- VCs selected promising foodtech firms that could help restaurants in a challenging 2023.
- We asked VCs to list companies in their portfolios and startups in which they had no financial ties.
- The result is a list of up-and-coming startups in foodtech.
Venture-capital firms poured millions into foodtech startups earlier in the pandemic, investing in digital tech such as contactless ordering, autonomous robots, ghost kitchens, and restaurant-payment platforms.
But by mid-2022, VC backing in the foodtech space dried up, forcing layoffs and operational cuts. Foodtech startups raised $2.7 billion in the third quarter of this year, down 63% from 2021 and down from $5.6 billion in the previous quarter, according to PitchBook.
Still, VCs are looking for promising foodtech startups to back as they push for profitability over growth. Insider asked emerging and veteran foodtech VCs to recommend companies helping restaurants and food retailers improve profits at a time when every penny counts. Their picks solve real issues, from addressing food waste to finding new revenue streams.
Estimated total funding for each startup is based on reports from PitchBook unless otherwise specified.
Jimmy Frischling, Branded Hospitality Ventures
Startup: Copia
Recommended by: Frischling, cofounder and managing partner, Branded Hospitality Ventures
Relationship: Investor
Total funding: $4.12 million (as of September 2020)
What it does: Copia is a fully automated food-donation platform designed to help businesses save money, reduce waste, and feed communities in need. Copia also gives merchants data to inform food-purchasing decisions. Restaurants, hotels, hospitals, and corporate cafeterias use Copia’s technology to understand overproduction trends and reduce surplus over time, while ensuring that excess food is used the best way — feeding people in need, Frischling said.
Why it’s on the list: Copia calls hunger “the world’s dumbest problem” because hunger is not a scarcity problem — it’s a logistics problem.
“Food waste and hunger are inextricably linked issues,” Frischling said. “The cost of food waste is no joke. Americans discard more than $160 billion in food each year.”
Frischling added: “For every $1 a company invests in food-waste reduction, they can expect a $14 return on investment.”
Startup: Sauce
Recommended by: Frischling
Relationship: No investment
Total funding: N/A
What it does: Founded in 2020, Sauce is a dynamic-pricing startup that can suggest different online-menu prices for different times of the day based on a restaurant’s historical and real-time delivery-ordering patterns.
The artificial-intelligence-powered software can recommend increasing or decreasing prices based on demand. In some cases, restaurants have raised prices as much as 40% during peak delivery periods, the company told Insider in a previous interview.
Why it’s on the list: “Dynamic pricing in the restaurant industry is still in the early stages of adoption and embracement, but it’s coming,” Frischling said. “To win in the dynamic-pricing space will require companies to strike a balance and be fair to their guests. Transparency and communication are the first and right places to start, and Sauce is doing just that.”
(Editor’s note: Branded just invested in Juicer, a rival dynamic-pricing startup.)
Rini Greenfield, Rethink Food
Startup: Motif FoodWorks
Recommend by: Greenfield, founding managing partners, Rethink Food
Relationship: Investor
Total funding: $343.5 million
What it does: Motif FoodWorks is a food-technology company whose goal is to make plant-based foods better-tasting, more nutritious, and more sustainable. Motif provides meat and dairy alternatives for consumer-packaged-goods companies, food-service providers, distributors, and private-label retailers.
Why it’s on the list: Motif’s products are better for both the planet and the consumers who are looking for ways to replace their nonsustainable meat choices, Greenfield said.
Motif helps brand owners, restaurants, and distributors increase their overall revenues and margins because it’s making plant-based foods “taste good with better nutrition, so it drives higher demand,” Greenfield said.
Startup: Too Good To Go
Recommend by: Greenfield
Relationship: No investment
Total funding: $51.9 million (as of November 2021)
What it does: Too Good To Go combats food waste at the consumer level. The app lets consumers purchase leftover, expiring, or misshapen food at discount prices from local restaurants, bakeries, and grocers.
Why it’s on the list: If food waste were a country, it would be the third-biggest greenhouse-gas-emitting nation behind the US and China, Greenfield said. Yet most food banks can’t accept one-off restaurant deliveries or damaged meals, she said.
So Too Good To Go takes its cause to the consumers by providing a marketplace for restaurants to sell “a surprise bag” of unsold items or “leftovers” at reduced prices, Greenfield said. Too Good To Go takes a flat fee of $1.79 per purchase to operate the platform, and business owners keep the rest of the profits, with the added bonus of bringing in a new customer base.
“By monetizing food waste for small businesses, the platform has saved 145 million meals and served 59 million customers globally,” she said. “The app not only helps reduce food waste but also gives customers the ability to save money. As such, it has become increasingly popular amongst young people.”
