EIT Food CEO: Investors are “re-emerging slowly from their safe harbors”
2 septiembre 2020
As elsewhere, the Covid-19 pandemic has ruptured both business and access to capital for Europe’s startups. To help early-stage companies stay afloat, the EU’s main innovation community builder, the European Institute of Innovation and Technology (EIT), has stepped in with a new Bridge Fund. For foodtech, the funding is being handled by EIT Food — which has told AFN it will invest €5.4 million ($6.45 million) of bridge funding into 13 agrifood startups during the Covid-19 crisis. A total of €4.01 million ($4.78 million) will come from the EIT’s Crisis Response Initiative, and €1.3 million ($1.55 million) of additional funds has been provided by EIT Food.
The lucky 13
- Agritask – helps farmers and agribusinesses crunch and act on data.
- Alberts – a food robotics startup with an AI-powered, personalized smoothie and soup station.
- Antofénol – a biotech company replacing toxic chemicals with products made of agricultural waste from vineyards.
- Consentio – building an end-to-end food supply chain transaction platform.
- Eatch – developing a fully automated kitchen with personalized, healthy dishes.
- Epinutra – working on natural nutraceutical solutions, its first product is Benesco TM, which wards off heartburn pain.
- Feltwood – makes low-cost, biodegradable, mouldable, recyclable, and compostable plastic alternatives developed from vegetal waste.
- Foodpairing – creating digital flavor models for smart recipes.
- Food Sourcing Specialists – making compostable packaging for long-life semi-liquids and healthy sports nutrition.
- Mimica Touch – offers a temperature-sensitive indicator cap or label for food freshness, taking the guesswork out of food expiry labels.
- NapiFeryn – extracts protein from rapeseed oil production waste streams.
- Phytolon – uses fermentation-based technology to produce natural food colors.
- Sencrop – designs and sells connected weather forecast solutions for farmers to measure rain, humidity, and wind speed.
EIT Food CEO Andy Zynga described the investments, which ranged in size from €212,000 ($253,000) to €500,000 ($597,000), as a “vital lifeline” for the recipient businesses. AFN recently caught up with him to hear more.
AFN: Can you give us a sense of why these companies needed, as you say, a “vital lifeline”? Can you give some examples?
Andy Zynga (AZ): Startups with high impact and growth potential have already been hit hard by the pandemic, and with Covid-19 still circulating this will remain the case for the foreseeable future. The Covid-19 crisis presents a perfect storm to many food and agtech ventures.
These ventures are applying a wide variety of technologies — including biotechnology, robotics, and sensor technologies — to make the food system healthier and more sustainable. Critical to the development and application of these is access to specialized facilities, equipment, and people. This access has, for a period of time, been rendered impossible and is only slowly getting back on track.
Moreover, raising capital from external investors is proving more challenging, posing additional cash flow risks. Investors have been on pause during the pandemic and have chosen to focus on their existing portfolio, and have cancelled or delayed new investments.
Whereas the Covid-19 situation is complex, and market solutions to food system challenges may have been disrupted or delayed, the pandemic also presents many new opportunities to adapt to a new way of living – and accelerate progress faster, in some cases. We believe that supporting entrepreneurs during this critical time is imperative to making sure that some good comes from it, in terms of fast-tracking positive trends.
The aim of the initiative is to provide time-sensitive bridge funding to startups and scale-ups that need to adapt their company to the situation caused by Covid-19. With this support they’ll be able to continue their innovation activities, extend their runway, and prepare follow-on funding.
AFN: In what other ways, besides bridge funding, is EIT Food providing support?
AZ: The maturity of ventures and their need for support varies, so naturally each business will receive tailored support. Possibilities range from introductions to partners in the EIT Food network, to help in raising their next investment round, or participation in one of the existing EIT Food programmes, such as the Food Accelerator Network.
The network of EIT Food in academics, corporates, and investors — across Europe — allows [it] to not only open doors and help international growth and fundraising, but also bring insights and expertise from around the continent into that tailored support.
AFN: Why these 13 companies in particular, and not others? Were there others you wanted to invest in?
AZ: The aim of EIT Food has been to support as many ventures as possible. That is why we are happy to have been able to go beyond the funding awarded through the EIT’s Crisis Response Initiative, and provide an additional €1.3 million [$1.55 million] from EIT Food funds.
As with every competitive call, unfortunately we had to make a selection from the 100-plus applications received. This was done through a thorough evaluation process, based on clear criteria. These include not only the growth and impact potential of applicants, but also the extent to which the funding through the Bridge Fund [can have] a strong catalytic effect to the venture. In other words, to help it survive and bridge the gap towards a next investment round.
AFN: Are there further rounds of bridge funding in the works? If so, any particular priority sectors within foodtech you can mention?
AZ: The EIT Food Covid-19 Bridge Fund marks a one-time, timely opportunity specific to the Covid-19 context. However, it is not the only possibility for promising pre-seed and seed-stage ventures to secure funding and support from EIT Food. We will continue to fund these ventures during the pandemic and after.
Existing programmes include Seedbed, Food Accelerator Network, and RisingFoodStars. We are currently focusing our work on [six] areas of sustainable food innovation which will do just that – from regenerative agriculture, sustainable aquaculture, and circular food systems to alternative protein, targeted nutrition, and digital transformation of traceability.
AFN: The ‘new normal’ has been with us for a while now. Where do you now see the main risks and opportunities for European foodtech?
AZ: The new normal is constantly evolving as the pandemic continues to flare. This requires startups, and investors, to evolve as well. As with any crisis, it requires constantly mitigating risks, but also offers opportunities. Travel continues to be unpredictable and risky, yet is critical for hardware and product-oriented ventures to convince prospective co-development partners, customers, and investors. This makes market entry and adoption even more unpredictable than it already was. Likewise, European agrifood ventures seek incredibly diverse, international teams. Recruiting talent from abroad naturally proves challenging. From a pure product development and innovation standpoint, we’re seeing labs and facilities slowly getting back on track, yet with clear restrictions and limitations that continue to impact research and development.
Agility, and being able to respond to rapidly changing market conditions, has always been a key predictor of success. But this is now even more true. That is also where opportunities lie. Large food companies looking for new approaches to product development, facilitated through FoodPairing’s AI for example. Or retailers looking to digitize more and move the transactions in their supply chain through Consentio’s platform. Alberts’ ‘Covid-proof’ healthy soup and smoothie stations certainly both address the contactless trend as well as facilitating healthy snacking in company environments.
AFN: What about private investor sentiment in Europe? Are they returning any closer to pre-pandemic levels of activity?
AZ: During the pandemic, the supply of capital has not been the major issue. Uncertainty in the market is. As this uncertainty is only slowly fading, attracting capital from private investors remains more challenging than before the crisis. However, as the pandemic is aging it is becoming clear how [food] companies are adapting and which trends are being accelerated – healthy eating, shorter supply chains, and alternative proteins, for example. This also means that we are indeed seeing investors re-emerging slowly from their safe harbors.
AFN: We’ve heard that much of the bridge funding is with the aim of enabling pivots. What can you tell us about the companies’ aims in this regard?
AZ: The aim has not been facilitating pivots per se. However, in exploiting opportunities and making operations Covid-proof, ventures are anecdotally applying this fresh funding to pivot. One clear example is the prioritization of in-house development of new applications, versus a pure focus on customer-oriented projects.
How did you find the process of applying for bridge funding at EIT Food? Let us know! Drop a note to firstname.lastname@example.org