The latest news, trends, analysis, interviews and podcasts from the global food and beverage industry

The global agri-food-tech sector has seen a steep decline in investment, with funding plummeting by 73% from its 2021 peak, according to the latest FoodTech 500 report.

Despite this downturn, industry players are shifting focus towards sustainable and system-wide innovations, marking the emergence of what analysts are calling 'FoodTech Wave 3.0.'

The FoodTech 500, now in its sixth year, ranks the most innovative start-ups and scale-ups operating at the intersection of food, technology and sustainability. This year’s report, compiled from 1,420 applications across 52 countries, paints a stark picture of the investment landscape.

Total agri-food-tech funding has dropped from $61.2 billion in 2021 to just $16.1 billion in 2024, with deal volume declining by 58% in the same period.

While overall funding has contracted, a reallocation of investment suggests a shift in strategic priorities. Traditional downstream sectors, such as food delivery and alternative proteins, which once commanded 68% of total funding, now represent just 47%.

Instead, investors are increasingly backing upstream innovations, including agricultural biotechnology, precision farming, protein fermentation and upcycled ingredients.

The proportion of global agri-food-tech funding directed towards agricultural biotechnology, for example, has risen from 3.8% in 2021 to 6.2% in 2024. Precision farming solutions have seen a similar uptick, increasing from 2.7% to 6.6% over the same period. Meanwhile, fermentation-based protein alternatives and biotech-driven food processing methods are gaining traction as investors seek scalable, climate-friendly solutions.

The median deal size has also increased from $3 million to $5 million, suggesting that investors are favouring established companies with proven business models over early-stage start-ups.

“Investors are becoming more discerning,” said Alessio D'Antino, CEO of Forward Fooding, which created the FoodTech 500 report. “The focus has shifted towards sustainable, scalable solutions that can demonstrate clear pathways to profitability”. This raises concerns about the future innovation pipeline, as a lack of funding for early-stage start-ups could stifle new ideas and technologies.

Food-Tech Wave 3.0

Despite the challenging financial environment, a new paradigm is emerging – dubbed FoodTech Wave 3.0. This movement highlights sustainability and systemic solutions to the pressing challenges facing the global food system.

Companies are increasingly adopting circular approaches, biotechnologies and innovative practices that not only address food security but also environmental concerns.

Circular economy and sustainable practices

The Food-Tech Wave 3.0 is characterised by a holistic view of the food system, recognising that the greatest challenges – and opportunities – lie in reimagining how food is produced, distributed and consumed. This includes:

Circular approaches: Innovations that eliminate waste and create value from byproducts are gaining traction. Companies are focusing on upcycling food waste into new products, thereby reducing overall waste in the food supply chain.

Biotechnology innovations: Firms are leveraging biotechnology to develop sustainable ingredients and improve food production processes. This includes advancements in precision fermentation and synthetic biology, which promise to revolutionise how food is manufactured.

Technological integration: Companies are increasingly utilising technology to connect different parts of the value chain, enhancing efficiency and transparency. This includes blockchain for traceability and AI for optimising supply chain logistics.

Notable players in the 2024 FoodTech 500

Among the standout companies recognised in this year’s ranking are:

Apeel Sciences (US): Ranking number one in the list, Apeel Science is innovating in food waste reduction through advanced technology that extends the shelf life of produce. Its plant-based coating helps reduce spoilage, benefiting both consumers and retailers.

ProducePay (US): Enhancing agricultural supply chains with a robust ag marketplace that connects farmers directly with buyers. Its platform provides farmers with access to financing and market insights, empowering them to make informed decisions.

Nature's Fynd (US): Leading the charge in protein fermentation, offering sustainable alternatives in the ever-evolving food landscape. Its innovative approach to producing protein from fungi addresses the growing demand for alternative protein sources.

Heura Foods (Spain): Pioneering plant-based solutions that are reshaping consumer perceptions of alternative proteins. Their products are designed to mimic the taste and texture of traditional meat, appealing to a broad audience.

Terviva (US): Focusing on sustainable agricultural practices through biotechnology, addressing both food production and environmental sustainability. Its work with the pongamia tree offers a novel approach to producing food while restoring degraded land.

Oatly (Sweden): A leader in the oat milk market, Oatly has transformed dairy alternatives with its sustainable and delicious products that cater to the rising demand for plant-based options.

Fruity Fresh (Netherlands): This company specialises in innovative fruit preservation technologies that extend shelf life and reduce waste, aligning with the industry’s sustainability goals.

Mosa Meat (Netherlands): A pioneer in cultured meat, Mosa Meat is at the forefront of developing lab-grown beef, offering a sustainable alternative to traditional livestock farming.

Impossible Foods (US): Known for its plant-based meat alternatives that closely resemble animal products, Impossible Foods continues to push the boundaries of food technology and sustainability.

Winnow Solutions (UK): This company focuses on reducing food waste in commercial kitchens through smart technology that tracks and analyses food waste, helping businesses save money and operate more sustainably.

Ecovative Design (US): Specialising in mycelium-based materials, Ecovative is innovating in sustainable packaging and food products, aiming to replace plastics with biodegradable alternatives.

ProVeg International (Germany): A global food awareness organisation that promotes plant-based eating, ProVeg is working to reduce the consumption of animal products and raise awareness about sustainable food choices.

Emerging trends and technologies

The report also identifies key trends shaping the future of FoodTech:

Health and wellness: Consumers are increasingly seeking foods that contribute to their health and well-being. Companies focusing on functional foods, personalised nutrition and health-oriented products are gaining traction.

Sustainable packaging: As environmental concerns rise, companies are innovating in sustainable packaging solutions. This includes biodegradable materials and reusable packaging systems that minimise waste.

Digital transformation: The pandemic accelerated the digital transformation of the food industry. Companies are investing in ecommerce platforms, delivery logistics and digital marketing strategies to reach consumers directly.

Navigating challenges and seizing opportunities

While the investment landscape presents significant hurdles, the report underscores the opportunities that lie ahead. Collaboration is becoming a cornerstone of success in the food-tech sector, with start-ups increasingly partnering with established players to accelerate innovation.

“The future of FoodTech will rely on robust partnerships,” noted D'Antino. “As we face global food challenges, it’s essential to foster collaboration over competition.”

Additionally, the report highlights the growing emphasis on regulatory frameworks that support sustainability and innovation. Policymakers are increasingly recognising the importance of fostering an environment conducive to food-tech growth, which includes incentives for sustainable practices and funding for research and development.

As the FoodTech sector navigates these turbulent waters, industry stakeholders are urged to recognise and support the pioneering companies that are committed to transforming our food systems. The 2024 FoodTech 500 serves not only as a ranking but as a testament to the resilience and adaptability of the industry.

“The challenges are immense, but so are the opportunities,” concluded D'Antino. “We must embrace this new wave of innovation to ensure a sustainable future for food.”