Nourishing Innovation: The Role of Venture Capital in Shaping Sustainable Food Technologies

Tuesday, May 28th, 2024

Venture capital, led by Big Idea Ventures, fuels the urgent innovation needed for sustainable food technologies.

The global food industry stands at the cusp of a revolution, driven by the urgent need for sustainability and innovation. Venture capital firms like Big Idea Ventures (BIV) play a pivotal role in this transformation, funding and fostering the technologies that could redefine our food systems.

“BIV is backed by a strong network of strategic partners including AAK, Avril, Bühler, Givaudan, Temasek Holdings, and Tyson Ventures, and is partnering with governments around the world working on food security and new food ecosystems,” said Andrew Ive, Managing General Partner, Big Idea Ventures, who spoke exclusively to Asia Pacific Food Industry (APFI).

“Food and agriculture is a key lever for delivering on humanities climate and sustainability goals. We helped grow the alternative protein industry and are now a leader in food innovation worldwide,” he said.

Venture Capital’s Role in FoodTech
With the world’s population projected to reach 9.7 billion by 2050, the demand for protein is set to soar. Traditional animal agriculture, however, poses significant environmental challenges. Alternative proteins, derived from plants, fermentation, and cell cultures, offer a promising solution. They have the potential to minimise the ecological footprint of our diets, reduce greenhouse gas emissions, and conserve natural resources.

Venture capital firms are uniquely positioned to accelerate the development of sustainable food technologies. By investing in startups with innovative ideas and strong potential for impact, these firms are not just betting on financial returns but also contributing to the advancement of global food security and environmental sustainability.

BIV exemplifies this approach through its accelerator programs and investment funds. The New Protein Fund II (NPF II) and Generation Food Rural Partners fund are two such examples, targeting alternative proteins and agritech innovations. BIV’s selection criteria for startups emphasise unique IP, experienced teams, and market viability, ensuring that only the most promising ventures receive support.

“The New Protein Fund II aims to develop and expand innovations in alternative proteins, fats, ingredients, and replacements for crops like cocoa, coffee, palm, and sugar. Protein diversification is a major issue since animal agriculture is responsible for 60 percent of all food production emissions globally and occupies 77 percent of global farming land,” said Ive.

On the other hand, “Generation Food Rural Partners fund focuses on commercialising intellectual property developed by universities to create new companies that provide a livable wage and support rural communities in the US,” he said.

Ive said that thanks to these unique approaches, 100 percent of BIV’s portfolio is impact-led.

“We do not just add an ESG component to our investment criteria; our investment thesis is built around what we need to be able to sustainably live on this planet for many generations to come,” he said.

New Protein Fund I (NPF I), focuses on the alternative protein ecosystem and the technologies that enable this sector, while NPF II, which launched last year, expands the investment strategy of NPF I. It includes fats, high-impact ingredients, and alternative crops such as sugar, cocoa, coffee, and palm oil. Ive said.

“We support innovators working on new technologies to improve our food supply and help us meet our climate goals. These technologies will also help ensure there is enough food for the growing population by 2050.”

Generation Food Rural Partners (GFRP) is an IP commercialisation fund that starts new companies to solve supply chain challenges for the agriculture, food, and protein industries.

“The development of sustainable technologies in the food and agricultural supply chain is crucial. Rural communities will continue to play a central role in delivering the foods we need,” he said.

As such, “this fund forms new companies to licence intellectual property developed by universities to the commercial market, driving advancements in important areas of innovation,” Ive added.

“We launch new companies, recruit seasoned management teams, and provide support from inception alongside our collaborating university and strategic partners. Our mission is to create living wage jobs in rural communities across the US, driving economic growth and development.”

Last year, GFRP is launching three innovative portfolio companies and is currently in the process of finalising an agreement to acquire a fourth company that is focused on addressing critical challenges, said Ive.

Educating Through Acceleration
Beyond funding, BIV’s accelerator programs provide startups with mentorship, resources, and networking opportunities. These programs are educational incubators, shaping the next generation of food entrepreneurs and equipping them with the knowledge to succeed in a competitive market.

