Wednesday, January 10, 2018

Dealflow: "New Investors Flock To Food"

From CB Insights:
Attracted by big exits, corporate activity, and new brands, the number of investors backing food & beverage startups has tripled in four years.

The number of investors participating in the food and beverage sector has more than tripled since 2013, jumping to over 450 investors making bets in the space last year.
This includes a wide range of investors, including venture capital funds, private equity firms, corporations, and angel investors.
Several new investors in the space focus specifically on food and beverage.

New York-based AccelFoods, which made its first round of disclosed investment in early 2014 (a series of $50K seed investments to startups including insect protein brand Exo) and has since then made over 40 more. It recently, for example, led a $1M seed round into MA-based jerky startup Kalahari Brands.

Major international food incubator program Food-X also launched in 2014, and has since backed over 600 startups. Recent bets include investment into high-protein frozen yogurt startup Pow-Cow.
CA-based VC firm Blueberry Ventures has backed startups such as Ripple Foods and Biena since its 2015 launch.

We’ve also seen a domino effect of major food corporations launching their own incubator programs and VC arms since 2015, as shown in the timeline below (and covered in more detail here).
Funding from corporates represents a relatively small portion of all food deals, though corporates contribute to the growing pool of investors. Corporate interest in acquiring startups also strengthens the overall ecosystem, opening up exit opportunities that attract more startups and investors.
As the sector grows, established tech-focused investors have begun to make their first investments in the food and beverage sector.

For example, VC fund Draper Fisher Jurvetson made its first food investment in Q3’17, backing synthetic meat startup Memphis Meats, while smart money VC New Enterprise Associates backed baby food startup Yumi in Q2’17.

First Round Capital invested in powdered tea startup Pique Tea in Q1’17, and CRV participated in the seed round for subscription instant coffee startup Sudden Coffee as early as Q4’16.
Alongside tech investors, many food companies themselves have made their first equity investments over the past several years.

As highlighted above, companies ranging from General Mills to Campbell’s to Kellogg’s have begun to invest through VC funds; other companies, such as Cargill, have made their first equity investments directly. (Cargill made its first food startup investment in Q3’17, backing synthetic meat startup Memphis Meats in the same Draper Fisher Jurvetson-backed deal mentioned above)....

"Hungry for Investment: Big Food Races Toward Startups"
Nestle and Campbell Soup Co. to Leave the Grocery Manufacturer’s Association "The food lobby is splintering as companies disagree about how to respond to changing consumer tastes"
Trouble In Packaged Food Land (K; GIS; MDLZ; NESN)
Nine of the World's Biggest Packaged Food Companies Have Launched Venture Capital Units
M&A In European Food