Combining impact with financial gain: Insights from investors in the foodtech space

Rolling into summer, it’s been an energizing and busy few months in the European startup community. With the return of in-person events, there have been plenty of opportunities to get connecting and chatting with different entrepreneurs, investors and thought leaders from across the ecosystem. 

From the EU-Startups Summit which we hosted in Barcelona in May, quickly followed by the Tech.EU event held in Brussels, to F&A Next 2022 and VivaTech in Paris (where the Ukrainian president made a surprise hologram appearance), all of these events have had one conversation piece in common: market conditions and business impact, either societal or environmental.

Prioritising impact in the midst of uncertainty

Looking at the current market downturn with high inflation, rising interest rates and the global food supply at risk, we wanted to find out first-hand if the need for sustainability, climate or cleantech investments has shifted. So, we sat down with a couple of investors and founders to learn how they are navigating the current markets and what advice they would give to impact-driven founders looking to raise capital. 

Impact needs to go hand-in-hand with financial return

Co-founding partner Clare Murray from Blume Equity, partnering with tech-enabled businesses across sustainable food, healthy living and responsible consumption at the growth equity stage in Europe, believes “Europe has a very robust impact funding ecosystem at the venture stage. What is missing is a pool of capital at the next stage to support these companies on their scale up journies. In order for impact investing to become mainstream, impact needs to go hand in hand with financial returns.” 

Blume Equity’s biggest challenge in today’s shifting markets is growing the team with a focus on building its own company culture and creating its own ecosystem.

Clare’s advice to founders looking to raise capital now: “Just keep at it, take feedback but stand your ground, use your network to get media placements or introductions. If you are close to profitability is a good time to rise. Sequoia’s advice is a great piece to review to proactively prepare questions investors might have. Be aware of your valuation and if possible raise smaller rounds.”

Blume Equity has invested in Elvie, the women’s health tech pioneer behind a connected breast pump and smart pelvic floor exerciser based in the UK and the online discount food store Motatos, or Matsmart as it is locally known in Sweden. The Blume team currently has its eye on food waste solutions and carbon accounting.

Choose investors wisely

We also spoke with Marie Asano, Partner at the European Circular Bioeconomy Fund. The fund describes itself as the first European VC in (circular) bioeconomy exclusively dedicated to scaling growth-stage companies in food and energy contributing to a climate-neutral Europe. Marie joined ECBF in 2021, as she wanted a role where she could use her knowledge in science, to always learn something new, combined with bringing the next innovative technology to market.

In her words, joining the team allowed her to make a “small contribution to the world and our future by investing in not the next generation of companies with a cool innovation, but those that have products which will allow us to be more sustainable.”

Marie’s first investment was a 3D printing company that produced implants out of high-performance polymers. Marie and the team have their eyes on precision fermentation, not only for producing biomass but as a whole new method of production to produce functional ingredients. At the F&A Next, as part of the jury for the startup challenge, she was impressed by Plantik.

Marie’s advice to founders looking to raise capital now: “Raise more than you have anticipated to make sure you have some financial buffer. Also, choose investors that will help you strategically and financially weather the storm.”

Quickly prove your innovation’s value

Alongside investors, we also chatted to Clemens Rengier, Founder and CEO of Biorena, the Munich-based startup offering same-day delivery of high-quality organic products

The idea came about after realizing that there was no local player delivering organic food in a sustainable and convenient manner.  Biorena delivers from its 1500sqm warehouse only 15min from the centre of Munich using electric cars. Similar European players are Crips in the Netherlands, Farmy in Switzerland or Kazidom in France already active in the Benelux region. The biggest challenge the team faces right now is to expand through Germany, city by city, and then envision an expansion into Austria and Switzerland as the next step.

Clemens’s advice to founders looking to raise capital now: “Focus on profitability as much as possible, and show to potential investors what is coming soon. I believe great models will survive. Less burn, more profitability is key no matter the market conditions.”

Be strategic

Other founders, such as Brad Vanstone, Co-Founder and CEO, Willicroft, a plant-based cheese startup based in Amsterdam, also present at the event, are of the opinion that founders should: “Understand early on where your strengths and weaknesses lie. Food is so multifaceted and complex that it’s important to excel in 2-3 areas and find partners who can take care of the rest. Strategic investment is paramount to this as money can only get you so far. We’ve also found that focus is key. There are so many opportunities out there – honing in on a couple of goals rather than spreading yourselves too thin is a much stronger recipe for success.”

Brad also believes that “businesses that make impact part of their foundation from the beginning will be the ones that survive over the years ahead. Climate change is not going anywhere so whilst the obvious thing to do right now might be to cut corners that’s very shortsighted in my eyes!”

There is no one size fits all advice scenario, but it’s clear there are still plenty of reasons to be optimistic, and plenty of proactive steps startup founders can take. Take these learnings and insights and apply the most relevant to your business. 

Most important? Make sure you and your teams are staying informed and that you are able to adapt rapidly. Stay dynamic.