Investments in early-stage food technology companies continued to shrink through the third fiscal quarter of 2023, with food tech funding reaching $2 billion, marking the eighth straight quarter of declining investments. However, key market exits in the third quarter involving the Target Research Group’s acquisition of Spoonshot and plant-based protein developer Shore Seaweed’s acquisition by Scotland-based Aquascot indicate potential growth and investment opportunities. Despite the decline in investments, food tech deal sizes and valuations reached all-time highs in 2023, with the median deal worth $4 million, an increase of 33% compared with 2022, and median valuations up 58% to $23.6 million over the same period.
Eric Weiner, partner at Lowenstein Sandler’s Emerging Companies & Venture Capital Group, sees the current food tech and consumer packaged goods market as the result of previously overly generous investment attitudes. With valuations returning to more realistic figures, and investors likely feeling less cautious than previous quarters, Weiner is bullish about the market in 2024.
Alternative protein companies, particularly those focused on plant-based and fermentation innovations, and online grocery platforms accounted for the largest deals in the quarter. Notable investments included a $73.3 million Series A round for plant-based dairy producer Oatside, $50 million in Series C funding for fermented protein manufacturer Meati, $26 million in seed funding raised by plant-based seafood brand Konscious Foods, and a $35 million round for cultivated meat company Meatable.
