Earlier this week, we launched the Europe AgriFood Tech Investing Report in collaboration with F&A Next, detailing $1.6 billion of funding to foodtech and agtech startups in 2018.
As part of our partnership and mission to foster a extra cohesive ecosystem in Europe, we partnered with different native leaders to contribute knowledge and insights. Consequently, we consider this is now probably the most complete dataset on the European foodtech and agtech funding landscape as we speak.
Thanks to our collaborators from across the area: Kevin Camphius from ShakeUp Manufacturing unit, Johan Jorgensen from Sweden FoodTech, Alessio Dantino from Ahead Fooding, and of course the groups at the founders of F&A Next – StartLife, Rabobank, Wageningen University and Anterra Capital.
Punching Under its Weight
Europe’s agrifood tech ecosystem raised simply 9% of the funding that went to foodtech and agtech startups globally in 2018. Once you assume that the EU alone – excluding other European nations included in the reporting – represents about 20% of worldwide GDP and it’s residence to 12% of the world population, the area is clearly punching under its weight.
“Europe’s agrifood tech ecosystem is still young but much more active than you may think as the number of deals show; nearly as many deals closed in Europe as in the US, it just happens that most deals are mostly local with a much smaller dollar amount than in the US or in Asia,” says Kevin Camphuis from ShakeUp Manufacturing unit.
Early Stage Emphasis
The excellent news, nevertheless, is that the variety of deals closed grew 23% year-over-year to 423, and nearly all of that exercise happened on the earliest levels. Seed stage offers accounted for almost 70% of deal move in 2018 in Europe – in contrast to 55% globally – and 15% of dollars invested compared to simply 4% globally.
This is good news as it highlights the growing variety of entrepreneurs getting into the business.
“The European food tech ecosystem lags other markets today. However, we have every reason to believe that a healthy funnel of promising earlier stage companies, growing investor activity and availability of corporate venture capital will close the gap rather sooner than later,” says Jeroen Leffelaar from Rabobank, another F&A Subsequent founder.
While Europe’s food supply startups have been arguably probably the most mature globally — no less than five of them have now exited to achieve 7x returns in a five-year time period — there was an apparent lack in late-stage funding, which raises considerations that either financing is just not out there for startups to progress to later levels, or are failing before they will get there.
“Very few European startups have reached a level of maturity or geographical development that justifies the same amount of funding as most of the late stage funding you may compare them to,” says Camphuis. “But it’s changing, if you just look at three notable rounds, we’ve seen in France in the past six months, i.e., Ynsect, InnovaFeed, and Wynd. It’s clearly not a question of lack of investment as there is a growing number of big VC funds addressing Europe.”
Upstream on the Up, Downstream Downturn
While the maturation of a number of meals supply startups contributed to a 50% drop in downstream funding, startups working on the farm or in the availability chain earlier than the retailer, raised 200% more in 2018 than 2017, reaching almost $1 billion and representing 56% of complete funding. While our reporting could be slightly improved in 2018 due to our new knowledge partnerships, there’s little question upstream innovation is rapidly choosing up steam. For those of us somewhat fatigued with yet one more meals supply service, that is refreshing, notably as they continue to thrive in the US and Asia and dominate the funding landscape.
Furthermore, funding to European upstream startups — which embrace Ag Biotech, Farm Software & Robotics, Midstream Tech, Revolutionary Food, Biomaterials, Novel Farming Techniques, and Ag Marketplaces — raised a good 13% of the worldwide upstream complete, and all categories at the very least doubled the amount of funding they raised.
Broadly the European agrifood tech ecosystem is far more diversified than globally, the place three downstream categories — restaurant supply, grocer and retail tech — accounted for over half of funding in 2018.
In Europe, funding was far more evenly cut up across categories with some clear strengths too.
Whereas removing an outlier deal in the retail tech class would push it under Ag Biotech, we’ve seen an acceleration in improvements for eating places and retailers as they face challenges corresponding to labor shortages, regulation, and competition from e-commerce! It was additionally probably the most lively class by the variety of deals.
Ag biotech is particularly lively and relatively mature in Europe, which is unsurprising as house to a few of the world’s largest crop inputs suppliers, and a number of the world’s leading agricultural science institutions together with our associate Wageningen. With the news last week that Monsanto (now Bayer) was ordered to pay $2 billion in damages to a couple who claimed Roundup weedkiller gave them cancer – and extra trials to come – the massive agribusinesses and farmers shall be keenly on the lookout for further acceleration in various crop inputs. Startups in this class in Europe are creating plant breeding, gene modifying, biologicals, and microbial options.
