When it comes to investment in European Startups, fintech still reigns supreme. According to figures from Dealroom.co, the financial technology sector attracted a quarter of all European funding ($15.6 billion, to be precise) in the first half of 2022. Enterprise software was not far behind, with health, energy and transport also making it into the top five.
But cast your eyes down one place to the number six ranking and you come to a startup sector that doesn’t always get the attention it deserves – namely food. In the first half of this year, early stage companies in this vertical attracted $3.1 billion in funding.
And there’s a lot to play for. On the face of it, the food sector – particularly in terms of production – seems reassuringly traditional but that’s deceptive. From the invention of the plough in some forgotten past time, through to genetic crops and surveillance drones, technology has always provided a means for farmers to increase their yields while automation and supply chain technology has helped factory producers bring an ever widening range of products to supermarket shelves while also keeping costs down.
The Enviroment Challenge
But now technology is helping to solve different challenges. It’s generally agreed that food production accounts for almost a third of the world’s carbon footprint and according to recent University of Illinois research, it could be as high as 37%. In terms of the bigger picture, certain forms of production are contributing to significant environmental degradation. In that respect, many of today’s challenges revolve around providing a growing world population with quality food and – crucially – doing so sustainably.
That’s why the European Union’s EIT Food Program has been highlighting the work of food startups in the run up to COP27. “The food system should be at the heart of the climate agenda,” says Andy Zynga, CEO of EIT Food.
But as Zynga points out. Food has not been discussed in any great depth at previous COP summits. That has changed this year with the establishment of a Food Systems Pavilion. And in the runup to the event EIT Food has been using its own blog and social media to profile the work of 27 innovative companies operating within the value chain that runs from field to fork. The campaign is taking place under the banner of (ahem) CROP27 ahead of Agriculture and Adaptation Day on November 12.
So when I spoke to Zynga, I asked him about the thinking behind the campaign. “Everyone talks about the fact that food contributes about 30% of global emissions,”he says. “We wanted to focus on the positive, not the negative. “We believe that innovation is the answer.”
At the same time, the organization wants to ensure that agriculture and food are on the agenda. “In the past, the impact of food production was implied but not talked about explicitly,” Zynga says. “We want to make the issues explicit.”
So what does that mean in practice? Well EIT Food is a European Union-funded not-for-profit organization charged with nurture innovation. Its goals are to help food startups and scaleups that can address the challenges of moving to net zero, improving nutrition and creating a fair food system that people can trust.
The companies chosen reflect that mission. To take just a few examples. Napiferyn Biotech (plant-based proteins), Urban Crop Solutions (indoor farming to reduce emissions), Vaxa (reducing emissions through the cultivation of algae), and Grawindy Renewable Energy technologies (combining renewable energy with food production).
All the companies on the list were already being supported by EIT Food and they were selected according to their matc with the “Impact factors” identified by the organization. The selected 27 come from all over Europe.
All this is clearly good news in terms of raising awareness of the companies themselves, but can small businesses at the start of their journeys actually make a difference to a problem as intractable as climate change.
Helping them do that is at the heart of EIT Food’s mission. The aim is to provide support from the very earliest stages of a company’s development through to rapid growth. The programs include industry challenges ( where entrepreneurs develop ideas at “foodathons) , an incubator, an accelerator and a Rising Food Stars initiative for scaleups. The programmes connect entrepreneurs with partners and also investors. “So far our companies have attracted 400 million euro in external investment,” says Zynga.
That’s the big picture. In the shorter term, the intent is to use COP27 to encourage more countries to prioritize investment in food innovation while also prompting food companies to create action plans for sustainability.
But is there any incentive for big producers to work with startups? Zynga says the answer is yes, citing consumer demand for environment-friendly products coupled with a new EU eco-labelling system designed to enable individuals to understand the impact of the food they eat. Moves to tighten legislation around carbon credits and debits may also force action. Movement, yes, but it’s a long game.