With headline-dominating layoffs, the last quarter of 2022 wasn’t all too rosy for the tech world. But climate tech, and food innovation as a sub-sector, largely continued to grow. Cell-cultivated meat and insect-focused endeavors stood out as the winners of the quarter, while indoor agriculture companies sailed in stormier waters.
A breakthrough moment for cell-cultivated meat
Cell-cultivated meat startups ended 2022 on a high note. In the U.S., industry leader Upside Foods received the long-awaited green light from the Food and Drug Administration (FDA), indicating that the product is safe for consumers to eat and can likely go to market soon.
This news came amidst a series of large investments throughout the quarter. The three biggest ones I’ve seen were: Sydney’s Vow, working on quail, raised $49.2 million; Paris’ Gourmey, developing foie gras, raised $48 million; London’s Hoxton, manufacturing animal fat, raised $22 million
Something to note: The companies at the center of each big raise are all headquartered outside the U.S., indicating that Silicon Valley isn’t the center of gravity for the industry as much as it was in its early stages.
In addition to these raises, the Dutch government announced investing about $64 million and providing $26.8 million in financing across the cell-cultivated innovation landscape. While all of this is exciting and moving in the right direction relatively quickly, it’s important to keep in mind that the sector still deals with a series of significant regulatory, technological and manufacturing hurdles. This means that cell-cultivated products will likely not be widely available and financially accessible for another decade or two.
What I can confirm, however, is that the products are the real deal. I was lucky enough to join a Good Meat tasting at COP27, which offered a series of cell-cultivated products, including whole-cut chicken breast and chicken skin. I was impressed by the taste and texture of the dishes. Actually eating them brought this innovation from a sci-fi idea to a reality for me. (Two months later, I’m still alive and well, so my very anecdotal experience confirms the FDA’s safe-to-eat assessment.)
Will indoor ag collapse?
Layoffs and shutdowns were indoor agriculture’s biggest story in Q4. Infarm and IronOx laid off about half of their staff to deal with economic headwinds and rising energy costs, while Glowfarms and Fifth Season shut down completely. Plenty announced the closure of its headquarters and former lead farm in South San Francisco, albeit it's unclear whether the move is motivated by the desire to downsize or relocate.
Opportunities are ripe for investment at the intersection of insects and agricultural productivity after COP15 in Montreal.
But the quarter also held seeds of hope among these shattering stories. Mid-October, organic culinary herb grower Soli Organic raised a $125 million series D to expand its indoor operations. A week later, Local Bounti announced closing a $23.3 million round to scale proprietary technology and improve unit economics. Freight Farms followed up with a $17.5 million funding announcement in November that will support the growth of its vertical hydroponic farms operated out of shipping containers.
While these rounds are somewhat smaller than what I observed at the beginning of the year, they’re still sizable. Still, overall the indoor ag trend might be pointing to industry consolidation in which the larger, more established players will survive current headwinds while many of the scene’s incumbents may risk running out of cash.
Pollination services are popping
Speaking of collapse: insects are also facing a depressing fate. Luckily for them, 2022 came to an uplifting end with the historic "Paris agreement for biodiversity" reached at COP15 in Montreal. And governments weren’t the only ones paying attention — agtech investors (alongside other business leaders) kept their eyes peeled for biodiversity-spurring innovations.
They found three opportunities ripe for investment at the intersection of insects and agricultural productivity. BeeHero recorded the biggest win with a $42 million investment. The Palo Alto-based startup uses advanced data analytics, sensors and artificial intelligence to make commercial crop pollination both simpler and more precise — a service it calls precision pollination. Over in Italy, 3Bee developed technology to protect bees and monitor their health. It closed out the year with an approximately $5.3 million influx.
Finally, British BigSis bagged about $5.4 million for its fascinating insect control mechanism that could help farmers reduce the use of chemical pesticides. The startup uses artificial intelligence and robotics to cut the costs of sterile insect technique (SIT) by up to 90 percent, making it an affordable and scalable solution.
For the non-biology majors: SIT breeds and sterilizes male insects of harmful species, and releases them into affected crops where they mate with wild females that subsequently don’t produce offspring. This method could help slow down or prevent an increase in pest populations and their crop damage. Bummer for the guys, but it sounds like a good solution otherwise.
Aside from these top three trends, Q4 came with updates in many food tech spaces that have been trending for a while, including regenerative ag, alternative protein, seed breeding and upcycled ingredients. But investments in those areas were more dispersed. What piqued my interest, however, is a hint at reusable packaging’s comeback after the industry’s COVID-19 implosion. R.Cup, for example, a provider of reusable cups for live event venues, raised $3.6 million in November. I’m curious to see if this will unfold into a bigger comeback for reusable systems in 2023.
