Foodtech. A recipe for sustainable growth.
Single family offices with an appetite for impact investing could consider Foodtech. This rapidly expanding sector both promises to reshape our food system to make it more sustainable and comes with the potential of high returns.
These are challenging times for private investors. The conventional investment space offers low returns, high volatility and little in the way of real engagement.
But one rapidly expanding sector is Foodtech. As it is rich in innovation, many new companies are vying for investment. Identifying real potential takes experience and skill. It demands thinking beyond conventional investment vehicles and looking for solutions that are original, exceptional and no less than transformational.
Be part of the change
Without a doubt, the Foodtech sector has real potential to bring about transformational change. Companies are already creating sophisticated food substitutes for meat and dairy products through the use of low-intensity arable crops. There are also exotic alternative sources of nutrition, such as seaweed or insects. And at the cutting edge are cell culture technologies capable of producing meat without raising and killing an animal. This is a space where the companies that will “take tomorrow” are in fact growing today.
The significance of these innovations is immense as they offer viable solutions to the unsustainable nature of our current meat-based food system. To consider the data, livestock farming is one of the least efficient methods of food production. It takes around 100 times as much land to produce a kilocalorie of beef or lamb as it does a plant-based food equivalent.1 Today, the global meat-producing sector accounts for 80% of all agricultural land use and over 20% of all water use worldwide. In addition, it generates almost 10% of global greenhouse emissions and astonishingly accounts for 80% of antibiotic use worldwide.
According to United Nations forecasts, demand for meat will almost double by 2050 based on current trends.2 The UN’s calculations for its Sustainable Development Goals tell us that by mid-century, when the world’s population is forecast to be over nine billion, we will need the equivalent of almost three of our planets to sustain our current lifestyles.
Consider a new diet
With only one Earth, something has to give – which we predict will be our meat-based diet. If the world moved to a largely plant-based diet, agricultural land use would fall by 75% overnight.3 Of course, this will not happen overnight. But given the data, the companies pioneering the technologies behind the great food transition are and will become even more important.
While it is not difficult to find emerging companies with intriguing Foodtech ideas, the challenge is to identify the ones that will thrive. Investors need to be skilled in finding these companies, understanding their business models, studying their technologies and projecting their growth. For that reason, networks have become critical as they allow investors to grasp what is really going on in the companies that could be shaping the future.
Footnotes:
1 https://ourworldindata.org/land-use-diets
2 https://ourworldindata.org/grapher/global-meat-projections-to-2050
3 https://ourworldindata.org/land-use-diets
