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Hungry tech investors are jumping into the food revolution

Silicon Valley’s venture capital (VC) firms have long been known for their investments in technology companies. From the early days of computer chips and networking to software, mobile technology and even “apps,” VC investments have focused primarily on technical products that have made business processes simpler for corporations or  enhanced life for consumers.

But over the past few years, Silicon Valley has turned its attention to “disrupting” other industries by applying technological solutions to business models that have remained largely untouched by the digital revolution. One need only look to examples such as Apple’s iTunes, Uber or AirBnB to see how these disruptions have affected how the music, transportation and hospitality industries operate.

Revolutionized decades ago by modern farm implements and Henry Ford-era mass production and manufacturing methods, until recently the food industry had yet to experience the kind of widespread digital disruption that Internet technologies have already brought to other industries. But if you look at the spate of recent investments into food start-ups and the food industry—with a five year quarterly high of $688 million in Q3 2014 alone—it’s becoming clear that venture capital is not just for software startups anymore.

VCs, incubators and crowdfunding – oh my!

One of the most interesting aspects of these new investments in food-related businesses is not just that money is being pumped into the food industry—that’s not necessarily anything new—but by whom. Silicon Valley has been jumping on the chuck wagon in droves, with both long-established tech investors and prominent tech founders doing the investing.

For example, Kleiner Perkins Caulfield Byers (KPCB), which is better known for investments in companies such as Google, Amazon and Twitter, recently invested in Beyond Meat, a company making plant-based meat substitutes, as part of its sustainability practice. Another firm known for very technical investments, Benchmark Capital, has invested in Potbelly, a sandwich and salad restaurant chain, that recently went public. And even Valley stalwart Sequoia Capital was an investor in The Melt, a grilled cheese chain.

Tech-company founders turned investors are also getting in on the food action. AOL founder Steve Case’s venture fund, Revolution Growth put $30 million into the Oakland, Calif. school-lunch company Revolution Foods. Tech founder turned NBA team owner turned celebrity Shark Tank investor Mark Cuban has invested in two gluten-free food startups, an app called “Find Me Gluten Free” and a pizza chain specializing in gluten-free crust. Google CEO Eric Schmidt has reportedly invested in the Lyfe Kitchen restaurant chain, along with the former COO of McDonald’s. And San Francisco egg substitute maker Hampton Creek Foods boasts an investor roster that includes a Valley who’s who of Vinod Khosla’s Khosla Ventures, Salesforce’s Marc Benioff and Facebook co-founder Eduardo Saverin.

The tech model of shepherding young businesses in their early stages is also becoming prominent in the food industry. New York based AccelFoods has honed in on the explosion of small food businesses and is helping to kickstart them via an accelerator program. According to TechCrunch, the company has been committing up to $400K to each business in each of its programs. Not to be outdone when it comes to furthering food businesses, large food companies are also making investments in smaller up-and-comers. Greek yogurt maker Chobani has started its own incubator, as has Coca-Cola, and even Marriott. Even Betty Crocker is getting out of the home kitchen—parent company General Mills has its own venture fund.

Of course crowdfunding has also become a popular way for individuals to support small food businesses in their communities. Many a restaurant and small food artisan have gotten a push via Kickstarter and Kiva Zip loans. Now Crowdfooding is getting into the investor-food start-up matchmaking game, as well, with a database tool that pairs businesses with potential investors. AngelList also boasts a database of more than 3000 investors for food products.

Perhaps this new wave of investments is just an example of Silicon Valley getting back to its roots, so to speak. After all, more than fifty years ago, much of the San Francisco Peninsula was covered in fruit orchards. So maybe investing in something, beyond a steady diet of silica chips and motherboards, that can really nourish people is a step in the right direction.

For more on the food tech investment landscape, check out the following:

http://www.foodtechconnect.com/2014/01/02/food-ag-investment-sources-explode-2013/

http://www.slideshare.net/BritaRosenheim/food-tech-media-industry-rosenheim-advisors-and-leon-mayer

If you’re investing in food startups, we’d love to hear from you. Bon Appétech Conference will be a great way to connect with industry stakeholders, large brands and influential decision makers. More information available at www.bonappetech.com.

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New start-ups look to create new meat alternatives

Food scarcity. The obesity epidemic. Chronic disease. Greenhouse emissions. Rising food prices. What do these things have in common? Each is one of the myriad reasons that companies and researchers are looking to alternative food products to address growing concerns about the health and welfare of the human population and our planet.

Why the concern? According the The Scientist, population growth and human consumption are beginning to threaten the earth’s resources. With the U.N. projecting the global population will reach more than 9 billion by 2050 and issues such as climate change, overfishing, drought, pollution and reduced agricultural productivity, there are some that fear the planet may not be able to support that population growth, forcing more people into poverty and hunger crises.

