The forecast is less than optimistic, following a 70% drop in startup investment for food and beverage companies last year compared to 2021. FoodTech Data Navigator from Forward Fooding.
The same figures show that only €4.3 billion will be invested this year in startups, scaleups, and food and beverage companies in Europe. This is a decrease of 30% compared to 2023.
Guus Hovius, Executive Director of Private Equity at Rabobank, says the food technology market is much more challenging today than it was a few years ago.
There have been fewer IPOs, acquisitions, and major exits. He continues: "Successful exits attract investors and boost valuations and deal activity in the sector."
Food and beverage investments at their peak
Hovius says activity has increased this year due to a challenging 2023. However, he adds, activity levels are not as high as they were previously.
Venture capitalists continue to show interest in food technology, but the pace of dealmaking is slow. “Investors are more cautious and taking the time to align with companies,” he says.
How to invest in food technology at a later stage:
Guus Hovius, Guus Willius of Rabobank, will lead a panel discussion at the Future Food Tech Event in London this year (October 2-3).
The discussion will focus on the complexities that companies must consider when seeking investments later in their life cycle.
You can view the full program and purchase tickets for all events.
The sector's investment peaked at €58 million in 2021. Since the investment peak, rising interest rates have dampened the market's appeal. The following year, investments fell by half, and by even more by the end of last year.
Investors are always interested in the development of specific companies.
Hovius continues: “Investors are increasingly focusing on sustainability, health, and environmental impact when it comes to making business investments.” At Rabobank, we are seeing more and more venture capital funds being established that focus on sustainability and impact.
Investment Trends in the Food and Beverage Sector
Hovius has seen more products emphasizing reduced sugar or higher protein content, for example.
He continues: “All these trends are very important, but price and taste are also important.”
Prudent investors should be able to identify profitable or near-profitable opportunities.
In general, you need to build good business relationships from the start. Think about the future of your company. Startups often cede certain rights to partners or lack adequate representation on the board of directors. This can be detrimental in the future.
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