The Freight Train of Foodtech Funding
According to the 2021 AgFunder AgriFoodTech Investment Report, a whopping $31 billion was invested in agrifoodtech startups alone last year. Earlier, it was reported (by Finestere Ventures) that $8.37 billion was invested in foodtech in the first three quarters of 2020. But what led to this exponential influx of venture capital? And why was such a devastating year for the industry as a whole so profitable for this particular segment?
The answer is fairly straightforward, and relates to concepts that we detailed in some of our nascent articles, such as Digitise or Die. The plethora of operational and other issues that arose as a part of this pandemic provided a unique opportunity for entrepreneurs to do what they do best: innovate and provide novel solutions. While this is the essence of most independent business ventures, the distinguishing factor in this case was time—the need to come up with a working product expeditiously, amidst unprecedented circumstances. Then, inevitably investment flowed where innovation was not only rapid, but urgent.
As grocery e-commerce rocketed to its own record-breaking highs, retailers looked to add automation while at the same time minimizing human-to-human contact. Restaurants that were forced to close down dining rooms pivoted hard towards systems that made takeout and delivery better and more efficient. This sudden pivot to pandemic-friendly tech drove interest in startups, which in turn, attracted the attention of investors.
The paragraph above, penned by Chris Albrecht for thespoon.tech elucidates the cause and effect principle at play, perfectly.
Now, with vaccines being rolled out and the end of the ‘contactless conundrum’ in sight, will foodtech investment continue to power forward at the rapid clip that it garnered last year? The signs are definitively positive.
In an article titled Dawn of the Droids, which we dubbed ‘An informed speculation on why 2021 is primed to be the breakout year for automated food services,’ we delved into one sector that is bound to show consistent growth — Robotics.
Food prep, server and delivery bots are the three primary segments tipped to garner the attention of most dining establishments in the soon-to-be post pandemic world. Our sentiment that in its truest form dining is inherently experiential and cooking is an art remains unvarying, but in a business landscape that demands renewed pragmatism to survive, it is hard to ignore not only the contactless and hygienic merit but also the efficiency that automation promises.
—Excerpt from Dawn of the Droids
Supplementing that is another prediction by Albrecht. Having researched companies that received funding in the beginning of 2021, he found that roughly $3.2 billion had been raised so far (in less than two full months). While $2 billion from that kitty was solely for a Chinese grocer app, Xingsheng Youxuan, there remained $1.2 billion raised by 30 different companies (around the world) in January and February 2021.
Impressive, to say the least. And while it’s still far too early to foresee a comprehensive outcome, the evidence so far is undeniably reassuring!
Please reach out to aman@dashin.in for any feedback or clarifications regarding the content of this article.
