A tsunami of food tech is hitting Denmark
2017 was the year food tech had its breakthrough in Denmark, but the real potential is yet to unfold. Early investors and accelerators believe a tsunami of food tech is to come.
Denmark has drawn attention from global start ups within the Food Tech industry. The country holds reputable, large companies like Arla Foods and Danish Crown and world class skills in fields such as food safety and traceability. As a result, several foreign start-ups seek to Denmark to finalize their ideas, reports Center for Food after year 1 of the accelerator course Scale-up Denmark, initiated by Accelerace. Almost 40 percent of the participating entrepreneurs are foreign, and next year the number is expected to increase to 50 percent, estimates Claus Kristensen, Partner and Investment Manager at Accelerace.
”From our experience, one-third of the foreign start-ups stays in Denmark after the end of the course. Especially if they are able to find funding, partners among the established business community, and access to talents,” says Claus Kristensen.
Despite the attention from foreign start-ups, Denmark is still far from being a global front runner within the food tech industry. Host to the world’s third largest group of industries within agriculture and food, Denmark certainly qualifies for being so and the field is taking shape. The first Danish food tech innovators have proved their potential – spanning from Jesper Buch and the Just Eat-concept, fast growing start-ups such as Too Good To Go, as well as the ever busy entrepreneur Jacob Jønch and his latest start-up Simple Feast. The latter has seen foreign investments from British Balderton Capital, sparking hope for Danish food tech start-ups altogether.
According to an industry analysis, done by the accelerator Accelerace prior to their Scale-up program for food based on Data from Tracxn, 2016 was the year for food tech’s global breakthrough. However, in Denmark it’s only just taking off and in a moderate pace.
Food tech only makes up a negligible part of the total investments made today, early investors all report, spanning from Innovationsfonden and Vækstfonden to Danish business angels DanBAN and DVCA in the private network.
Due to Denmark’s leading position within food production, the ecosystem ought to be secured by a lot more investors than just us
“Food tech innovations are in lack of venture capital. Due to Denmark’s leading position within food production, the ecosystem ought to be secured by a lot more investors than just us – both to invest along with us and especially to take over later on. However, food tech is a capital heavy area, and, from its starting point, not a traditional venture case as it might only give a 3 times return and not 10. It will take a patient investor in order to fully release the potential” says Louise Rørbæk Heiberg, Business Developer at CAPNOVA.
CAPNOVA makes up one of the Danish investment environments and, on behalf of itself and the state, it funds new, innovative companies in their early stages. In 2014, CAPNOVA was one of the firsts to invest in food tech and today the portfolio counts well over 20 companies in the field.
Eat healthy with AI
A wave of food tech is to come, believes Claus Kristensen, Partner and Investment Manager at Accelerace.
“Food tech is an extremely interesting but still unexplored field in Denmark. Till now, CAPNOVA and a few more private investors are the only ones to invest in this area. Now, however, also the large food industries pay attention to the new companies”, he says referring to for instance Arla. The company is a partner in the Scale-Up program for foods and has moreover involved in a pilot project with two food tech start-ups, both participants of the course at Accelerace.
The number of food tech start-ups in Denmark soon qualifies for what Accelerace describes as a tsunami.
One of them is the Copenhagen-based start-up Plant Jammer. By means of artificial intelligence, it develops new, vegetarian recipes with the goal of minimizing food waste and the overall ecological foot print, as well as encouraging the single consumer to eat more greens in general.
According to early investors, the number of food tech start-ups in Denmark soon qualifies for what Accelerace describes as a tsunami. Substituting meat with insects and lab developed protein- and meal replacements, might sound like a farfetched idea for the future but is nevertheless gaining ground in the US.
One can argue that with an increasing number of groundbreaking experiments, eventually some will succeed, technology will develop faster and expenses might drop. Moreover, food tech is a wide field, spanning from digital solutions for food distribution to meat- and meal-replacements, possibly changing the overall way we eat.
Meat free meat balls in IKEA
In Denmark, it is especially the start-ups within the areas of convenience and distribution which have proved successful. For instance Just Eat and Simple Feast. However, new food tech start-ups in the areas of traceability, food safety, circular and sharing economy as well as social dining are taking root. Denmark also sees new players in the more experimenting field, using new ingredients such as insects.
2017 was the year where food partnered up with IT.
According to CAPNOVA, it is however still early days for many of the initiatives which cannot yet be ascribed as actual businesses with potential for upscaling. Finally, there is the area for meat substitutes, spanning from natural greens to lab-grown replacements. In the Meat Packing District of Copenhagen, one for instance finds IKEA’s innovation Lab SPACE10 experimenting with foods of the future and more specifically meat free meat balls.
“2017 was the year where food partnered up with IT. Before, the agenda in innovation was set by the traditional food production companies. Now, we see entrepreneurs with scalable business models known from the IT area moving into food. We are looking at some real cool cases”, says Louise Rørbæk Heiberg from CAPNOVA.
However, among other early investors, the food tech breakthrough in Denmark is yet to be seen. At Innovationsfonden, food tech is still considered a minor area of interest and this February only 7 percent of the applicants to InnoBooster had a background in the field of bio resources, foods and life style. Moreover, the few applicants actually from these areas had a lower rate of success compared to average, Innovationsfonden states.
Also at Vækstfonden, food tech doesn’t play a major role, informs Peter Bruun, Head of Communication and CSR. In DanBAN they experience food tech moving in, but sporadically, and the trade association for venture- and capital funds as well as business angel, DVCA, are yet to have numbers suggesting a tendency.