FoodTech revolution like that of motor car replacing horse-drawn carriage

By John Reynolds on Monday 20 September 2021

FoodTech revolution like that of motor car replacing horse-drawn carriage
Image source: Horse-drawn carriage/Pixabay
CommentaryFood DeliveryGrocery DeliveryAlternative proteinPlant-Based FoodTech

Technology is driving change across FoodTech from farm to fork, creating new disruptor companies, awakening legacy companies to new technologies, as well as conferring multiple benefits to society and the planet.

The food industry is undergoing a revolution similar to the way the arrival of the motor vehicle in the early 20th century spelled the demise of the horse-drawn carriage.

Back then, the horse, which dominated urban and rural life in the 19th century, was dislodged by new technology in the shape of the combustion engine.

Today, technology is also the driver of change from farm to fork, creating new disruptor companies as well as conferring multiple benefits to society and the planet.

Paul Cuatrecasas, the co-founder of Future Food Finance, said: “While this disruption of food is changing the nature of what we eat, making it healthier and taste better, it’s also helping protect and save our environment faster than many of the other techniques trying to address climate control.”

These tech advances are omnipresent across the FoodTech sector.

They include autonomous farm vehicles, vertical farms and other advances in machines, expanding the scale, speed and efficiency of farm equipment, leading to more efficient cultivation of more land.

At the same time, cellular and plant-based companies are upending the dysfunctional food system with the pledge of enormous environmental, economic and food security benefits to a growing population.

Meanwhile, fast-track grocery delivery services are the next battleground in the grocery sector, with new disruptors and incumbents battling it out to deliver cheap groceries to doorsteps in 10 to 20 minutes.

Investors have not been blindsided by the FoodTech juggernaut and never-before-seen investment levels have been pouring into the food space.

Around $14bn (£10.19bn) during the pandemic alone was pumped into speedy delivery services, according to Pitchbook, while this year $6.79bn (£4.94bn) has been invested in the FoodTech sector as a whole.

Meanwhile, the average size of total capital raised by our 85 firms on the SPAC Watch List is over $400m (£291m), indicating the buoyancy of the sector.

And these funding levels are likely to continue apace.

“Clearly, there is some healthy pricing in the grocery delivery companies," says Cuatrecasas.

“But there is a reason for that: the amount of market share that grocery delivery companies have taken so far is still a relatively small percetange of the overall grocery shopping market. So, there is a huge market to play for over the next five to ten years.”

Other FoodTech sectors, like cultivated meat and AgTech, are also likely to see continued investment.

The SPAC Watch List details those private companies we think are most likely to succeed in the next five to ten years.

These companies are raising bountiful investments, catching the eyes of investors be it through stratospheric user growth or strong management teams expertly communicating their stories to investors.

The majority of the companies, 37, on our list are food delivery companies, with the likes of includes, with big hitters like US on-demand delivery service Gopuff, valued at $15bn (£10.92bn) and Colombian delivery startup Rappi, valued at $5.25bn (£3.82bn).

But other FoodTech sectors like AgTech, plant-based and cell-based also make the list.

We expect, in the future, more firms across these sectors to become successful, as, like food delivery firms, they have ample opportunity for growth.

For example, we expect other markets to follow Singapore, which became the first market to approve cultured meat after green-lighting the San Francisco-based startup Eat Just to sell lab-grown chicken meat. 

With the likely imminent approval of cell-based meat in the US, we expect the floodgates to open for cell-based alternatives.

Many governments around the world have already gone public in backing cell-based meat and the manifold benefits it can bring to society.

Likewise, many of the vertical farming companies are dependant on the exponential pace of change in LED lighting. And so as the cost of  LED lighting comes down, the value of these companies will start to increase.

And the higher margins of vertical farming companies will mean they are likely to attract capital in the future.

In short, FoodTech is undergoing a major revolution and as society embraces this revolution, the companies pioneering these new technologies will continue to attract money, helping them drive further change.