Agriculture & foodtech Retail and Direct To Consumer Startups Venture

Food Investors Bet On Healthy, Convenient, Fermented And Highly Caffeinated

Illustration of cultured-food app icons. Egg, sushi(?) and meat.

Food and beverage startups broadly fall into two categories: old standbys and avant garde experiments.

The first group consists of companies making new-and-improved versions of things we already enjoy, be it coffee, breakfast cereal or fine whiskey.

The rest mostly goes to those working on novel flavors and forms. Think mushroom drinks and jerky, caffeinated gum and cocoa-free chocolate.

As we look at food and beverage startup funding trends for 2023, it’s clear both approaches are drawing investors’ attention.

What do they like? After poring over more than 500 food- and drink-related funding rounds, we’ve identified five standout trends, each of which we discuss in more detail below.

Trend No. 1: Healthy meets convenient

Patrons of fast-food chains and convenience stores have long noticed that easy grab-and-go options rarely qualify as healthy choices. If several recently funded startups have their way, however, we could see more options that are both nutritious and convenient.

We put together a list of eight companies funded this year that fit this mantra. Names include Everytable, a ready-made meal chain that markets itself on affordability and nutrition; Immi, a maker of high-protein instant ramen; and Seven Sundays, a maker of self-described nutrient-dense breakfast cereals.

Of course, startups aren’t alone in this pursuit. Most grocery stores’ shelves are already stocked with items like protein bars, cold-pressed juices and premade salads. There’s also a long history of thriving startups getting acquired by companies not known for their healthy wares. Candy giant Mars, for instance, reportedly shelled out $5 billion in 2017 to acquire healthy snack-maker Kind Snacks.

Trend No. 2: Nonalcoholic drinks

Boozeless booze is a growth market, driven in part by younger consumers who are consuming less alcohol than prior generations. And venture investors have noticed.

Last year, budding nonalcoholic beverage startups received a record of over $414 million in venture funding, per Crunchbase data. While overall funding is down this year, we’re still seeing deals in the space get done.

Below, we put together a list of five companies in the space that have raised funding this year. It includes Athletic Brewing, a maker of boozeless craft beer; Boisson, a seller of nonalcoholic wines and spirits; and Tost Beverages, which specializes in dry, sparkling beverages.

Trend No. 3: Fermented foods

Humans have been fermenting food and drinks for over 12,000 years. Lately, however, variants of this ancient process are generating plenty of interest and capital from startup investors, who see it as a way to advance new edible and drinkable products.

Using Crunchbase data, we found nine companies funded this year, not including breweries, that include fermentation as a core part of their business models.

Fungus is a big focus area. Berkeley, California-based Prime Roots, which picked up $30 million in a May Series B, is working on mycelium-based meats. Meanwhile, Boulder, Colorado-based Meati, a maker of “meats” derived from mushroom roots, has raised over $270 million to date.

But there are other applications as well. Planet A Foods, for instance, is developing technology to ferment plant-based ingredients to recreate beloved flavors, like chocolate, from food industry byproducts.

Trend No. 4: Alternative Protein

Alternative protein has been a popular startup funding sector for many years at this point, and we’re still seeing plenty of seed through later-stage deals in the space.

We assembled a sample set of 11 companies below, working on everything from CO₂-derived protein to cell-based beef and pork.

Air Protein, which develops protein-enriched food made from CO₂, snagged the biggest round for technology it says can both help the planet and help feed its human inhabitants. Other good-sized rounds went to plant-based meat makers Daiz, based in Japan, and No Meat Factory, based in British Columbia.

Trend No. 5: Caffeine

Many things we consume would likely not exist without caffeine, including much of the copy certain authors provide for Crunchbase News. Fortunately, our bottomless appetites for this legal stimulant continue to inspire founders and investors alike.

Using Crunchbase data, we drew up a list of eight companies funded this year delivering up doses of coffee and caffeinated wares.

One of the larger funding recipients is A Shoc, a seller of energy drinks made with yerba mate, green coffee beans, coffee fruit extract and guarana. Another would-be disrupter is Rev Energy, a maker of gum with the caffeine equivalent of one espresso shot in every piece.

Coffee lovers also have some startups to patronize, including Jot, a maker of concentrated coffee, and Javy, which makes concentrated coffees as well as a product called Instant Protein Coffee.

Some things are better kept separate

Like many things in the culinary world, our trendiest food categories would make a poor fusion cuisine.

If we attempted a Franken-startup with all the hot elements, it might produce something like a caffeinated, nonalcoholic champagne made from protein-rich fermented fungus.

It sounds terrible. But given the trends, maybe someone would fund it. Getting someone to drink it, however, would probably be more challenging.

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Illustration: Dom Guzman

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