Big corporations are feeding Americans a diet of crap, but a swarm of start-ups is chewing away at their market dominance.
The New York Times brought us the news this week that venture capitalists — normally the lifeblood of innovation in the technology and cleantech sectors — are increasingly providing the financial fodder for food-related start-ups. The injections of cash could be helping to fertilize a green agro-culinary revolution.
In some cases, the goal is to connect restaurants with food purveyors, or to create on-demand delivery services from local farms, or ready-to-cook dinner kits. In others, the goal is to invent new foods, like creating cheese, meat and egg substitutes from plants. Since this is Silicon Valley money, though, the ultimate goal is often nothing short of grand: transforming the food industry.
“Part of the reason you’re seeing all these V.C.’s get interested in this is the food industry is not only is it massive, but like the energy industry, it is terribly broken in terms of its impact on the environment, health, animals,” said Josh Tetrick, founder and chief executive of Hampton Creek Foods, a start-up making egg alternatives.
Some investors say food-related start-ups fit into their sustainability portfolios, alongside solar energy or electric cars, because they aim to reduce the toll on the environment of producing animal products. For others, they fit alongside health investments like fitness devices and heart rate monitoring apps. Still others are eager to tackle a real-world problem, instead of building virtual farming games or figuring out ways to get people to click on ads.
“There are pretty significant environmental consequences and health issues associated with sodium or high-fructose corn syrup or eating too much red meat,” said Samir Kaul, a partner at Khosla Ventures, which has invested in a half-dozen food start-ups. “I wouldn’t bet my money that Cargill or ConAgra are going to innovate here. I think it’s going to take start-ups to do that.”
The article cites research by CB Insights, a venture capital database. From CB Insights’ website:
Whether it’s finding a place to eat, sharing recommendations on your favorite dishes or ordering food online, investors have been hungry (sorry for the terrible pun) to invest in web and mobile-based food applications and platforms — aka food tech. Over the last year, almost $350 million has been invested in Food Tech and deal activity to the burgeoning sector grew over 37% vs the prior year. …
In general, international deal activity was very strong as local players and investors see opportunities in replicating some of the concepts seen, tested and validated in the US. Within the US, Silicon Valley has the largest share of deals at 17.78%, followed by NY at 16.67% and rounded out by Southern California at 7.78%.
Here’s hoping the smart money keeps flowing for smart, green foodie entrepreneurs.
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