In our recently released report on the state of the FoodTech ecosystem in Europe, investments were stable for 2024 compared to 2023. However, if you look at the data for the different geographies, the story is not the same. The British and French ecosystems were badly hit (and still continue to be, as we can see week after week with a series of negative news). In the opposite direction, some areas did well, and that’s particularly the case in Germany. So, what’s Germany’s FoodTech doing well, and is it something that we can replicate?
State of FoodTech in Germany
As you can see in the graph below, investments in German FoodTech startups don’t really follow any kind of pattern. That’s quite different from other ecosystems, where we see regular growth until 2020, a surge in 2021 and then a decline.
Quite simply, this is linked to a small number of extremely large deals of hundreds of millions in delivery startups like HelloFresh, Delivery Hero, and, more recently, quick-commerce startups. While most of the 15-minute grocery delivery industry has vanished from developed markets, this has not “killed” the delivery ecosystem in Germany, which is still doing quite well. Actually, if we look at the largest deals for the past 15 months, Flink, a former quick-commerce unicorn, the only major player still active in Europe, raised more than €200M!
A future beyond delivery
As shown in the top deals and in the distribution of the funding and deals, the German FoodTech ecosystem is evolving beyond delivery:
- While a majority of the funding in 2024 went to delivery startups, that was only due to a couple of deals,
- Food Science is taking the lead with a growing share of funding and, more importantly, with an increasing number of deals and startup creation, both for new brands (with top startups like Koro) and alternative proteins (with players like Formo using precision fermentation on dairy proteins, Planet A with alternative cocoa, or Project Eaden developing whole cut plant-based meat substitutes).
Three ingredients of success that could inspire other ecosystems
1 – Higher involvement from universities and research. This is mostly the case for AgTech and Food Science innovation, and for four or five years, we have observed that startups and universities or research centres are increasingly collaborating. While this may seem obvious, these collaborations are still quite rare globally, with still too few windows between research and venture creation in agriculture and food. For now, only a handful of (mostly) small countries have succeeded.
2 – Resilience: the German FoodTech ecosystem faced multiple large failures, notably Infarm in vertical farming and Gorillas for quick-commerce. It would have been easy to give up on FoodTech investments. However, these negative outcomes were not analysed as a structural reason to stop investing but rather as lessons on what to avoid, notably star founders and valuations and growth decorrelated from profitability.
3 – High level of engagement from middle to large-scale companies as investors and partners. In the past years, we have seen a shift where these companies are reducing the number of deals they are doing, notably as investors, but only to become better partners to support the emergence and the scale-up of the few startups they work with.
