TOKYO — Investment in food tech startups in Southeast Asia is rising regardless of headwinds from the coronavirus pandemic as customers within the area turn into extra involved with environmental sustainability and wholesome life.
In response to a report by AgFunder, operator of the web AgriFoodTech enterprise capital platform, funding in ASEAN agriculture and meals tech startups reached $350 million within the first half of 2020, greater than 80% of the whole raised final 12 months. Michael Dean, founding accomplice of AgFunder, mentioned he “expects funding [this year] to exceed the 2019 determine.”
Business observers cite a number of causes for rising investor curiosity within the sector.
Read also – Japan’s handmade item C2C startup Creema files for IPO
“Traders more and more hope to spend money on meals tech, particularly within the kitchen section, reminiscent of good residence home equipment, since individuals more and more prepare dinner at residence as a substitute of consuming out on account of social distancing measures,” mentioned Hitoshi Fujiwara, a senior accomplice at auditing specialist Ernst & Younger ShinNihon. Funding in meals tech startups targeted on well being can be on the rise, Fujiwara added, “as a result of the coronavirus has raised [consumer] well being issues, reminiscent of gaining weight whereas staying residence.”
Meals comprised of plant-based protein are drawing curiosity from health-conscious customers, particularly after the COVID-19 outbreak. In Singapore, meals tech startup Subsequent Gen, which affords plant-based meat substitutes, introduced its launch in October with seed funding of $2.2 million. Subsequent Gen has its headquarters, management staff and analysis and improvement heart within the city-state, the place it goals to construct a world client model, with key markets in China, the U.S. and Europe.
Andre Menezes, co-founder and chief working officer at Subsequent Gen, advised Nikkei Asia that whereas the pandemic has impacted fundraising, he believes there are nonetheless important alternatives for modern startups.
“There are sectors that may profit from the change in mindsets pushed by COVID-19. Well being and sustainability are two of these areas. At Subsequent Gen, we’ve intentionally chosen to not onboard any exterior traders in our preliminary funding spherical,” he mentioned.
Read also – German online takeaway food “Delivery Hero”chase to stirring Uber Eats in Japan
The startup is engaged on extra funding for a pre-Collection A spherical by the tip of the 12 months and is getting ready to usher in exterior traders for its Collection A financing spherical in 2021. Menezes mentioned Subsequent Gen is lucky that the plant-based meals section has not been damage by the pandemic.
“COVID-19 was a tough lesson for all of us, highlighting that the issues we normally take without any consideration aren’t at all times obtainable. One good instance is worldwide journey, which was made virtually inconceivable,” he mentioned.
“On this state of affairs, COVID-19 has strengthened the significance of getting the suitable traders and companions that may add worth to the enterprise, particularly with regard to worldwide growth and provide chain networks,” Menezes added.
One other Singapore-based meals tech participant, Shiok Meats, which payments itself as “the world’s first cell-based crustacean meat firm,” oversaw a $12.6 million Singapore greenback ($9.3 million) Collection A funding spherical in late September. The startup affords seafood, together with shrimp, crab and lobster meat, cultured from cells slightly than harvested dwell animals.
Investor curiosity in meals know-how just isn’t confined to Singapore. In Thailand, Bangkok-based Thai Union Group, the world’s largest canned tuna processor, introduced in late September that it had invested in 4 new meals tech firms.
Thai Union mentioned the COVID-19 pandemic was not the rationale it determined to spend money on the meals tech startups. The corporate’s technique has been to foster innovation within the sector because it launched the Area-F undertaking in 2019, working intently with the Nationwide Innovation Company and Mahidol College, to encourage the expansion of startups.
The corporate has additionally arrange a $30 million enterprise capital fund to spend money on new firms. The fund’s first guess was on Flying Spark, an organization that produces protein from bugs.
“We invested within the 4 startups as a result of it’s our long-term enterprise technique to be a number one meals firm that’s nicely outfitted with innovation, which can put us on a sustainable development path,” Thiraphong Chansiri, president and CEO of Thai Union, mentioned in a press release.
That’s a part of a broader development, analysts say. Enterprise capital corporations are pouring cash into meals tech because the coronavirus has made individuals extra acutely aware of meals security and inspired them to hunt options to conventional meals.
“Enterprise capital is in search of investments with excessive returns. Nonetheless, COVID has set off a development that has made meals tech their most worthwhile funding,” mentioned an analyst at Kasikorn Analysis Middle.
“Whereas Southeast Asia has been main within the meals tech race, Japan is making an attempt to catching up,” mentioned Hitoshi Hokamura, a accomplice at Scrum Ventures, a enterprise capital specialist primarily based in San Francisco and Tokyo.
In Japan, funding in meals tech totaled $88 million final 12 months in line with AgFunder, lower than within the U.S., China, India and the U.Ok. However Japanese meals processors are trying achieve floor on their world rivals by collaborating with startups amid the pandemic.
Scrum Ventures introduced in late September plans to launch a meals tech-focused program that it hopes will promote collaboration between conventional meals firms and startups. Huge Japanese gamers embody prompt noodle maker Nissin Meals Holdings, well being meals and drug maker Otsuka Holdings and inexperienced tea brewer Ito En. A couple of extra are anticipated to hitch later.
One of many members, edible oils firm Fuji Oil Holdings, advised Nikkei Asia that it has determined to hitch this system to develop new applied sciences that may broaden its enterprise in plant-based meals and meals supplies, reminiscent of fat and oils, and proteins, increasing their distribution and gross sales channels by working with startups.
“Shopper issues relating to sustainability practices have been on the rise,” mentioned Hiroshi Shimizu CEO of the soy-based meals producer, given the rising “affect of local weather change, inhabitants development and the meals disaster.” The corporate is now specializing in improvement of meat substitutes and soy-based lotions.
Fuji Oil has been making soy-based merchandise for the reason that Sixties. However, mentioned Shimizu, “Making various meals just isn’t sufficient. We should make issues linked to the well being and happiness of customers.”
Scram Ventures Hokamura mentioned the definition of meals tech is altering. Beforehand, “meals know-how was useful to the enterprise however not essentially favorable to customers,” citing the instance of meals components. Right this moment, meals tech is extra targeted on individuals’s well-being in addition to environmental sustainability, he mentioned.
The quantity of funding within the meals tech sector, “will proceed to extend,” in line with EY’s Fujiwara. However “fundraising might be cut up into winners and losers,” as traders turn into extra cautious. “Traders are particularly keen to place their capital into startups’ applied sciences that may assist revive the restaurant trade, which has been severely broken by the pandemic,” he mentioned.
