An analysis by Pitchbook found that VC investment in food tech fell by 23% in the second quarter of 2022. This was due to total deal values dropping from $6.9Bn to $5.6Bn. This coincides with a decrease in the total number of deals dropping 23%, from 359 funding deals in the first quarter of 2022 to 275 deals completed in the second quarter of 2022.
Over the same period, funding for alternative proteins declined by 9%. This is a much smaller decline than both the wider food tech industry and the overall venture market. This demonstrates the industry’s resilience and stability in the face of uncertain and rapidly changing economic conditions. This is likely to be contributed by continued investment across all three major sub-segments comprising plant-based, precision fermentation, and cultivated/cell-based.
In terms of potential pullbacks, the plant-based meat market might be most susceptible with increased saturation and low customer retention rates for retailers.
It has been observed that many IPO windows have been closed and exit options have been limited by volatility in the public markets. However, there were massive IPO rounds for food companies such as GoPuff, Wonder, Choco and others. Most investors retreated during this period due to rising inflation.
Investing in food tech has declined to 45% from a high of $10.1 Billion in early 2021, according to The Spoon. In spite of these trends, the Good Food Institute reports that alternative protein funding declined by just 9%. This shows considerable strength when compared to both the food tech industry and the overall venture capital market.
A $400 million Series C funding round was raised by UPSIDE Foods in the second quarter of 2022, the largest funding round for cultivated meat. Cultured Beef producer SciFi Foods raised $22 million Series A in June, while Eclipse Foods secured $40 million Series B to develop plant-based dairy alternatives.
As government support for alternative protein increases, such as the legislation recently passed by California, investors’ confidence in the sector will likely increase. Strong private investments in the future may be expected.
