Is FoodTech Investment Shifting Towards The Connected Kitchen? It Appears So
If you look at the foodtech investment landscape over the past few years, you'll notice one - and pretty much only one - investment theme: food delivery.
Yep, the vast majority of foodtech investment, as tracked by investment tracking firm CB Insights, goes to food delivery startups. As can be seen in the chart below, all but 6% of foodtech venture funding in 2013 went to delivery and, while the percentage of non-delivery foodtech investment almost doubled in 2014 to 11%, it tanked in 2015 with a paltry total of $93 million (less than 2%) of investment.
Figure 1: FoodTech Investment (US$ Millions), Delivery vs. Non-Delivery
Granted, it's not that food delivery isn't interesting. It's a massive category that includes everything from home grocery delivery services (Instacart), meal kit services (Blue Apron), prepared meal delivery (Munchery), liquor delivery (Drizly) and more, and with total retail food spending worldwide at roughly $4 trillion, the prospect of owning just a tiny sliver of the total market is enough to get investors salivating and writing big checks.
But as those of us who follow foodtech know, the category is more than just delivery. There are lots of startups doing interesting things ranging from cricket protein to farm tech to 3D food printing, so it's no surprise that investors may finally be looking outside of delivery as the category matures.
And the hottest space in foodtech outside of delivery may just be the connected kitchen. Consider what we saw in the first half of 2016: At the top of the list is Juicero, the connected cold-press juicer company that announced one of the biggest foodtech funding rounds of the year with a $70 million series B in March. That same month June announced a $22.5 million series A and, just two months later, PicoBrew announced a $10.6 million series A. Add in Innit, which just announced an $18 million round last week, and you're at $120 million for the first half of 2016 for these four connected kitchen startups alone.
If there is a slight reallocation in foodtech investment dollars towards the kitchen, no one should be surprised. Technology is giving consumers new ways to cook food and democratizing other types of food creation (such as beer brewing). Millennials, once thought to be leaving the kitchen, are embracing cooking and love using tech as part of their cooking journey.
These trends point to a bright future for the connected kitchen, as do industry specific ones. Food brands themselves like Campbells and Nestle are beginning to invest in the space. all at the same time while big players like Whirlpool and Samsung are beginning to up their investments in IoT and the future of cooking.
Bottom line? If you're a foodtech investor, maybe its time to come home and look inside the connected kitchen.