Brita Rosenheim, Vita Ventures
Startup name: Afresh
Recommended by: Rosenheim, managing partner, Vita Ventures
Relationship: Investor
Total funding: $147.9 million
What it does: Afresh is an AI-powered platform for grocery retailers built to reduce food waste and handle the complexities of fresh-food forecasting, inventory, ordering, and store operations. The tech is used at 3,000 grocery locations, up from 250 at the end of 2021.
Why it’s on the list: Afresh’s demand-planning and purchasing platform helps grocers reduce waste and extend shelf life by allowing them to avoid excess inventory. It also increases sales for perishable products such as produce and deli items, Rosenheim said.
The nonprofit organization ReFed estimates food waste represents at least $18.2 billion in lost opportunity.
Afresh is well-positioned “to drive transformative value not only to retailers but also to consumers and the climate,” Rosenheim said.
Startup: Bikky
Recommended by: Rosenheim
Relationship: No investment
Total funding: $9.5 million
What it does: Bikky is a customer-data, -analytics, and -engagement platform built exclusively for restaurants.
Why it’s on the list: Earlier in the pandemic, consumers adapted quickly to digital ordering, including delivery. But this left restaurants vulnerable as third-party delivery operators kept consumer data.
“As a result, beyond the dining experience that restaurant operators create within their own four walls, digital customer engagement and loyalty is becoming one of the last avenues for operators to own their own customers,” Rosenheim said.
Bikky recognizes this challenge and has built a platform to help restaurant operators capture both first- and third-party data from in-store, mobile, online, promotion, and external sources, she said. Owning consumer data allows restaurants to personalize marketing.
“These insights will increasingly become table stakes for success by helping operators not only drive richer relationships with their customers but also help to funnel customers into more-profitable channels with higher checks,” Rosenheim said.
Michael Schatzberg, Branded Hospitality Ventures
Startup: Incentivio
Recommended by: Schatzberg, cofounder and managing partner, Branded Hospitality Ventures
Relationship: Investor
Total funding: N/A
What it does: Incentivio is a fully automated intelligence-driven guest-engagement platform for restaurants and virtual kitchens. It creates white-label apps for restaurants with digital ordering, loyalty programming, and gift-card uploading.
Why it’s on the list: Incentivio’s robust tech stack allows restaurants to maximize revenue and enhances the guest experience for both first-time visitors and loyal diners, Schatzberg said.
“As we explored reentering this market with a new partner, we wanted to make sure that our search would lead to a platform that reduced friction and works across a restaurant’s existing tech stack and infrastructure,” he added. “Incentivio fit the bill.”
Startup: Raydiant
Recommended by: Schatzberg
Relationship: No investment
Total funding: $54.4 million
What it does: Raydiant is a digital-signage company that creates in-store experiences using televisions as interactive digital displays that drive messaging, sales, and engagement for restaurant chains like Wahlburgers.
Why it’s on the list: Raydiant’s platform is a restaurant’s ultimate command center as its plug-and-play, cloud-based system lets restaurant operators create, manage, and scale on-screen experiences across 1 to 100,000 locations, Schatzberg said. Its dynamic digital menu boards, self-service kiosks, entertainment apps, and powerful tools solve major logistical headaches for restaurants.
Lisa Feria, Stray Dog Capital
Startup: Ish Food
Recommended by: Feria, CEO and managing partner, Stray Dog Capital
Relationship: Investor
Total funding: N/A
What it does: Ish Food is disrupting the food industry with healthy and sustainable plant-based seafood. Shrimpish, its first product, has the taste and look of real shrimp and cooks just like it, Feria said.
“Their products are made up of healthy ingredients and have a positive or neutral environmental impact, including coconut and algae,” she said.
Why it’s on the list: The plant-based-seafood category has the potential to make up $221 million in retail sales.
“It’s not easy to recreate seafood flavors and textures, but Ish has developed a recipe that is so close to the real thing,” Feria said.
Consumers and restaurants are becoming more aware of how our food system contributes to the climate crisis and turning to plant-based foods to help offset a portion of their carbon footprint.
Startup: Meati
Recommended by: Feria
Relationship: No investment
Total funding: $251 million
What it does: Meati makes plant-based food intended to act as a sustainable alternative to meat. The company specializes in the production of fungi-based steaks that are minimally processed and made from natural ingredients, providing consumers with vegan food choices.
Why it’s on the list: Mushroom-based meat alternatives are nothing new, but Meati has been able to scale its production and manufacturing practices at a rate rarely seen in this space, Feria said.
“Alt-proteins are helping restaurants meet the growing consumer interest in plant-based foods and will benefit from offering an eco-friendly option to consumers who are looking for it,” she added.