“Twice a year, we select the best early-stage companies for our five-month accelerator programs in Paris, Singapore, and New York where we help break down barriers to scaling a start-up successfully,” said Ive.

“Our teams, internal experts, corporate investors and extensive network of mentors bring guidance in the realms of R&D and product development, manufacturing, distribution, marketing, funding, organisational management, and more.”

“As part of the program we offer an investment package of USD 200,000, with the potential for up to USD 3.5 million in follow-on investment,” he said.

In addition to BIV’s capital investment, the company takes early-stage companies through a 5-month program to accelerate their growth.

The Impact on Asia Pacific
In the Asia Pacific region, where food security is a pressing concern, the work of venture capital firms in FoodTech is particularly impactful. BIV’s Big Idea Food Competition (BIFC), for instance, showcases the region’s entrepreneurial talent and fosters a collaborative ecosystem for food innovation.

The food innovation ecosystem comprises many types of value adding groups: startups, medium-sized companies scaling, large corporates focused on production and distribution, governments focused on food security, universities bringing new IP to the world, investors excited by food innovation. “We want to help pull the key elements together,” he said.

BIV runs initiatives like the BIFC to promote this collaboration. “We started BIFC with the vision to enable building new entrepreneurial ecosystems, identifying world-class talent and investing in the future of food entrepreneurs across Asia,” said Ive.

“The idea behind this initiative was to bring together founders, corporates, food leaders, and investors working across the region,” he added.

The competition took place in six countries throughout Asia, including Japan, South Korea, Thailand, China, Indonesia, and Singapore. We got more than 500 applications.

The best 5 companies from each country presented their product ideas to a group of local judges. These judges were industry professionals and experts in the field. “The winner of each country then travelled to Singapore in September 2023 for a final competition to compete for a Grand Prize USD 200,000 investment package and automatic inclusion into Big Idea Venture’s accelerator program,” he said.

“We partnered with Montgomery Asia group for the BIFC Finals at the Specialty Food & Drinks Asia trade show in Marina Bay Sands Singapore. The startups from all over Asia pitched and cooked for a panel of industry experts and it was a great success,” Ive added.

Challenges and Opportunities
Despite the promise of alternative proteins and other FoodTech innovations, challenges remain. Scale-up, consumer acceptance, and regulatory hurdles are just a few. Education is key to overcoming these barriers, and articles like this one play a vital role in informing and shaping public discourse.

“Having worked with six cohorts from NPF I and our most recent first cohort of NPF II we have seen the alternative protein industry evolve and expand in terms of the sheer diversity of technologies that it offers,” said Ive.

Some of the opportunities are within the advancements seen in the alternative fats category, according to Ive. “To boost consumer acceptance, it is crucial to address the difference in taste and texture that still separates alternative meats from conventional ones. A key ingredient that could help bridge that gap will be fats.”

Another key area is the emergence of enabling technologies that can help the go-to-market strategies for alternative proteins be quicker. These technologies can help make alternative proteins more scalable, tastier and cheaper.

And finally, an increase in collaboration between startups within the ecosystem. “Product innovation will be key to increasing consumer acceptance of alternative proteins,” said Ive.

“The proliferation of specialised niche startups focusing on micro aspects of the production process has opened up exciting opportunities for collaboration in tackling fundamental challenges in production and supply chain management,” he said.

As we look to the future, the synergy between venture capital and FoodTech startups will be crucial in addressing the world’s food challenges. Firms like Big Idea Ventures are not just financiers; they are educators, innovators, and catalysts for change, nourishing the seeds of a sustainable food landscape for generations to come.

One of the biggest developments last year, said Ive, was the FDA clearing two cultivated meat companies’ products for sale in the US. Singapore was previously the only country where it was possible to consume cultivated meat.

“The FDA approval is a turning point for the industry and we have seen many governments around the world addressing protein diversification and allocating budgets and new policies.”