ImpactAlpha, January 21 – Impact investors look for inevitable imperatives. Case in point: The $7.8 trillion global food industry must become more environmentally sustainable.
In a new report, “Growing a sustainable food system,” venture firm Village Capital details investment opportunities in firms improving the efficiency of farms, decreasing food waste and shifting eating habits toward healthy, plant-based diets.
PepsiCo acquired baked fruit and snack-maker Bare Foods for about $200 million last May. In July, Canadian agtech investor Clean Seed Capital Group acquired Iowa-based precision planting company Harvest International for $13.1 million. New Brunswick, Canada-based Chinova Bioworks, which is developing a mushroom-based preservative, raised $1.9 million from food-tech investors last August.
- Augmenting the farm. Industrial agricultural is a drain on water and land. Farm labor shortages are getting worse. Artificial intelligence, robots, the internet of things and other information technologies are helping more than half of farmers regulate greenhouse temperatures, harvest fruits and reduce pesticide use. In 2017, investors made 28 investments in early-stage firms in precision agriculture, a market expected to reach nearly $8 billion by 2022.
- Reducing food waste. Actors in the food supply chain are losing annually about $160 billion in unsold produce. Some 125 startups are innovating in food logistics, a market is set to top $150 billion by 2023. Data and logistics companies like FoodLogiq, which raised $19.5 million in March, are improving supply chain efficiencies. Biotech firms, including Chinova Bioworks, are helping extend the shelflife of food and drinks.
- “Earth-functional foods.” Small brands are pressing foods that have environmental benefits beyond health, such as lower carbon footprints and recycled ingredients. A growth market: alternatives to meat for a growing global middle class. Consumers also are demanding more sustainably produced food and transparent supply chains. More than a dozen large food companies, such as Campbell Soup Company, Cargill and Land-O-Lakes, have launched corporate venture funds.
- Heartland startups. Go where it’s grown, says Village Capital. Almost 90% of the more than 100 startups that applied to its 2018 food and agriculture accelerator were headquartered outside the venture capital corridors of New York, San Francisco and Boston.