How food tech companies can raise money in a slowing economy

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The economy is experiencing a slowdown, but that doesn’t mean that alternative protein makers and food tech companies will be unable to get funding this year.

However, the current business climate won’t exactly make it easy, either, a pair of analysts from Nomura Greentech told the audience at the Future Food-Tech Alternative Proteins conference in New York on Tuesday. The growth in investment dollars that the space has seen in recent years probably will not continue, with 2022’s fundraising projected to be about the same as last year’s. More investment dollars are likely to go to more established food tech companies. There are not likely to be any big food tech IPOs this year, and it’s unclear how the currently publicly traded companies will continue to fare.

“There’s no way around that: In the next 12 to 24 months, we’re going to have a really tough environment,” said David Verbitsky, head of ag tech and sustainable food for Nomura Greentech, which provides strategic financial advice on fundraising, M&A and IPOs to companies with sustainability at their core.

But challenges aside, Verbitsky and his colleague Morgan LeConey, head of food and beverage, said the outlook for financing is largely optimistic. After all, more than $11 billion was invested in food tech and alternative proteins between 2019 and 2021 — with over half of that coming in 2021, according to Nomura Greentech figures.


“There’s no way around that: In the next 12 to 24 months, we’re going to have a really tough environment.”

David Verbitsky

Head of ag tech and sustainable food, Nomura Greentech


With everyone from tech VC firms to public pension systems to family-based endowments putting money into food tech companies, LeConey said there has clearly been a shift in the way investors look at the space.

“Every investor now views alternative proteins as mainstream,” LeConey said.

A panel of investors from Synthesis Capital, FootPrint Coalition, Temasek and Norwest Venture Partners took the stage at the conference on Wednesday. They emphasized that while the current economic conditions may make it difficult for tech and up-and-coming companies to find the investment capital they need right now, it’s a short-term problem.

“Climate change isn’t going anywhere,” said Manuel Waenke, director of ventures at FootPrint Coalition. “Health problems aren’t going anywhere. So if anything, this is a 20- to 30-year plan. And the problems that we’re trying to solve are getting bigger.” 

Stock prices are down, but large funding rounds continue

Plant-based meat sales, once an area for phenomenal growth, have largely stagnated in the past 12 months as consumers have shifted their shopping behaviors after the height of the pandemic, with some opting not to be repeat buyers. Oatly and Beyond Meat, both companies that only make products in the plant-based segment, have also seen their sales — and stock prices — tumble. LeConey said Oatly’s stock is currently down 86% from its previous high in the past year, and Beyond Meat’s price is 84% lower than that benchmark. But, LeConey said, there is a silver lining here: Putting all of the the high-growth sustainable foods that are publicly traded together, their value has grown 181% since January 2018.

And while the economic downturn and inflation-related headwinds may mean the investment dollars aren’t flowing as freely as they had been in past years, the money is still going to come. Verbitsky pointed out that there have been six large capital raises in this space so far this year: $400 million for Upside Foods, $135 million for Redefine Meat, $120 million for Remilk, $100 million rounds for Wildtype and Next Gen Foods, and $85 million for MycoTechnology.

Redefine Meat’s 3D printed plant-based steak.

Courtesy of Redefine Meat

However, those companies have some big things in common, Verbitsky said. They’re either close to commercialization or have products on the market. They’re relatively established, with significant intellectual property and unique technology. They can readily provide proof of concept to investors, have detailed plans about what they are going to do with investment funds, and have clearly articulated their paths to scale up and get to market. 

LeConey said that from conversations with investors, it is clear that they want to invest in companies on track to show value in the near future.

For companies that aren’t quite at that stage, there are likely to be opportunities for M&A, partnerships and joint ventures with larger players, Verbitsky said. Despite anything going on in the larger economy, the overall business risk of the plant-based and alternative protein sectors is going down. The technology is becoming more proven, and he said that many larger food companies are seeing the value in expanding their capabilities to involve animal alternatives. In 2022 alone, there has been a high-profile joint venture between Kraft Heinz and NotCo, a partnership between ADM and Eat Just, and Upside Foods’ acquisition of Cultured Decadence.

