May 12, 2023

Climate-focused food startups had a record 2022

But investors are losing interest in vertical farming and plant-based meat

Freya Pratty and Amy Lewin

4 min read

Going against tech’s gloomy grain, Europe’s sustainable food startups brought in a record level of funding last year.

The sector, which includes everything from precision fermentation to crop analytics, attracted $1.9bn in 2022, new analysis from Dealroom and FoodLabs, a Berlin-based foodtech investor, shows. That figure is 20% higher than 2021's total. 

The problem sustainable food companies are trying to tackle is a large one. The global food system accounts for 30% of total greenhouse gas emissions, and over half of those are a result of livestock agriculture. 


Agriculture remains underfunded

Companies focused on food products themselves (foodtech) had a significantly stronger year in 2022 than those focused on farming and agriculture (agritech). 

Foodtech companies saw a 30% increase in funding, compared to just a 5% increase for agritech startups.

That’s despite the fact that agricultural production is the food system’s biggest polluter, accounting for 7.1bn tonnes  of global greenhouse in 2021. Investors say there’s still a lack of innovation (and capital) in this area. 

“It’s a huge market opportunity, but we haven’t seen many exits in this space in recent years and farming businesses are tight on margins as it is, so spending on yield generating software and capex investment is not top of mind for them,” Tomer Strikovsky, investment manager at ETF Partners, told Sifted at climate tech conference HackSummit on Thursday. “But those companies that will be able to crack it will be very interesting.” 

To date, vertical farming startups have attracted the most VC funding in agritech — but investment peaked in 2021. Since then the industry has been hit by bankruptcies, layoffs and growing concern that the business model just doesn’t stack up. 

Sustainable fertilisers, sustainable aquaculture and regenerative agriculture are — slowly — beginning to get VC attention. 

Regenerative agriculture promises to increase crop yields and restore degraded soil which can then then sequester carbon. Agreena, a Danish startup which enables farmers to sell carbon credits by using regenerative agriculture techniques, raised a €46m Series B in March this year. Berlin-based Klim is another startup trying to encourage farmers to transition to regenerative farming. 

“If we want to be serious about saving the planet, we need to increase Earth’s regeneration capacity,” says Antony Yousefian, partner at early-stage agritech investor The First Thirty, which focuses on soil startups. “Soil is the world’s most undervalued asset and in rapid decline, so it’s increasing in value — we need to invest in companies that regenerate it, that is agritech not foodtech.”

Appetite for cell-based meat grows

Alternative proteins have long been a poster child for the foodtech sector but, like vertical farming, the sector has entered a rocky phase. Big listed alt meat companies like Beyond Meat have seen their stock price tank (it’s now reported to be raising $200m) and growth slow, which sent wobbles through the sector. 

Plant-based food (including Beyond) has typically received most investor attention, bringing in 58% of funding for alternative proteins across the last seven years. 


That continued to be the case last year; but companies working on cell-based proteins (where stem cells are replicated in labs to produce meat-like products) saw a strong increase.

Cell-based meat is yet to be approved for human consumption in Europe. Despite that, Manuella Cunha Brito, investor at VC firm Trellis Road, said at HackSummit that she wasn't surprised that European cell-based meat companies had seen high levels of funding last year.

“We have positive signs from the US and Israel, indicating that the market will be there sooner,” she says. America approved a cell-based chicken product earlier this year. “There’s an expectation that over time, regulation will evolve here,” says Cunha Brito.

That said, she adds that, as the sector grows, it’s getting increasingly hard for early-stage alternative protein founders to stand out from the crowd and catch investors’ eyes.

This, coupled with the broader funding slowdown, is leading many foodtech companies to collaborate with one another, rather than compete. Kynda, a biotech startup from Hamburg that builds bioreactors for biomass fermentation (a production process used by some alt-protein startups), pivoted from producing alt-meats itself to making the equipment its competitors need, for example. 

Investors predict the industry will see more mergers and acquisitions too. 

Freya Pratty

Freya Pratty is a senior reporter at Sifted. She covers climate tech, writes our weekly Climate Tech newsletter and works on investigations. Follow her on X and LinkedIn

Amy Lewin

Amy Lewin is Sifted’s editor and cohost of Startup Europe — The Sifted Podcast , and writes Up Round, a weekly newsletter on VC. Follow her on X and LinkedIn