Foodtech Industry Evolution: From Pizza Delivery to Making Food out of Thin Air 

Funghi-based proteins, food waste management, indoor farming … foodtech industry has been on the rise lately!

Leveraging the experience of Paolo Borella in setting up and running the first foodtech accelerator in the Nordics, EIT Food FAN (launched in 2020), we wanted to provide our perspective on the foodtech industry evolution with some examples from Finland and the Nordics. 

This article contains a summary of the trends shaping foodtech over the past decade from our perspective.

Moving forward from manufacturing and distribution

Historically, innovation in the food industry was focused on industrial efficiency, strongly linked to agritech: automation of manufacturing processes, food processing, food preservation and distribution & online commerce. The latter one accounted for the first big leap of the foodtech industry: food delivery. A note: the food delivery segment can be also considered as a part of e-commerce rather than foodtech, however, in this article we refer to it as foodtech with the objective to show the industry evolution and in line with Dealroom / Pitchbook classifications. 

2016 seems to be the year when data on foodtech as a separate industry started to be tracked, and we invite you to look at the European foodtech map from 2016 by Dealroom.

Source: Dealroom

Easy to notice that the few foodtech startups existing at the time were about delivery. Big funding rounds in the segment gave a great push for the industry in general and most probably have contributed to its evolution, drawing investors’ attention to foodtech. For example, the Finnish unicorn Wolt, founded in 2014, closed a $530 round in 2021 and was acquired by the American DoorDash in 2022 at $7 billion.

7+ years have passed since and the landscape has evolved a lot: let’s look at the 2 diagrams below, showing global foodtech funding by segment, 2016 vs 2023. Clearly, the food delivery sector has lost its dominant position and the foodtech landscape in general has become much more complex. Even food delivery itself diversified into groceries, B2B marketplaces, 10-min delivery, etc.

Source: Dealroom

The foodtech map of Finland is another great example to illustrate this diversification. Just compare the 2016 European map from above to the 2023 map of Finland (taken from the great report on the state of Finnish foodtech by Tesi). The difference is striking: the number of foodtech companies in Finland only is 3 times bigger than in whole Europe in 2026, and they are working in completely new segments, including the significant growth of deep tech cases.

Source: Tesi

Ecosystem growth and science-based innovations (with Finnish examples)

The industry maturation led to a number of trends: 

1. The pool of investors grew and vertically-focused foodtech investors started to emerge - like Nordic Foodtech VC (€42M closing of the Fund I in 2021) as the first industry-specific investor in the Nordics and Baltics, largely contributing to the Finnish foodtech ecosystem development. NordicFoodtech, launched in Finland and now also present in Denmark, has invested in 13 companies in Finland, Sweden, Denmark and Estonia so far.

If we look at other recent examples, the beginning of 2024 saw the closing of the Dutch agrifood Future Food Fund II at €40 M, while the Danish Kost Capital reported €20 M closing. Industry specialist investors are one of the crucial components of industry development, contributing with capital and expertise.

2. Investment interest in foodtech propelled the evolution of new areas beyond delivery, in particular, research-based startups and spin-offs. A whole new generation of startups emerged, like those attempting to solve food shortage and environmental challenges of animal proteins with new proteins, including:

- insect-based (Volare, the Finnish deep-dech startup, using industrial food side streams into circular proteins, oils and fertilisers)

- funghi-based (Eniferbio, another Finnish deeptech startup that uses sidestream raw materials as feedstock for mycoprotein, producing a dry ingredient that can be infused into livestock, pet and human-grade food products. Eniferbio raised over €12M in Jan 2024 for first commercial-scale PEKILO® mycoprotein factory)

- or based on proprietary microbes that feed on carbon dioxide and hydrogen: the Finnish Solar Foods marketing their technology as making food out of thin air. In Nov 2023 Solar Foods raised €8M to ramp up the first production facility of Solein - their high-protein food ingredient.

3. Alternative proteins became mainstream in foodtech as they aim to replace conventional animal-based sources for ethical and sustainability reasons. However, to produce alternative food and make it tasty we need fats and flavours as well and those are other novel foodtech segments. For example? The Swedish Melt&Marble, engineering yeast strains to produce ‘designer fats’ to replace beef fat, chicken fat, or palm oil. The Danish EvodiaBio applies fermentation to produce natural and environmentally friendly aromas.The Finland-based Nordic Umami Company, now rebranded as BioMush, developed a fermentation-based technology to extract umami from plant-based industry by-products. It’s worth highlighting that such startups as the Finnish BioMash or also Tracegrow represent a promising subset of the startups working in novel proteins, fats and oils: in addition to producing environmentally friendly ingredients, they leverage industrial side streams, building circular economy. 

