Monday, November 2, 2015

Food and Beverage Startups Reach Record High Funding

Food and Beverage Startups Reach Record High Funding

2015 has been a big year for food and beverage startups, suggesting that when it comes to what and how we eat and drink, VC and consumer interest alike could not be higher. According to a report by Dow Jones VentureWire, this year food and beverage startups saw record funding: investors poured $368.7 million into the sector in the third quarter, bringing the total up to $542.4.

Within the food and beverage sector, $191.6 million went to specialty foods, $181.5 million to general food products, and $151.7 to non-alcoholic drinks.

To those paying attention, the rising success of food and beverage startups may be of little surprise. From wine delivery services like Drizzly to the portioned recipe delivery service Plated,  the public has a demonstrable desire to get dinner to their door and into their bellies as fast as possible.

But food and beverage startups encompass much more than highly personalized or specialized delivery services. Startups that promise sustainability, quality nutrition and more are cropping up to meet (and drive) a growing demand for food and drinks that are more healthy, and less wasteful.

These include Soylent, a startup that provides highly-nutritious, liquid food substitution, Kite Hill’s artisan, vegan cheeses, and Beyond Meat, which sells plant protein-based meat alternatives. These might not sound so tasty right now, but given the possibility of food crisis in the future, the innovations they foster may prove vital someday.

Alongside these more radical endeavors are plenty of startups that will likely have a wider public appeal off the bat, like organic yogurt producer Maple Hill Creamery, health food company Sweetgreen, and Shenandoah Growers, a fresh herbs brand. These are all New York based companies backed by Seed 2 Growth Ventures (S2G), a food and agriculture venture fund.

Food and beverage startups are so popular, there are a number of accelerators created just for them. As of October, 2015, there are 4,855 startups in this space on AngelList, and 3,775 investors.

Entrepreneurs looking to enter this space may face challenges to due to increasing competition in the sector. The factors investors tend to favor in food and beverage startups align tightly with what they look for in other types of startups: a novel position, economic advantage, a strong management team, quality product and/or service, wow factor and good branding.