When it comes to investing in European startups, fintech still reigns supreme. According to figures from dealroom.coIn the first half of 2022, the financial technology sector drew in a quarter of all European funding (US$15.6 billion to be precise). Enterprise software was not far behind, with health, energy and transportation also in the top five.
But cast your gaze down one spot on the number six ranking and you’ll find yourself in a startup sector that doesn’t always get the attention it deserves – namely food. In the first half of this year, startups in this industry attracted $3.1 billion in funding.
And there’s a lot to play for. At first glance, the food sector – especially in terms of production – seems reassuringly traditional, but that is deceptive. From the invention of the plow in a forgotten time to genetic crops and surveillance drones, technology has always provided farmers with a means to increase their yields, while automation and supply chain technology have helped factory producers deliver an ever-expanding range of products to supermarket shelves while keeping costs low.
The environmental challenge
But now technology is helping to solve several challenges. It is generally agreed that food production is responsible for almost a third of the world’s carbon footprint and according to recent University of Illinois Researchh, it can be up to 37%. In terms of the bigger picture, certain forms of production contribute to significant environmental degradation. In that regard, many of the current challenges revolve around providing a growing world population with quality food and – crucially – doing so sustainably.
That is why the European Union EIT Food Program has paid attention to the work of startups in the run-up to COP27. “The food system must be at the center of the climate agenda,” said Andy Zynga, CEO of EIT Food.
But as Zynga points out. Food has not been discussed extensively at previous COP summits. That has changed this year with the establishment of a Food Systems Pavilion. And in the run-up to the event, EIT Food has, through its own blog and social media, profiled the work of 27 innovative companies operating across the field-to-table value chain. The campaign takes place under the banner of (ahem) CROP27 ahead of Agriculture and Adaptation Day on November 12.
So when I spoke to Zynga, I asked him about the thinking behind the campaign. “Everyone is talking about food being responsible for about 30% of global emissions,” he says. “We wanted to focus on the positive, not the negative. “We believe that innovation is the answer.”
At the same time, the organization wants to ensure that agriculture and food are on the agenda. “In the past, the impact of food production has been implied, but not talked about explicitly,” Zynga says. “We want to make the problems explicit.”
So what does that mean in practice? Well, EIT Food is a European Union funded non-profit organization dedicated to driving innovation. The goal is to help food startups and scale-ups that can meet the challenges of the transition to net zero, improve nutrition and create a fair food system that people can rely on.
The chosen companies reflect that mission. Just to name a few examples. Napiferyn Biotech (vegetable proteins), Urban crop solutions (inland farming to reduce emissions), Vaxa (reduction of emissions from growing algae), and Grawindy Renewable Energy Technologies (combination of renewable energy with food production).
All the companies on the list were already supported by EIT Food and they were selected based on their match with the “Impact Factors” identified by the organization. The selected 27 come from all over Europe.
All of this is clearly good news in terms of raising awareness among the companies themselves, but can small businesses at the start of their journey actually make a difference to a problem as pervasive as climate change.
Helping them do that is at the heart of EIT Food’s mission. The goal is to provide support from the very early stages of a company’s development through to rapid growth. The programs include industry challenges (where entrepreneurs develop ideas during ‘foodathons’), an incubator, an accelerator and a Rising Food Stars initiative for scale-ups. The programs connect entrepreneurs with partners and also with investors. “Our companies have attracted $400 million in external investment to date,” Zynga said.
That’s the big picture. In the shorter term, COP27 aims to encourage more countries to prioritize investments in food innovation, while also pushing food companies to develop sustainability action plans.
But is there an incentive for big producers to work with startups? Zynga says the answer is yes, citing consumer demand for eco-friendly products coupled with a new EU Ecolabel scheme designed to empower individuals to understand the impact of the food they eat. Moves to tighten legislation on carbon credits and write-offs could also force action. Movement, yes, but it’s a long game.