Food Drive: How food innovation has continued during the pandemic

Not only are companies continuing on the path to innovation, but many funders are putting a lot of money toward it. Since the pandemic began, Impossible FoodsPerfect DayApeel SciencesOatly and Nature’s Fynd have all received funding infusions of $80 million or more.

Arama Kukutai, a co-founder and partner at Finistere Ventures told Food Dive that there’s nothing strange about the massive funding for innovative food companies in the midst of a pandemic. Since May, Finistere, which focuses on funding companies that want to transform the food and agriculture space, has invested in four different companies: Agriculture intelligence company Taranis, smart oven Tovala, agriculture analytics firm Enko Chem and agricultural risk management system Growers Edge.

While Kukutai said that food innovation is always a good place to invest — after all, everyone in the world needs it — the pandemic has made it a more desirable place to put money. Finistere is working on an analysis of investments in the food space during the pandemic. While it isn’t yet complete, Kukutai said he’s seen a general acceleration of investment into food since the pandemic began.

"You don't want to be out there fundraising for the new capital if you're in the middle of a pandemic and/or economic crisis. I think what we've seen, anecdotally, is a lot of capital pulled forward into companies to make sure they can get through not only 2020, but for a lot of our companies, we've funded them saying, 'Let's make sure we've got enough money and capital to take us all the way through 2021 as well." Arama Kukutai, Co-founder and partner, Finistere Ventures

Many investors who are putting money toward food companies are looking specifically at what innovations are doing to make a difference for consumers or the whole planet, Kukutai said. Investors in meat, egg and dairy alternative companies, for example, are likely focused on improving the food system's sustainability. Investors in agriculture tech that makes it easier to get large and healthy yields of crops are interested in making farming more productive and economical. And investors in vertical farms are likely hoping to improve crop freshness and reduce the pollution caused by the many links in the supply chain to take produce from the field to the consumer.

"We wanted to support the best companies that we have already invested in and make sure they have the resources to hit their milestones, and frankly to also be able to ride out the COVID period," Kukutai said. "You don't want to be out there fundraising for the new capital if you're in the middle of a pandemic and/or economic crisis. I think what we've seen, anecdotally, is a lot of capital pulled forward into companies to make sure they can get through not only 2020, but for a lot of our companies, we've funded them saying, 'Let's make sure we've got enough money and capital to take us all the way through 2021 as well.'"

Kukutai said it is apparent there is a lot of uncertainty ahead for companies. It is unknown when there will be an effective coronavirus vaccine, which would allow for more normal business to resume. The economy is currently in a recession that was hastened by the massive halting of business due to the pandemic, and the path to recovery is unclear at this time. And everything in business could be affected by policy changes, the likes of which could be vastly different depending on who wins the presidential election in November. 

Wanting to provide stability was part of the reason behind Finistere's investments this summer. Kukutai said they had been working toward some of the investments for a while, and they were ready to demonstrate their confidence in the companies. Some had long-term research projects that needed to be funded now in order to continue. In the case of Tovala, Kukutai said that stay-at-home orders furthers the consumer need for that kind of product. Investing now can especially help the business grow, though Kukutai said he was already confident in Tovala's potential before the pandemic.

While investments are rolling in right now, Kukutai said he couldn't predict what will happen in the future. However, he is confident that both innovation and investment will continue beyond the pandemic.

"It's thematically the need to come up with ways to feed the planet," he said. "Food security, greater nutrition, more healthful food, less environmentally impactful, better supply chain management, and also, frankly, getting food to consumers that is just a better eating experience."

Additional Finistere Insights

Feeding 10 billion without increasing greenhouse gas emissions—the technology investment opportunity

Agriculture and food production are the single largest contributors to human green house gas emissions.  I the latest of our blog series in partnership with Pitchbook Data, Finistere Ventures Managing Partner Arama Kukutai and Senior Advisor Kyle Datta opine on the role of agtech within the efforts to reduce the impact of food production on… Read More ▸

Finistere Ventures: The next wave of evolution in crop protection & input management

In 2017, Finistere Ventures and PitchBook partnered to build and share the most comprehensive data set on agtech investment in the industry. We are extremely proud of how this partnership has grown and developed over the years, spawning three comprehensive reports covering global, regional, stage and sector-based agtech investment trends/key developments, and garnering collaborations from… Read More ▸

Spencer Maughan Co-authors Australian AgTech Landscape Report for University of Sydney

Finistere partner Spencer Maughan worked closely with the United States Studies Centre at the University of Sydney to author a report on the opportunities and challenges in the Australian AgTech sector. Key Findings: Australia’s AgTech investment market is small, at an early stage and not keeping pace with global peers A breadth of AgTech segments… Read More ▸