In the third quarter of 2023, investment in the food tech sector by venture capital saw its eighth consecutive decline, as revealed in a recent PitchBook report. The quarter witnessed 205 deals amounting to $2 billion, marking a 13.9% decrease from the previous quarter, where 268 investments totaled $2.2 billion—an alarming 71% decline year-over-year. PitchBook classifies “foodtech” across various sectors, encompassing alternative protein, bioengineered foods, discovery and review, e-commerce, food production, and restaurant and retail tech.
Alex Frederick, the senior analyst of emerging technology at PitchBook, expressed a degree of disappointment in the ongoing decrease in deal activity, although he acknowledged the market’s evolving nature. Despite this, he highlighted the Instacart IPO as a bright spot in the third quarter, generating excitement. Frederick noted that the IPO window remains closed, posing a challenge to venture activity.
Meir Rabkin, founder and managing partner of climate tech venture firm Blue Vision Capital, emphasized the resilience of climate tech over the past two years, particularly in terms of company valuation. Regarding food tech investments, Rabkin acknowledged the challenges, citing high capital expenditures and lengthy R&D processes. Despite these hurdles, he identified the sector as “extremely exciting” due to ongoing disruption and innovation.
Cristina Rohr, managing director of food and agriculture investments at S2G Ventures, pointed out that capital constraints can lead to more resilient business models, as founders adopt capital-efficient approaches and explore different collaborations, such as licensing models. Rohr attributed the decline in venture capital in the food tech sector to companies prioritizing scalability and positive unit economics in a challenging environment affected by commodity pricing and supply chain costs.
Within the alternative protein sector, the third quarter saw $724.2 million invested across 46 deals. Despite a decline from its peak in Q3 2021, deal activity in plant-based foods increased for the second consecutive quarter. However, PitchBook’s Frederick described the sector as “struggling,” particularly in meat alternatives, citing challenges such as reduced shelf allocation and difficulties in convincing consumers to try premium products due to price perceptions and the processed nature of these foods. Notable deals in the alternative protein space during the third quarter included Meati’s Series C extension at $200 million, Meatable’s $35 million round, and Enough raising €40 million.