Proportionally, Europe has a higher footprint in Novel Farming Techniques – together with indoor ag, insect farming, and aquaculture techniques – than globally where it represented simply four% of funding in 2018.
Insect farming is especially superior in Europe with a number of startups in scaleup mode for the animal feed business— especially France the place Innovafeed mobilized $65 million across two rounds in 2018 and Ynsect closing a record-breaking deal this yr of $125m.
Farm management software program sensing & IoT is another power in Europe – for crop farmers and livestock farmers as well as aquaculture. Innovations run the gamut from pc vision in beehives to remote sensing to underwater cameras and extra.
It might be remiss not to point out various proteins and revolutionary food in the wake of Beyond Meat and Unattainable Meals’ stellar offers just lately although globally and in Europe, these Progressive Food improvements are nonetheless a small portion of the overall pie (5% of complete funding).
In Europe, there are some notable startups including Mosa Meat, which was based by the primary cultured burger manufacturer Mark Publish in the Netherlands. There are a couple of various practical elements corporations too like Stem one in every of our portfolio corporations with a sugar alternative tech.
But in this category – and biotech – Europe does have challenges revolving across the regulatory surroundings; last week there was a headline around the EU wanting to ban using term burger and sausage for plant-based items, and the EU’s strict stance on gene-editing is a supply of a lot rivalry. Each of those laws might hamper innovation, or even end result in a constructive for the UK if/when it exits the union.
Geographical Cut up
The UK and France contributed almost half of complete funding (45%) and 40% of deal circulate in Europe’s agrifood tech market in 2018.
“We are proud to be cultivating a varied and diverse agrifood tech industry, united in the aim of improving the quality and sustainability of food and food production throughout the value chain. In addition, we are seeing government-back initiatives such as Innovate UK delivering millions of pounds of funding and resources to support PhDs and agrifood tech entrepreneurs kickstart their ventures,” writes Alessio Dantino from Forward Fooding in the report.
On France, Kevin Camphuis writes “France is a large market with strong consumer demand for innovation, a deep culture for food preparation, seasoned agri and agro know-how, and one of the most diverse corporate and retail ecosystems, from farm to shelf, including global leaders. And early 2019 shows clear signs of acceleration with as much funds raised over the three first months of 2019 as in full-year 2018.”
Spain’s complete was bolstered by an outlier — delivery tech company Glovo, which raised a $129 million Collection C spherical — although it was still the fourth most lively market for offers closed.
While low on the leader board for complete funding, Italy contributed the third highest number of offers in 2018. Its median deal measurement was only $400,000. Seed stage offers claimed 28 out of 31 complete funding rounds, pointing to Italy’s nascent agrifood tech business.
Two midstream tech deals over $30 million pushed Eire’s totals up, while Nordic nations contributed more offers, principally at the seed stage.
“A focus on health and sustainability drives innovation in the Nordics,” says Johan Jorgensen in the report.
Japanese Europe has but to make strides in agrifood tech, though there are some leading farmtech startups, similar to Agrivi out of Estonia.
While native commentators complain a few lack of buyers for the business, some 603 buyers participated in 2018, again representing round 30% of the worldwide investor base in agrifood tech.
“Indeed, more multistage investors are entering the Agrifood space, and in our programs, we have been (fore) seeing and driving the trend for more high-quality agtech startups,” says Jan Meiling from StartLife, a founding father of F&A Subsequent.
If there’s one other key takeaway from the roster of buyers closing food and agtech deals in Europe, it’s that few are wholly devoted to the sector (a minimum of geographically.)
Out of 603 lively buyers in 2018, 498, or 83%, made only one funding in Europe’s meals and agtech sector. Thirteen % (13%) made two investments, whereas only 5% made three or more.
Generalist buyers topped the listing of most lively buyers in Europe’s meals and ag sector.
Probably the most lively investor by deal quantity in Europe’s food and ag sector was UK-based crowdfunding platform Crowdcube, which backed greater than 180 corporations across a variety of industries in 2018, 13 of which have been in agrifood tech. Funding rounds ranged from a couple hundred thousand dollars to a number of million.
Bpifrance, a France-based entrepreneur-focused financial institution, and Kima Ventures, the global angel investor network, have been additionally among the many most lively in Europe’s meals and ag tech area, closing six or extra deals in 2018.
Seraphim Capital was a notable exception to the generalist-funder development. The UK-based area tech-focused funding agency invested in six corporations involved in the food and ag sector by way of distant sensing applied sciences. For example, Finland’s satellite imagery company ICEYE is considered one of Seraphim’s portfolio corporations.
Find out extra concerning the prime deals in each category, and the buyers, startups, and applied sciences driving Europe’s agrifood tech ecosystem in the free 67-page report right here.