $24M (AI) and Triplebar with $20M (AI).

Standout deals include 5 deals in AI-related technology, Nongshim Co., Ltd. $7.4m investment in two funds, and the collaboration between Tetra Pak and FRESH START FoodTech Incubator IL .

In the flavor and fragrance sector, DSM and Firmenich created a new fragrance and nutrition company, while ADM expands its flavor business with the acquisition of Fuerst Day Lawson and Revela Foods , and Roebuck Food Group plc acquires MOORHEAD & MCGAVIN LIMITED . These deals may reflect a perceived need for flavor enhancements amid the rise of alternative products.

On the tech front, CJ Cheiljedang partners with T&RBiofab for 3D bioprinting in alternative meat (CJ Cheiljedang also invested in the past in a few foodtech startups, and a media-related partnership for the cultivated food industry – interesting moves in different angles), Tyson invests in an insect protein company, and an ADM investment into Air Protein, with the former’s work for synbiotic products targeting microbiome optimization.

We can also mention Cargill 's agreement with CUBIQ FOODS to co-develop and commercialize plant-based fat technologies, which adds another intriguing dimension to the landscape for alternative proteins.

From the News

When looking at some of the news-articles that were published in 2023, we can see the evolvement of trends/ market dynamics. For example, we see two plant-based companies and one cultivated meat company folding, with articles saying " Perfect Day may sell consumer business to focus on B2B ingredients”, and ADM “‘re-scopes’ Decatur plant protein investment amid weak market demand for alt meat“.

On cultivated, we have the approvals cultivated meat got in the US ( UPSIDE Foods , GOOD Meat ), together with steps to approval from Australia ( Vow ), Netherlands for tasting, and applications submitted in Switzerland and UK (both by Aleph Farms). We also have Remilk’s approval in Israel.

Diversification of technologies among cultivated food companies is evident, with CellX exploring mycelium for hybrid proteins, Umami Bioworks collaborating with Cult Food Science on pet food, and the establishment of Good Dog Food, a pet food cultivated company backed by Agronomics Limited .

There were also some critical articles published about a few cultivated food companies, but this is also a sign that the industry is maturing, and there are other supportive examples to this, such as by JBS , building a lab-grown meat factory in Spain and an advanced research center, which will be the largest food biotechnology research center in Brazil, investing $80M.

Maturing is also supported by government funding, such as the EU's announcement it will invest €50M in 2024, helping startups and small businesses scale up the production of alternative proteins, Japan’s $13.1M grant to IntegriCulture , German €1.3M to BLUU Seafood, Britain injecting £12M into a specialized hub of innovation focused on cellular agriculture and The Ontario Agri-Food Research Initiative which will provide a funding opportunities to support research and innovation activities, and even YDLabs which was selected by Israel Innovation Authority רשות החדשנות to establish microorganism fermentation labs for Israeli foodtech industry.

So what does it all tell us? My takes are:

1. Scaleup, surprise surprise, is an issue in all industries
2. Some geographical regions seem more open than others for certain types of innovation
3. More needs to be done to bring the big food companies closer to cultivated – and I’m sure the wonderful people at The Good Food Institute can add a lot to this
4. This is not going to be fast, nor easy. Talking about what won’t work won’t work either. As the foodtech industry is maturing, so is the technology and possibilities. If we believe, we can achieve (is this why Believer Meats rebranded?😉)

I will conclude with a saying by Yoni Glickman at PeakBridge ’s seed fund FoodSparks, which I think sums it very well (and was originally published in Agfundernews.com): “too many people celebrated failures rather than learning from them, and in the end, we – the planet, humanity – actually need to be collectively successful.”