Go big or go home

We have been in the FoodTech space for more than ten years and never have felt that much energy coming from large corporations and investors. A few years ago, an entrepreneur was given the means to experiment at a tiny scale and grow little by little. Nowadays, we observe such huge deals with startups raising hundreds of millions on unproven business models or risky technology. We also observe less and less space (notable funding) for entrepreneurs who want to go slow and take fewer risks.

This trend, which we identified as the third wave of FoodTech startups in our report on the investments with startups scaling and raising funds faster than ever, is here to stay, at least a couple of years. Is it finally the tipping point where FoodTech changes the “food system”, or is it the sign of some irrational exuberance? I am not sure about the answer. However, it conveys one clear and bold message to the entrepreneurs: go big or go home!

ALTERNATIVE PROTEIN STARTUPS ARE BUILDING THEIR PILOT PLANTS

While investments in alternatives proteins (if you need an update on the technologies, we just covered that here) keep rising at an impressive pace (from $1B in 2019 to $3.1B in 2020), we can wonder where all this money is going, notably for startups and technologies that don’t have products on the market yet. It seems that this influx of cash is more and more oriented toward the development of pilot plants where these startups will be able to prove their ability to reach scalability:

These pilot plants are much more important than a simple experiment. Hence, if these pilot plants deliver on their promises and offer a clear path for profitability and scalability for biomass fermentation, precision fermentation and cellular agriculture ecosystems could attract much more money. We could see investments in the order of dozens of billions in the ecosystem in the coming years. Indeed, alone the meat market is huge, with more than $1.4 trillion of sales each year globally.

GROCERY DELIVERY WARS

We are trying to keep up with the announcements in the grocery delivery space (with our table of the fundings and markets served here). We also try to experiment with most of the services available on the market before reviewing them. In the meantime:

  • Gorillas is looking for a $1B round that could be closed in the coming month. Interestingly, the company would be in discussions with Softbank, which is also a backer of US-based GoPuff (which raised itself a few billion and may soon be venturing in Europe). Could that lead to some gentleman agreement between the two companies to avoid competing against each other or even a larger deal?
  • Getir (Turkish Dark Store startup) has raised a new round of capital of $550M and is now valued at $7.5B

European grocery delivery startups have now raised more than $2.9B in 2021.

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Use case: project for a global F&B company looking to map its AgTech innovation ecosystem and the best startups to partner with

What we did:

  • Mapping of the AgTech ecosystem: startups, research regulators, and other leading companies.
  • Discussion to select areas to focus on.
  • Analysis of the information to reveal the trends and a model to analyse eventual partners.
  • A workshop to validate the opportunities based on our recommendations.
  • Scouting of relevant partners followed by introductions.

Results:

  • Mapping the different categories of innovations in AgTech that should be considered now to create long-term benefits for the business.
  • Identification of key partners (an incubator and a couple of startups).

Use case: project for a CPG company on the healthy ageing ecosystem

What we did:

  • Education of the board through a couple of workshops to define the perimeter
  • Identification of key opportunities and threats created by long-term evolutions (technologies, business models, behavioural changes).
  • Deep dives on each of the priority categories.
  • Co-construction of a vision on how the company should address these challenges.
  • Identification of partners (startups, incubators, funds) to move forward.

Results:

  • Creating a consensus on which categories to prioritise and how to address them.
  • Implementation of an open innovation strategy through the development of partnerships.

Use case: project for a global CPG company to develop a strategy on the healthy ageing ecosystem

What we do (ongoing mission on a subscription model):

  • Kick-off where we present an overview of the AgriFoodTech ecosystem to select with the client the categories to cover and for each, the level of information required.
  • Monthly newsletter: each month we send a newsletter with the articles that we have gathered ranked by relevance, their summaries, and a layer of analysis.
  • Database: we set up a personalised database that will be filled month after month with the information gathered on the companies identified for the watch.
  • Workshops: twice a year with the client’s innovation team and other “innovation curious” team members, we present an overview of the evolutions, key trends and a dashboard of the topics followed by the watch.

Results:

  • A clear, regular and evolutive tool to follow what is happening in terms of innovation on key topics.
  • A forum (through the workshops) to discuss innovation trends and new opportunities.

Use case: opportunity screening for an ingredient company

What we did:

  • Kick-off to define the perimeter of the ecosystem studied.
  • Mapping of the different trends shaping the innovation ecosystem of the client.
  • Analysis of the trends on DigitalFoodLab’s trend curve and other relevant frameworks.
  • Workshop to discuss DigitalFoodLab’s recommendations on key trends to prioritise

Results:

  • Shared view of the innovation ecosystem for the client with a view of the trends to prioritize.
  • Clear document (personalised trend curve) that can be easily shared internaly to explain the company’s innovation choices and which can be then updated each year.

Use case: scouting for an agriculture coop

What we did:

  • Kick-off to define the perimeter of the client, the goals of the scouting (partnerships) and the criteria on which startups should be evaluated.
  • Set-up scouting: we selected the first batch of 20+ key startups following the criteria of the client.
  • On-going scouting: then we set up a quarterly scouting of about ten startups.
  • For each scouted startup, we created an ID card with key information such as the business and technological maturity, funding, and corporate partnerships. We also added an explanation of why we selected this startup.

Results:

  • An ongoing and evolutive scouting are matching the client's criteria and its capabilities in terms of deal flow.

Use case: working on an acquisition process for a CPG company

What we did:

  • Kick-off to define what the client is seeking, notably in terms of maturity.
  • Workshop with the client based on a mapping of the different innovation ecosystems adjacent to its activities to select some priorities and discuss inspiring examples of startup acquisition stories.
  • Identification of 20+ targets.
  • Workshop to select the most relevant to engage with.
  • DigitalFoodLab worked as a sparing partner during the acquisition process, notably to help design how the acquired startup could be integrated into the overall company’s strategy.

Results:

  • Different results from traditional M&A processes with a focus on the client’s innovation strategy.
  • Identification of a good match for an acquisition.

Use case: market due diligence on sugar alternatives

What we did:

  • Kick-off with the client to discuss its interest on this category, its expectations and existing level of information (notably on the target company).
  • Mapping of the ecosystem to analyse the different existing alternatives and technologies to compare them.
  • Interview (calls) with relevant startups made by our internal biotechnology expert.
  • Recommendation on whether to invest or not.

Results:

  • Clear view of the ecosystem and of the reasons to believe (or not) in each sub-category.
  • Enforceable recommendations based on facts and expertise.