Top VCs Investing in Food-and-Beverage Startups 2022 – Business Insider

Founders with plans to build the next Impossible Foods or Eat Just might be hard-pressed for funding right now. 
Total VC investment in emerging food-and-beverage brands has declined this year as startups continue to face cutbacks in VC funding amid the economic downturn and fears of a possible recession. Food startups in North America raised about $7.8 billion in the first three quarters of 2022, according to data from PitchBook. That’s down from the roughly $9.2 billion raised during the same period in 2021.
Many of the VCs Insider spoke with who back food-and-beverage startups said they’ve pared back the number of new investments they’ve made in 2022. 
But they’re still on the lookout for the next disruptive brand, even if they’re taking a more measured approach in 2022.
“It’s extremely important to understand the underlying financial health of the businesses,” Jordan Gaspar, a managing partner at AF Ventures, which has invested in Siete and Cirkul, said. “I think that there was a lot of capital that came in the space really quickly” over the last few years, she added.
Many also acknowledge that the best businesses will take several years to build. Dayton Miller, a managing partner at Boulder Food Group, which has invested in brands including Olipop and Mid-Day Squares, said that his firm has continued to make investments this year. Boulder typically expects its food-and-beverage investments to last between five and eight years before the startup makes an exit, he said.
“We’re focused on the long-term trends, and ultimately think that the market will come to us if we build a good business,” Miller said.
Insider compiled a list of 11 venture capitalists who specialize in investing in food-and-beverage startups — and are on the lookout for headline-worthy deals. The list is based on recommendations from other investors, brands, and a review of top deals in the industry.
Here are the top food-and-beverage investors founders should keep in mind when raising cash.
Location: Durham, North Carolina
Notable Investments: Hoxton Farms, Veggie Victory, Tiamat Sciences  
Bethencourt has invested in over 170 companies during his career, with a focus on bringing scientific innovation to the food-and-beverage industry. He’s also the founder of the plant-based dog-food company Wild Earth. 
At Sustainable Food Ventures, Bethencourt and his partner, Mariliis Holm, look for companies building food products that are plant-based, cell-based, or recombinant. The latter is a method of producing animal-derived ingredients in plant, fungi, bacterial, or engineered animal cells without a live animal. 

Bethencourt told Insider these types of companies are essential for our rapidly changing global environment.  
“To continue to feed all of us, we have to continue to innovate, whether that’s better and tastier plant based, fermented, or cell-based meat products or genetically engineered plants that can survive and thrive in a hotter, drier and saltier world,” Bethencourt said. 
Location: San Francisco
Notable Investments: Blue Bottle, Holey Grail, Ghetto Gastro, Sweetgreen, Prime Roots
Conrad grew up on a small farm in Indiana and made his way from a basketball-camp counselor to a yogurt merchandiser for Danone before he became an investor.
At True Ventures, Conrad has invested in companies ranging from fast-casual franchises like Sweetgreen to specialty-donut retailers like Holey Grail. He might be best known for his investment in the coffee chain Blue Bottle — fitting for an investor who said he makes drip coffee in his free time.

Conrad told Insider that there are two major trends shaping the next generation of food-and-beverage companies right now: nostalgia and sustainability. 

“The modern consumer expects transparency around where what they eat and drink comes from,” Conrad said. “On an emotional level, consumers are taking delight in nostalgia, specifically the reinvention of long-loved food and drink but recreated with better, sustainably sourced ingredients that support small-scale farms and producers.”
Location: New York City
Notable Investments: Cheribundi, Renewal Mill

Dolan cut her teeth in investment banking before jumping into brand management for food-products companies like General Mills and Danone. Now, as a director at Emil Capital, she leverages her experience to help founders make their brands stand out in the aisles of the grocery store. 
Dolan told Insider that she’s noticed how the “better-for-you” trend that took hold of the food and beverage industry over the past decade has found its way to other consumer packaged-goods categories like household cleaners and pet care. 
“It started with a trend in caring more about what we put in our bodies, which significantly altered the food-and-beverage industry. Now, we’re starting to see those same trends play out for consumers who are caring more about what surrounds them in their environment,” Dolan said. 
Location: Cincinnati, Ohio 
Notable Investments: Cerebelly, Avaline Wine, Better Booch
Edwards is a veteran venture capitalist with almost two decades of experience and 30 investments under her belt. She launched H Venture Partners, which focuses on companies at the intersection of biotechnology and consumer-packaged goods, in 2017. 
The fund has invested in several premium food-and-beverage companies including the baby-food brand Cerebelly and the actor Cameron Diaz’s wine brand, Avaline.
But Edwards said she’s also interested in “unsexy categories” driving innovation in the sector. 
“Food-as-medicine is a big trend that we’re following,” she said. “We’re seeing a lot of promising brands in gut health as well as plant-based alternatives to protein and dairy.”
Edwards said she’s also looking for technologies that extend the shelf life of fresh food and beverages and enable more sustainable packaging.
Location: San Francisco
Notable investments: Eat the Change, Once Upon a Farm, Flashfood
Templeton is far from a stranger to the startup world: He founded OpenTable and was a chairperson for Grubhub before joining S2G in 2015.
S2G invests in companies at multiple levels of the food industry, from agriculture to grocery retail. Its goal, according to Templeton, is to make change in the entire food-supply chain.
“We felt if you move demand but don’t move supply… you’re broken,” he said.
At the brand-and-retail level, those investments can include better-for-you labels such as Eat the Change, a tea and snack brand founded by Seth Goldman, the founder of Honest Tea. 
But it can also include more novel approaches, such as Flashfood, a startup that connects users with discounted food at grocery stores that’s nearing its best-before date. 
“It dramatically reduces the amount of waste that a store has, and it brings in new customers to a lot of these stores,” Templeton said.
Location: Stilwell, Kansas
Notable investments: Good Catch, BlueNalu
Feria worked at big names in the food and CPG industry, including General Mills and Procter & Gamble, before becoming the CEO and a managing partner at Stray Dog Capital in 2015.
That experience in the industry led to a realization about much of the food industry, she previously told Insider. “The food system is not only bad for the environment, it’s basically murdering us.”
Stray Dog is a response to that problem. The firm invests in plant-based food brands that make alternatives to chicken, beef, and other animal-derived proteins, she said.
Apart from investing, Feria works with founders to understand what the best way to scale a business is. 
Having talented founders at the helm is key. “Once you have the right folks on board to develop a solid team, you can gain more funding opportunities, ultimately making the process to scale easier,” she said.
Location: Los Angeles
Notable Investments: Deux, Joyo Tea, Ghia, Maie Wines 
Over the past decade, Johnson has become a major player in the startup ecosystem of Los Angeles. She’s the founder Create & Cultivate, a media platform for female entrepreneurs, and No Subject, a marketing-and-events agency — both of which she self-funded. This past February, she launched New Money Ventures with her partner, Neha Kumar, where she focuses on empowering female entrepreneurs. 

