$4.6B Invested in AgTech Startups, Delivery Costs Devour Startups + More Food Tech News

Agtech Investment Snapshot via AgFunder

Every week we curate and deliver the latest food tech news, trends and research to our readers’ inboxes. Tracking the top technology and innovation happenings across agriculture, CPG, retail, restaurants, cooking and health, our newsletter is the absolute easiest way to stay on top of the emerging sector.

From an inside look at Campell Soup Co.’s new $125 million fund to the tricky economics of food delivery, check out our take on last week’s top food tech and innovation news below. This week, we’re also trying something new: we’re sharing our take on the top  food tech news. We’d love your feedback on is is helpful, so let us know in the comments, on Facebook or on Twitter.

Like what you read? Feast your eyes on the full newsletter here, or, better yet, sign up for Food+Tech Bytes to get the latest and greatest food tech and innovation news delivered to your inbox every week.

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TOP FOOD TECH NEWS

1. Delivery Costs Are Devouring Food Startups – TechCrunch

Farmigo founder Benzi Ronen breaks down new food delivery models and examines the challenges of building a sustainable food delivery company.

Our Take: We couldn’t agree more with Benzi’s assertion that building a successful, profitable food delivery company takes more than having a slick website and marketing strategy. As we’ve written about in the past, food is perishable, which makes delivery incredibly costly and challenging. Too many companies are fueling their growth through large capital raises and by operating on losses. As capital starts to dry up, though, these companies will be forced to face the complexities and costs of fresh food distribution in a painfully real way. Those companies that are relying on great code and growth hacking to build a sustainable delivery business need to rethink their strategy. Even tech companies like Amazon and Google, which arguably have some of the most talented engineers and distribution experts in the world, have taken years to scale fresh food distribution. In the end, we think the startups that focus on true business and distribution model innovation will emerge as the winners.

2. Campbell Launches $125M Venture Capital Fund, New Product For Competitive Edge – FoodNavigator

Campbell Soup Co. is launching a venture fund to invest in startups food startups, a move to keep up with the small, entrepreneurial companies that are driving food trends in the US.

Our Take: Campbell Soup Co. is the latest CPG company to launch a venture fund to invest in early stage startups focused on food, wellbeing and technology. Companies like Campbell cannot keep up with consumer demand, so they are beginning to invest in the startups that can keep up with the seismic shift happening in the food industry. General Mills, Mars and Coca Cola have also launched funds, and we expect to see this trend continue over the coming years.

3. On The Up And Up: Fastest-Growing Categories And Growth Trends That Will Shape 2016 – FoodDive

From the rise of beverages to new paths to purchase, IRI looks at the trends that are driving innovation in 2016.

Our Take: As more and more consumers go online to plan and shop for meals, food and beverage companies are increasingly embracing ecommerce. Many CPG companies, however, are struggling to make sense of the emerging omnichannel marketplace. This struggle is creating an opportunity for digitally-savvy startups to capture market share.

4. This Startup Wants To Use Bacteria To Revolutionize How Our Food Is Produced – Fortune

Indigo raised a $56 million round of funding to reintroduce microbes to plants that it says have been lost through the tools of modern agriculture—fungicides, pesticides, herbicides.

Our Take: This could be one of the more exciting new frontiers of agricultural research. Like humans, plants have microbiomes that can be impacted by their environment and diet. Indigo wants to optimize plants’ microbiomes to dramatically increase yields and protect against major challenges like drought. It has built a genomic database that maps the microbiomes of the most popular row crops to understand which microbes are key to a plant’s health. It’s using this data to develop probiotic seed coatings for row crows, like corn, wheat and cotton. While this is a very exciting area of research, its hard to access the technology until the company shares research that can be peer reviewed. For now, the company is opting to keep its trial data private as it files patents, according to The Verge. 

5. Agriculture Technology Investment Storms To $4.6bn In 2015 As Global Investors Take Note – AgFunder News

Food e-commerce and agriculture technology startups raised $4.6 billion in 2015, nearly doubling 2014 levels ($2.36 billion), according to a new report from AgFunder.

Our Take: It is encouraging to see so many investors, family offices, institutions and strategics pouring capital into ag tech and food e-commerce startups. AgFunder has done amazing work, and we will be digging into the report further in the coming weeks. In the meantime, it is important to note that while AgFunder’s report is the most comprehensive benchmark for agricultural technology investment, it is limited in its coverage of the food tech sector. When it comes to food startups, AgFunder only includes e-commerce, food science, packaging, processing and analysis companies in its report, which offers a limited view of actual investment in the food tech sector. Of the 499 deals included in the report, 137 of the deals were food e-commerce startups, totaling $1.65 billion in investment, which amounts to 36 percent of the $4.6 billion raised.

6. Google Launches Fresh-Grocery Deliveries – The Wall Street Journal

Google is expanding its same-day delivery service to fresh groceries in parts of San Francisco and Los Angeles.

Our Take: Online grocery is a huge, $13 billon industry, and Google wants a piece of it. Fresh grocery delivery is a nortiously complex, low-margin business, but Google likes to take on tough challenges. Unlike Amazon and Fresh Direct, which both operate their own warehouses, Google will deliver food from retailers. This model allows Google to leverage existing infrastructure and minimize overhead, while offering retailers an ecommerce solution, which is more similar to Instacart’s model. Still, fresh grocery delivery is tough, and only time will tell if Google can attract customers and make the economics work.

7. Connect With The Startups, Investors and Executives Who Are Shaping The Future of Food at FoodBytes! Brooklyn

Calling all startups and investors! Join us on March 3, 2016 for FoodBytes! Brooklyn, the preeminent event series dedicated to connecting investors and disruptive food and agribusiness companies. Apply to demo or get 15% off tickets with code “FTC15” now!

Our Take: We are partnering with Rabobank and SF New Tech to bring this event to Brooklyn, because we want to help startups succeed. There are a lot of people and companies who are getting into this space because they are capitalizing on a trend. Though you may not know them, Rabobank has a long history of banking for food, and we are so impressed with its passion for supporting the entrepreneurs who are building a better future. We hope to see many of you there.

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