The economy is expected to recover in the next 12 to 24 months, Verbitsky and LeConey said. With that recovery, the investment and IPO markets are likely to also come back for alternative proteins as demand for public companies in the space will continue — and become stronger — in the future.

“We all love the space,” Verbitsky said. “We see a strong investment thesis behind why you invest in alternative protein, but we need to realize where we are in the broader market environment.” 

New funding sources and making good use of time

As the economy slows down, the road looks uncertain for food tech companies in need of funds. After all, food tech is relatively capital expenditure intensive, requiring companies to spend money on equipment, ingredients and R&D to design products that work. After creating a proof of concept, there’s more investment needed in order to create products at a large enough scale for distribution, as well as for any needed testing to obtain regulatory approval.

Sagar Bhadra, a director at Temasek who leads growth equity investments in food and agriculture in North America, said that these needs of the industry are well known, but because of the economy, equity financing may not be as available to companies at this point. Now could be a good time to explore other ways to fund some of these development phases, like credit financing. These methods have not been commonly used by food tech players so far, but could be a resource to help the companies hit their milestones without having to wait for markets to recover.

Synthesis Capital Co-Founder and Partner Rosie Wardle said that food tech in general needs to get beyond relying just on VC or private equity investments in order to scale. One place that funds can come from is national governments. Some countries, including Singapore and Canada, have gone a good job of creating an infrastructure that supports food tech companies financially, she said. Others have been slower to adopt this sort of structure — but they really should, she said.


“Climate change isn’t going anywhere. Health problems aren’t going anywhere. So if anything, this is a 20- to 30-year plan. And the problems that we’re trying to solve are getting bigger.”

Manuel Waenke

Director of ventures, FootPrint Coalition


“If governments can really start to get on board here and realize how important alternative proteins are for the issues that they’re all facing, whether it’s food security, whether it’s climate, human health, then that type of financing support will be really helpful to the type of capital projects that will need to happen to really move this industry along and scale up,” Wardle said.

Norwest Venture Partners Vice President Kathryn Weinmann said that the current environment will encourage more slow development, which is OK for this type of industry. Norwest, which was primarily a software investor that has pivoted to some investments in food tech — including co-leading Upside Foods’ Series B round and participating in its recent Series C — has seen slower growth recently. Weinmann said that actually has advantages.

“We’ve been in a hyper-growth environment, or grow-at-all-costs environment, and in software, people got over their skis,” she said. “But in physical products, it’s even more important that people take deliberate steps forward, because the path of change is much harder.”

Upside Foods’ Cultivated Meat Engineering, Production and Innovation Center. 

Courtesy of Upside Foods

Slower growth can also help provide time for companies to work with large investors in order to secure key funds for times of economic recovery. FootPrint Coalition’s Waenke said that investors like himself are more cautious right now, but still talking with companies they might want to invest in. And those conversations can be more in depth, adding more due diligence and education.

Weinmann agreed, and added now is a good time to try to get new and different investors interested in food tech businesses. Upside Foods, formerly known as Memphis Meats, was the first investment in food tech for Norwest Venture Partners. Weinmann said the process of deciding to make the investment took about eight months, and Norwest took a deep dive to understand the science, processes and market opportunity. Investors, especially those who are new to the food space, really want to know what they are getting into, and there could be a lot of time now to explain all of the technology and risks.

“Help your investors, your prospective investors, quantify the type of risk that they’re taking, particularly in this space,” Weinmann said. “There’s all the normal business risks, but then there’s also some level of scientific risks depending on what you’re doing. And if you can help us understand that at a slightly more granular level, versus, ‘Oh, everything is solved with scale,’ that really helps us get more comfortable more quickly.”

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About the Author

Jervie David Montejar
A food lover who wants to try every delicious dishes around him and spread the news to everyone to try it as well. Finding the latest trends about food and restaurants around Cebu and the rest of the world :) "Life is uncertain. Eat dessert first." -Ernestine Ulmer
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