Foodtech startups space took a hit in terms of VC investments globally in 2016, from a record high of $4.8B across 427 deals in 2015, to $3.3B across 272 deals in 2016-YTD. Deal count fell across the board, at the seed (40%), early (30%), and late stage (48%). While capital invested was highest in China, deal activity was highest for companies from the US.
Four companies raised more than $100M, while eight companies raised over $50M in the past year. The largest funding rounds were secured by companies aggregating restaurants and delivering food to consumers. Ele.me ($1.3B, PE), Deliveroo ($255M, Series E), and DoorDash ($127M, Series C) bagged the largest rounds in this space. In turn, restaurant aggregators providing delivery was the most funded business model in food tech, hitting a sub-sector peak, from $1.74B in 2015 to $1.86B in 2016. The business model has an average founding age of 2011, and over the past five years the BM has consolidated, with major players emerging globally. The funding events seen this year are mostly late stage, which explains why the business model is peaking in 2016.
Beijing-based Yi jiu pi ($100M, Series C), a B2B e-commerce platform for wine and spirits also topped the investment charts this year. Other notable rounds went towards Internet connected kitchen appliance (juicer) manufacturer Juicero ($70M, Series B), personal chef hiring service Plated ($58M, Series B), liquor ordering and delivery platform Jiubianli ($61M, Series B), and food ordering and delivery service Baemin ($50M, Series E).
Companies providing food analytics solutions specific to flavor is an emerging business model, with two startups – Vivanda and Analytical Flavor Systems raising funding this year. Other niche upcoming business models include smoothie-box (Daily Harvest), insect protein-derived foods (Exo, Bitty), and apps that let you pre-book food at a restaurant (Hey You, QikServe).
Other notable business models sustaining investor interest include internet-first restaurants that provide data-driven personalized nutrition. Emeryville-based Habit, a meal-kit delivery service sends personalized meals to users based on their specific diet types, after analyzing the user’s DNA using a blood sample kit. The company raised $32M in a series A round from Campbell in Oct 2016.
The FoodTech space saw 29 acquisitions this year, notable exits where deal values were disclosed include Moscow-based Delivery Club, which was acquired for $100M by mail.ru, and Kevita, a probiotic drink maker got acquired for $200M by pepsico.com. There were two IPO offerings in the food tech space this year, London-based online food ordering service Takeaway (London), and Wangjiu (Beijing), an online retailer of premium wines.
500 Startups has been the most active investor in foodtech, with a total portfolio of 53 food companies and investments across multiple early-stage rounds, largely focused in the United States. SOSV, Y Combinator, Khosla Ventures, and Kima Ventures are other active investors in food tech companies. Sequoia Capital has been very active with equivalent deals in early as well as late stage rounds.
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