How food tech companies can raise money in a slowing economy

The economy is experiencing a slowdown, but that doesn’t mean that alternative protein makers and food tech companies will be unable to get funding this year.

However, the current business climate won’t exactly make it easy, either, a pair of analysts from Nomura Greentech told the audience at the Future Food-Tech Alternative Proteins conference in New York on Tuesday. The growth in investment dollars that the space has seen in recent years probably will not continue, with 2022’s fundraising projected to be about the same as last year’s. More investment dollars are likely to go to more established food tech companies. There are not likely to be any big food tech IPOs this year, and it’s unclear how the currently publicly traded companies will continue to fare.

“There’s no way around that: In the next 12 to 24 months, we’re going to have a really tough environment,” said David Verbitsky, head of ag tech and sustainable food for Nomura Greentech, which provides strategic financial advice on fundraising, M&A and IPOs to companies with sustainability at their core.

But challenges aside, Verbitsky and his colleague Morgan LeConey, head of food and beverage, said the outlook for financing is largely optimistic. After all, more than $11 billion was invested in food tech and alternative proteins between 2019 and 2021 — with over half of that coming in 2021, according to Nomura Greentech figures.


“There’s no way around that: In the next 12 to 24 months, we’re going to have a really tough environment.”

David Verbitsky

Head of ag tech and sustainable food, Nomura Greentech


With everyone from tech VC firms to public pension systems to family-based endowments putting money into food tech companies, LeConey said there has clearly been a shift in the way investors look at the space.

“Every investor now views alternative proteins as mainstream,” LeConey said.

A panel of investors from Synthesis Capital, FootPrint Coalition, Temasek and Norwest Venture Partners took the stage at the conference on Wednesday. They emphasized that while the current economic conditions may make it difficult for tech and up-and-coming companies to find the investment capital they need right now, it’s a short-term problem.

“Climate change isn’t going anywhere,” said Manuel Waenke, director of ventures at FootPrint Coalition. “Health problems aren’t going anywhere. So if anything, this is a 20- to 30-year plan. And the problems that we’re trying to solve are getting bigger.” 

Stock prices are down, but large funding rounds continue

Plant-based meat sales, once an area for phenomenal growth, have largely stagnated in the past 12 months as consumers have shifted their shopping behaviors after the height of the pandemic, with some opting not to be repeat buyers. Oatly and Beyond Meat, both companies that only make products in the plant-based segment, have also seen their sales — and stock prices — tumble. LeConey said Oatly’s stock is currently down 86% from its previous high in the past year, and Beyond Meat’s price is 84% lower than that benchmark. But, LeConey said, there is a silver lining here: Putting all of the the high-growth sustainable foods that are publicly traded together, their value has grown 181% since January 2018.

And while the economic downturn and inflation-related headwinds may mean the investment dollars aren’t flowing as freely as they had been in past years, the money is still going to come. Verbitsky pointed out that there have been six large capital raises in this space so far this year: $400 million for Upside Foods, $135 million for Redefine Meat, $120 million for Remilk, $100 million rounds for Wildtype and Next Gen Foods, and $85 million for MycoTechnology.

Redefine Meat’s 3D printed plant-based steak.

Courtesy of Redefine Meat

 

However, those companies have some big things in common, Verbitsky said. They’re either close to commercialization or have products on the market. They’re relatively established, with significant intellectual property and unique technology. They can readily provide proof of concept to investors, have detailed plans about what they are going to do with investment funds, and have clearly articulated their paths to scale up and get to market. 

LeConey said that from conversations with investors, it is clear that they want to invest in companies on track to show value in the near future.

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