Venture capital investment into the food tech sector experienced its eighth consecutive quarter of decline in the third quarter of 2023, with 205 deals worth $2 billion, according to a new PitchBook report.
This is down 13.9% from the previous quarter, when 268 investments were made valued at $2.2 billion. And an over 71% decline year over year. PitchBook considers “foodtech” to be sectors, including alternative protein, bioengineered foods, discovery and review, e-commerce, food production and restaurant and retail tech.
“It’s a little bit disappointing to see deal activity continue to slide,” report author Alex Frederick, senior analyst of emerging technology at PitchBook, told TechCrunch. “However, it’s still an evolving market.”
He considers one of the bright spots in the third quarter to be the Instacart IPO, saying that there was excitement around that, especially since it went well. However, Frederick also said he isn’t seeing that many other tech startups run to exit quite yet either.
“The IPO window remains closed, which is going to continue to challenge venture activity,” he added.

What investors say

Climate tech, overall, remains “extremely resilient” in the past two years, Meir Rabkin, founder and managing partner of climate tech venture firm Blue Vision Capital, said in an interview. He notes the resilience is with regard to company valuation — the shrinkage felt in other sectors wasn’t as prevalent in climate tech.

Speaking on investment in food tech, Rabkin said it’s “a bit of a tough space” for a number of reasons, including capital expenditures being relatively high in this sector and R&D can take a long time.

“That being said, there’s a lot of disruption and innovation that needs to go on there,” Rabkin said. “It’s an extremely exciting space to be in.”

Capital constraints aren’t all bad, though, said Cristina Rohr, managing director of food and agriculture investments at impact investment firm S2G Ventures.

She found that when availability of capital wanes, company business models became more resilient as founders thought in more capital efficient ways. They are also considering different kinds of collaboration, for example, potentially licensing their models.

Rohr is not surprised by venture capital being down in food tech because companies are focused on scalability and achieving positive unit economics.

“We are in an environment that’s subject to commodity pricing and supply chain costs,” Rohr said. “With all of that, to be scalable, you have to be at cost parity with incumbent technologies or products. As these large rounds are coming together, investors are seeing the technical milestones combined with the ability to achieve these milestones in a way that has positive unit economics.”

Plant-based isn’t growing as quickly

Meanwhile, within the alternative protein sector, $724.2 million was invested across 46 deals in the third quarter. VC funding into plant-based foods “is down significantly from its peak in Q3 2021,” though deal activity is doing better, with another increase for the second quarter in a row, according to the report.

Despite the increase in plant-based investment deals, PitchBook’s Frederick described the sector as “struggling,” when it comes to meat alternatives, citing a shrinkage in grocery shelf allocation for those products.

Reasons for that include a challenge in getting new customers to try these premium products, mainly because of price and the perception of taste and that these products are processed foods, Frederick said.

“It’s difficult to get and stay on the shelf,” he said. “It is so important for these companies to deliver. Consumer packaged goods, overall, are really challenged right now with price inflation. Consumers are going toward low-cost alternatives, however, the plant-based beef companies are selling at a 2% price premium to conventional meat.”

Notable deals during the third quarter among alternative proteins include Meati’s Series C extension at $200 million, Meatable’s $35 million round and Enough raising €40 million.

As seen in TechCrunch

New capital infusion puts Farmless on path to first alternative protein products

I wrote a funding update on Farmless, a company we had reported on earlier this year. The Dutch startup is working on alternative protein sources via fermentation technology and raised another €4.8 million in seed funding. It will be applied to Farmless’ goal of discovering a microorganism it can ferment into different food applications.

What else I’m reading

Sweet deal: The Canadian Food Innovation Network awarded Crush Dynamics nearly $2 million to develop and test a novel ingredient that will enhance food quality and reduce sugar and sodium content in food products. Learn more.

Sustainable supply chain: Clean Food Group now has £1 million from the U.K. government to fund a project to advance novel low-emission food production systems. Read more.

Support for cultivated meat: Big Idea Ventures, an alternative protein investor, launched Nexture Bio, a startup developing scaffolding technology used to create a 3D alternative meat product to more closely resemble whole cuts of meat. Get the scoop.

ICYMI: The alternative seafood industry has a new advocate, the Future Ocean Foods association founded by Marissa Bronfman. It includes 36 companies across 14 countries representing cultivated, plant-based and fermentation technologies. Read more.

Next time you’re in New York: Pop over to Eleven Madison Park to try The EVERY Company’s plant-based egg alternative that was just added to the menu. Check it out.

If you have a juicy tip or lead about happenings in the venture and food tech worlds, you can reach Christine Hall at chall.techcrunch@gmail.com or Signal at 832-862-1051. Anonymity requests will be respected. 

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