There are sexy startups, and there are less sexy startups.
Nowhere is that clearer than in food and agritech. Sexy startups do fun things like delivering bananas in five minutes, or making meat-free burgers. Less sexy startups do things like software for greenhouses and alternative fertilisers.
Investors often get very, very excited about the sexy startups in a new industry — and channel a disproportionate amount of capital in their direction. And the haze of hype clears, we end up no closer to a more sustainable way of feeding the planet’s billions.
Take vertical farming, which promised to solve our food supply and climate woes with futuristic warehouses and tonnes and tonnes of lettuce. The industry, which attracted nearly half of all agritech funding in Europe since 2015, has now hit a wall of layoffs and bankruptcies.
The rest of farming — the farming that actually produces 99.9% of the food we eat and contributes some 20% of global greenhouse gas emissions — has been, and still mostly remains, ignored. Food inflation has soared in Europe, soil degradation continues to cost the EU billions each year and our diets are getting no healthier.
Now, as investors told me at climate tech conference HackSummit last week, there are good reasons for that. Farmers don’t typically have heaps of time or money to invest in new unproven technologies. But surely a startup worth its salt would come up with a smart way around that.
It’s trickier, of course, to invest in sectors that are heavily regulated, like cell-based meat and food as medicine. It’s far easier to taste 20 kinds of plant-based nuggets and write a €2m cheque.
The mood in the foodtech community is apprehensive; founders and investors alike expect a tough 18 months ahead, and anticipate that plenty of businesses will go bust, or need to merge.
But investors seem to be waking up to the technologies that will move the needle. The same investors who raved about biomass fermentation to me at this conference last year are now telling me they’re interested in "enabling technologies" — the less sexy, behind-the-scenes stuff where there’s almost always less competition, more complexity and, surely, more money to be made.
So when the next hype cycle comes along, why don’t we all just skip the sexy startup part — and jump straight to investing in the unsexy startups?