As such, food technologists are beginning to look at alternative food sources that can help provide healthy alternatives to feed the population and save the planet. And with the advances in genomics now enabled by high performance computing, it’s easier than ever for technologists to use a variety of methods to create new food sources that have “natural” origins—from recreating meat-like substances using plant compounds to cellular regeneration and “synbio,” or synthetic biology (which creates new organisms using existing DNA sequences).

Plant-based foods

Tofu. Seitan. Veggie burgers. Chances are most people have at least tried some kind of meat substitute even if they’re not a vegan or vegetarian. With chronic obesity and health problems becoming an epidemic in Western countries, many people are taking it upon themselves to eat a healthier diet, which may mean incorporating more plant-based proteins into their diet or following a “Meatless Monday” rule. And a number of companies are trying to make faux meat more flavorful and realistic than what’s previously been available to consumers.

For instance, Beyond Meat says it has taken the elements that comprise meat—amino acids, fats, carbohydrates, trace minerals and water—from plants and has applied processes of heating, cooling and pressure to give plant matter the consistency and texture of animal meat. The company’s products include “beef” crumbles made from pea protein and grilled “chicken” strings made from non-GMO soy and pea protein. Not only does the company have strong backing (investors include Bill Gates, Twitter co-founders Evan Williams and Biz Stone, and VC firms such as Kleiner Perkins Caufield and Byers) but the company was also named one of Fast Company’s “Most Innovative Companies” last year. Their product is said to have even fooled The New York Times’ food writer Mark Bittman into believing it was real.

Seattle-based Field Roast makes what it calls “grain meat,” which the company claims can be traced back to Buddhist monks who wanted a meat alternative in 7th Century China. Field Roast products are similar in tradition to seitan, but their grain-based products were created by founder and chef David Lee in the tradition of European charcuterie and sausage making. As such, the company makes a variety of grain-based meat substitutes that range from breakfast sausage, frankfurters, burgers and deli slices to meatloaf. The company also makes a line of vegan cheese called Chao made from coconut and tofu. Also tackling plant-based meats and cheeses is Impossible Foods, whose website is very hush-hush about what the company is doing other than to say it’s using specific proteins and nutrients from plants to develop milk, meat and eggs.

Hampton Creek has focused on making a substitute for eggs. Rather than sell the egg product as is, at this time the company is focused on creating healthy substitutes for staples like mayonnaise (Just Mayo) and cookies (Just Cookies). Also billed as a health-oriented option, Soylent is a powdered drink mix that, when combined with water, can be used as a complete meal substitute. Utilizing microalgae, Solazyme is developing vegetable oil and animal fat substitutes. The company has already developed a vegan flour that can replace oils, egg yolks or dairy fat and a gluten-free protein substitute.

Cultured Products

Academia is even getting in on the faux meat action. Cultured Beef, a project of Maastricht University in The Netherlands, uses muscle cells harvested from cows to create new meat tissue. According to their website, a normal-sized hamburger can be formed from approximately 20,000 cell strands. The company believes that by “growing” beef in a lab, not only will it be easier to meet growing demand for meat due to population growth but it will have less of the environmental impact that raising beef can have on emissions and land.

Lest you think that synbio need be limited to food products, Brooklyn-based Modern Meadow is taking cellular science even further to produce cultured leather. Using techniques first developed to grow human tissue for drug testing and development, the company is combining tissue engineering (also known as biofabrication) and 3D bioprinting techniques to create “leather.” Once they’ve conquered the leather-making process, the company plans to develop a meat product using similar methods.

In Boston, a startup called Gingko Bioworks has taken on the challenge of engineering new organisms. In one project, the company is working with DARPA (Defense Advanced Research Projects Agency) to manufacture probiotic bacteria similar to microbes that protect the body from infection or aid in digestion. In addition, Gingko scientists are working on cultured food and fragrance ingredients. According to Perfumer and Flavorist magazine, the company has already developed six as-yet unknown cultured ingredients.

Edible packaging

Harvard bioengineer David Edwards is in the process of developing edible packaging for food to help reduce waste. His company, called Wikicells, is said to be working on products such as ice cream and frozen yogurt products wrapped in flavored “skins” designed to help consumers move beyond plastic wrappings.

Whether eaters will get on board with these discoveries remains to be seen. According to a Pew Research Poll, only two of 10 Americans are willing to give lab meat a try. But that’s probably what your grandparents once said about tofu, too.

Find out more at our Expanding the Pie panel on alternative foods at Bon Appétech, April 10-12, 2015. Modern Meadow will be among the participating companies presenting the latest challenges and solutions to alternative food issues.

If you’re a technology based food product start-up, we’d love to hear from you. Bon Appétech Conference will be a great way to connect with industry stakeholders, large brands and influential decision makers. We are hosting a startup expo where entrepreneurs can showcase and launch new products, including new food products. More information available at www.bonappetech.com

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