4. Research capabilities became important for the ecosystem growth - in the case of Finland, EIT FAN Foodtech Accelerator   after careful considerations chose Finland as a base for their Nordic hub as an addition to their foodtech map (Paris, Bilbao, Munich, Haifa). The Nordic foodtech acceleration program landed in Finland thanks to the partnership with VTT, the Finnish Applied Research Institute and the University of Helsinki are key stakeholders of the ecosystem, contributing to its success.

5. Established companies have been increasingly active with their own efforts and engaging with the various ecosystem activities. On a global level, Nestle has been historically active with innovation efforts (counting with 12 accelerators globally as of today). In Finland, food corporation Fazer was one of the first movers (see an example in the next section below) together with the dairy producer Valio and another big food player Paulig (Paulig has ramped-up their CVC efforts with first with PINC and lately with their Climate Fund).

These trends shaped the foodtech landscape as a diverse mix of companies with various products, technologies and business models in different parts of the food value chain.

Country adoption of foodtech innovations 

It’s interesting to watch different countries adopting very polarized approaches to new foods. Italy, for example, issued a total ban on artificial meat in Nov 2023, going against the alternative proteins trend.

The world leader in new foods adoption is Singapore: it was the 1st and for 3 years the only country allowing the sale of cultivated meat starting with the regulatory clearance of Eat Just's cell-cultured chicken in 2020. Singapore imports over 90% of its food, so adopting novel foods should help to reduce the country’s import dependence. Annual private funding for Singapore-based alternative-protein companies doubled to $170M in 2022.

It’s therefore not surprising that Solar Foods, in partnership with the Finnish food giant Fazer, will launch the world’s first air-protein chocolate in Singapore, according to their announcement from Jan 2024. As far as Europe, Solar Foods is targeting a wider-scale European launch between 2025 and 2026 while awaiting EFSA approval of Solein, filed in 2021.

In June 2023 the US became the 2d country to approve the production and sale of cultivated meat: Good Meat and Upside Food received USDA’s regulatory clearance for cell-cultivated chicken.

It will be interesting to see if the EU catches up in order not to miss the foodtech innovation train due to stricter regulatory procedures (while the UK is already preparing the necessary changes).

Environmental factors and a vertical farming demise story

Environmental challenges and climate change, growth of food waste and energy crisis play a huge role in shaping the foodtech industry.

Food waste accounts for approximately 6% of global greenhouse gas emissions. Almost two-thirds of this (15% of food emissions) comes from losses in the supply chain. 3/4 of food waste emissions come from meat and animal products. Together with new proteins, other strong foodtech segments emerged to address this challenge, like startups optimizing supply chain processes or food / sidestream recycling.  

For example, the Finnish unicorn Relex Soutions (raised over $700 M in funding at $5.7 Billion valuation), provides a supply chain automation and optimisation platform, helping retailers and brands avoid food waste and improve supply chain efficiency. The Finnish startup Hailia turns discarded fish into new commercial food products with their patent-pending technology.

Other foodtech trends influenced by environmental factor include:

• A surge in new types of online retailers, some focused on sustainability, some on local products, and some on targeting niche markets. 
• A significant shift with companies moving out of their labs to build their own production capabilities (like in the case of Eniferbio or Solar Foods).

Energy crisis brought a transformation to foodtech as well, drawing attention to efficiency and deflated another loud foodtech trend - indoor farming.

Indoor vertical farming became very visible in the media as the way to fight food-related greenhouse gas emissions and reduce the land surface needed to produce food. 38% of land globally is used for agriculture and indoor vertical farming offers the way of growing herbs, fruit or vegetables stacked one above another in a closed and controlled environment. The shelves are mounted vertically, reducing the amount of the land space in use.

Berlin-based Infarm used to be the best known Europe-originated startup in the segment, having scaled quickly and raised $500M in 2022 at $1B evaluation on the wave of the indoor farming hype (we can’t come up with any other explanation rather than hype, because Infarm had €8M revenue with €127M losses in 2021.). The scaleup boasted 1,400 farms across Canada, the US, Japan and various countries of Europe.

Despite having the first hydroponic farming system certified, by mid-2022 when the energy crisis hit the company started to struggle and then, as described by Sifted, went silent and ‘just disappeared’. By the end of 2023, Infarm’s entities in Europe were declared insolvent. It seems like the company had other types of problems beyond the rising energy prices, however, this story serves as a good example of the foodtech trend volatility.

The Infarm story is a vivid example of the current  indoor farming industry struggles. Here you can find a good reading on the decline of vertical farming and ways for the industry to overcome the challenges, induced by the energy crisis.