While top-tier VCs have traditionally focused on tech startups, rather than consumer goods, several “smart money” firms are beginning to steer funding directly toward food & beverage startups — albeit in several very specific areas. Nearly all the food & beverage startups that have attracted smart money are focused on transformational technologies such as plant-based protein and animal-free eggs — startups that may not only be selling products, but are designing new processes that could change what we eat.
We used our CB Insights Business Social Graph tool to look at which food & beverage companies have been backed by smart money VCs. Our analysis includes startups producing branded, packaged food products or food development technologies. We did not include food delivery startups or meal kit startups such as Blue Apron.
Out of our list of 24 smart money VCs, nine have invested in food and beverage startups since 2013, backing 14 startups between them. Khosla Ventures was most active, funding eight food and beverage companies since 2013. Interestingly, Google Ventures (though a corporate venture arm, not a smart money VC and not included in the graphic) is actually the second most active investor in this cohort of smart money-backed startups, backing five of them since 2013.
For more on how we selected our 24 “smart money VCs,” please see the explanation and full smart money list at the bottom of this post.
Smart money VCs’ food & beverage investments nearly all focus on replacing common food items. These innovations may be more scalable than simple “flavor innovations,” or startups working on a new snack product or beverage flavor. Within that broad mission, the startups fall into several categories:
- Animal replacement: This category has earned the most smart money focus, with smart money VCs backing five animal-free meat and dairy startups. Impossible Foods, with $183M in disclosed funding from smart money VC Khosla Ventures, as well as Google Ventures, Bill Gates, and others, aims to develop plant-based burgers that are indistinguishable from meat. Ripple Foods ($43.6M) makes dairy-free, pea-based milk; Hampton Creek ($120M) makes a vegan, animal-free egg substitute; Kite Hill ($25.4M) makes nut-based, dairy-free cheeses; Beyond Meat ($40.5M), backed by Kleiner Perkins Caufield & Byers, sells plant-based meat products.
- Next-gen food: Soylent, backed by Andreessen Horowitz and Index Ventures, may be the most buzzed about investment target in this category, with its promise to replace any meal with a liquid nutritional drink. The company uses algae as a major ingredient, and since then other startups such as Oppo (not included in the graphic) also built products based on algae. We also see smart money backing a reduced-sodium salt, in Nutek Food Science; reduced-sugar candy, in Unreal Brands; and plant-based protein and vitamins, in Aloha. All 3 were backed by Khosla Ventures, and Aloha was also funded by First Round Capital. Blue Bottle Coffee — a unique brick-and-mortar chain that’s received backing from Index Ventures and True Ventures— also strongly emphasizes its coffee’s origins, and helped launch the cold brew coffee craze, which CB Insights clients can see took off as a trend recently.
- Food safety: Roka Bioscience (which went public in 2013, after raising $139M from investors including NEA) offers molecular testing solutions that can mitigate food safety risks. Clear Labs, with $21M in disclosed funding from Khosla Ventures, as well as Google Ventures, Tencent, and others, also focuses on molecular testing — it promises whole genome sequencing and big data analysis to increase food supply chain transparency and ensure food safety.
- Direct-to-consumer fruit and vegetable meals: Juicero raised nearly $100M from Kleiner Perkins Caufield & Byers and others, offering an at-home cold-pressed juicing device with packets of chopped fruits and vegetables for users to make juices and smoothies. Google Ventures, Campbell Soup’s venture arm Acre Venture Partners, First Beverage Group, and others also backed Juicero. Similarly, startup Hungryroot aims to provide an easy way for users to eat fresh fruits and vegetables at home. Hungryroot, which raised $13.4M from Lightspeed Venture Partners and others, sells branded, packaged vegetable food items, such as cauliflower rice and chickpea-based cookie dough. The startup sells direct-to-consumer, and also recently began selling through Whole Foods.
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VC-Backed Food and Beverage Startups
Note: To analyze smart money trends, we looked at the activity of 24 top VC firms, selected according to portfolio valuations and investment outcomes. Some of the investors are linked to relevant research briefs. Here’s our full list of 24 smart money investors:
- Sequoia Capital
- Benchmark Capital
- Accel Partners
- Greylock Partners
- Andreessen Horowitz
- Union Square Ventures
- First Round Capital
- Bessemer Venture Partners
- Kleiner Perkins Caufield & Byers
- New Enterprise Associates
- Founders Fund
- Lightspeed Venture Partners
- Foundry Group
- Index Ventures
- Khosla Ventures
- Social Capital
- Emergence Capital Partners
- True Ventures
- Floodgate Fund
- General Catalyst Partners
- Spark Capital
- Battery Ventures
- Redpoint Ventures
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