Whether it’s finding a place to eat, sharing recommendations on your favorite dishes or ordering food online, investors have been hungry (sorry for the terrible pun) to invest in web and mobile-based food applications and platforms – aka food tech. Over the last year, almost $350 million has been invested in Food Tech and deal activity to the burgeoning sector grew over 37% vs the prior year.
Given the relative nascency of the space, it is not surprising to see that a majority of the investment deals (over 70%) has been too early-stage deals – seed and Series A. Given the increasing early stage deals in the space, average deal sizes have trended down over time and median deal sizes have stayed relatively small as can be seen below. Most deals are <$5M as the third graph below illustrates.
However, the space is not without its larger financings as well. Q2’12 which was a big quarter for Food Tech saw several large Series C funding rounds to the likes of Just-Eat ($64M) and Livebookings ($24.1M).
International food tech companies also raked in big money last year with Yemeksepti which serves the restaurant industry in Turkey and the UAE seeing $44M of financing and Delivery Hero of Germany pulling in nearly $80 million in 2012 to fuel acquisitions and compete with equally well-funded Just-Eat which counts its backers as Greylock, Redpoint and Index Ventures among others.
In general, international deal activity was very strong as local players and investors see opportunities in replicating some of the concepts seen, tested and validated in the US. Within the US, Silicon Valley has the largest share of deals at 17.78%, followed by NY at 16.67% and rounded out by Southern California at 7.78%.
Acquisition activity over the last two years was steady with 2012 seeing a bit over 1 exit per month on average. While Yelp’s IPO and Aramark’s spin-off of Seamless to its private equity owners Warburg Pincus, TH Lee, JP Morgan Chase and Goldman Sachs Capital Partners were two of the more notable and larger exits in the recent past, most of the exits to Food Tech have been smaller tuck-in acquisitions or asset/talent acquisitions like that of Groupon acquiring Savored.
With some well-capitalized larger players in the space, the talent-acquisitions should continue especially since many of the seed funded companies may be hit the Series A crunch.