Food tech investment and innovation is about to rocket following a tough period after the the meat alternatives and plant-based markets bottomed out.
Following nearly a decade of steep growth, food tech suffered a damaging blow from 2021 when the market crashed as investments dropped off a cliff by 70%, in line with the global VC market dive, said Forward Fooding co-founder and CEO Alessio D’Antino at IFE this month.
In part, the crash was due to investments focusing too hard on too few areas, such as alt proteins and, in the early days, vertical farming.
“Now there’s a growing world of climate-centric solutions. So over the last 10 years as an industry we’ve had to learn from hard lessons,” explained D’Antino.
Food tech investment focus areas
“In 2017 to 2018, it looked like vertical farming was going to fix our climate and food production problems. Alternative protein was the same thing, with $61bn raised between 2016 and 2021.”
Following the crash, the market didn’t polarise into specific areas again, but investors spread their bets to wide spaces. Investment volumes last year plateaued, said D’Antino, who believed that signalled an end to the overall decline.
“We could rebound and get back to a growth curve,” he said. “This year and next, we expect a slow rebound to just under $25bn (€23bn)."
Food tech, agtech and everything in between was “entering a new paradigm”, driven by a “more circular approach” to innovation, he said.
Within agtech, there were over 500 companies with a CAGR of 8% predicted over the next 12 months.
How much will food tech grow in 2025?
Growth of 23% was expected in bio-fermentation and food as medicine had a CAGR of 14%, said D’Antino.
“Ingredient circularity is at 12.2% CAGR and that’s helping food makers to put back into the loop what they’d otherwise throw away, creating new side streams.”
The sector as a whole had developed and grown significantly in the matter of a decade, reflected D’Antino. There were now over 10,400 of what he called agrifoodtech businesses, with over $250bn (€230bn) invested. Though 91% of that investment had occurred from 2018.
“10 years into the development of the industry, it’s still very small when compared to the $1.23tn fintech sector. Over the years, what we’ve seen happening is a few hotbeds of innovation have been created and developed in different parts of the world.”
London, the Netherlands and other European territories had become world leaders in the space.