The fund has already backed several buzzy beverage startups including Ghia, a brand of non-alcoholic drinks, and Joyo, a sparkling-tea brand that the motivational speaker Jay Shetty launched. Johnson told Insider that she believes the category of food and beverage is at the same point beauty was a decade ago — ripe for reinvention. 
“In the same way we saw clean beauty sweep the category, we feel strongly ‘good for you’ functional food and beverages that seek to enhance your life or lifestyle are the future of the grocery aisle,” she said. 
Location: Los Angeles
Notable Investments: Caulipower, Olipop, Mid-Day Squares
Miller knows firsthand what being a founder in the food-and-beverage world is like. He cofounded and sold Function Drinks, a brand that sold beverages designed to combat hangovers and provide energy. 
At Boulder Food Group, Miller focuses on early-stage food-and-beverage brands. He said the ideal candidate brand for BFG has already launched products but has yet to manufacture and distribute them widely.
Once BFG invests, the firm takes a hands-on approach, often joining a company’s board and working with the brand.
“The saying is ‘From behind your desk is a scary place to view the world,'” Miller said. “We’re very much out there. We’ve been in the trenches.”
Miller said that BFG has focused more on its existing investments over the past year over making new ones as markets have tightened. But it’s still keeping an eye out for new brands to work with, he added.
In August, for instance, BFG invested in a $10 million Series A round for Maev, which makes human-grade dog food.
Location: Santa Monica, California
Notable Investments: Liquid Death, Urban Remedy, OffLimits Cereal
Pham is the cofounder and managing partner of Science, where he invests in what he calls “disruptive” consumer-technology companies. 
And that’s not a buzz word he takes lightly. 

Pham invested in the canned-water company Liquid Death — which shot up to a valuation of $700 million in October — four years ago, when few investors were interested. He believes the company has found success by vying for the attention of Gen Z. 
“We see younger generations shifting toward healthier consumption habits — they’re drinking less, ingesting less sugar,” Pham told Insider. “At the same time, the healthy-food-and-beverage space has historically been a stale category filled with boring brands.”
“This creates a lightning-in-a-bottle moment for disruptive brands who know how to tap into culture and talk to Gen Z and digital natives,” Pham said.
Location: New York
Notable Investments: Siete, Tractor, Cirkul
Gaspar founded AF in 2012 after several years working in law. Back then, AF was an accelerator focused on very early-stage brands.
Now, companies that AF works with generally have revenue of $10 million or more, Gaspar said. AF invests in personal-care products as well as food-and-beverage brands, she added.
Across both groups, though, AF looks for “disruptive” products and founders with a clear idea of the market they want to target.
One recent investment is Cirkul, which makes water bottles with flavor cartridges that allow users to add flavors to their water. 
The brand reached a $1 billion valuation earlier this year after going viral on TikTok in 2021. Walmart also started carrying the brand in April.
Gaspar said that Cirkul satisfied many of the criteria that AF looks for in potential investments.
“They really are serving their customer something that they don’t have,” she said. Cirkul’s founders were also “very specific about knowing that the Walmart consumer was their consumer, and really thinking through how to deliver the products to that consumer,” Gaspar added.
Location: San Francisco
Notable Investments: Upside Foods, NotCo, Beeflow
IndieBio is a fund that invests in biotechnology companies under the parent firm SOSV. It’s headed by Po Bronson, a former tech journalist turned venture capitalist, who’s written for outlets like Wired and The New York Times. He’s aided by partners Alex Kopelyan and Parikshit Sharma. 
IndieBio has several food-and-beverage companies within its portfolio, which are all building new-and-improved products for the alternative-meats industry. 
“Alternative meats are 2.5% of the market today. So we have 97.5% more work to do. Remember the iPhone three? That’s where we are today,” the team told Insider via email. 
At the same time, the fund is also striving to move food innovation beyond its focus on protein by investing in companies like Beeflow, which helps farmers manage pollination. 
“So much attention has been given to proteins and proteins only. The new wave of food tech innovation will encompass protein, fats, flavors, and functional ingredients,” they wrote.
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