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Now you can all (quite) invest in FoodTech

Published on December 3, 2019

FoodTech is a trending topic. It is therefore not a surprise that some financial institutions have started to look at it by creating “products” around this trend. Here are two different examples that illustrate this interest and the limitations attached to it:

Invest in a portfolio of publicly-traded FoodTech companies

eToro is a social trading platform, basically enabling any customer to follow and copy the trades of other investors. It has a copy portfolio feature that lets you copy portfolios of assets (mostly company stocks) and replicate them. eToro launched recently (late October 2019) a FoodTech copyPortfolio.

As interesting as the idea should be, the selection is somewhat limited to a few startups and is mostly centred around tech giants (such as IBM, Amazon or SAP) and quite traditional agribusinesses (from Nestlé to Kroger). Indeed, as you can see in the portfolio, the issue is just that they are not many publicly traded FoodTech startups. At least you can find the following: Beyond Meat, Grubhub, Takeaway, Blue Apron, Ocado, Chewy and Delivery Hero

EToro DigitalFoodLab

Vegan investor?

If one can wonder if a FoodTech portfolio is really meaningful, this kind of questions does not have stoped the launch of an exchange-traded-fund (basically an asset grouping some stocks, that is itself traded to replicate the variation of its holding and that you can buy and sell just like a common stock) named “US Vegan and Climate ETF” with name VEGN.
We can be even more surprised by its composition as its main holdings are tech giants, remote from the food business, such as Apple or Intel. This has led to some questioning, if not worse, press (which may be good to publicise a new financial product).

Why it matters?

In a word, FoodTech summarises both the promise of high growth companies and the solution to huge problems such as finding ways to provide proteins to a growing population. It is no wonder that people are keen to bet money on it, notably after the success of the IPO (initial public offering) of Beyond Meat. We can therefore expect to see more and more financial products around this trend (and more broadly around ethical and environmentally responsible food businesses) and in the near future, we may even see some of them being themselves more responsible.

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

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  • Education of the board through a couple of workshops to define the perimeter
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  • Deep dives on each of the priority categories.
  • Co-construction of a vision on how the company should address these challenges.
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Results:

  • Creating a consensus on which categories to prioritise and how to address them.
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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.
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Use case: opportunity screening for an ingredient company

What we did:

  • Kick-off to define the perimeter of the ecosystem studied.
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  • Workshop to discuss DigitalFoodLab’s recommendations on key trends to prioritise

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  • 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.
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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.
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  • 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.

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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.
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  • 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.
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  • Kick-off with the client to discuss its interest on this category, its expectations and existing level of information (notably on the target company).
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Results:

  • Clear view of the ecosystem and of the reasons to believe (or not) in each sub-category.
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