Food Waste Tech Funding Dips 33% Amid Sector Struggles

In a recent analysis of the agrifoodtech market, AgFunder, in collaboration with food waste nonprofit ReFED, has revealed a notable downturn in investment in food waste solutions across the United States. The Global AgriFoodTech Investment report indicates a 33% decline in funding from 2022 to 2023, mirroring broader challenges faced by the sector, including valuation corrections, fundraising difficulties, and a general retreat of investors.

Despite this, the sector’s resilience is noteworthy. Investment levels remain above those recorded in 2019 and 2020, signaling that the drive to address food waste continues to gain traction. Dana Gunders, ReFED’s executive director, remains optimistic, suggesting that the current economic landscape may, paradoxically, fuel further interest in food waste technologies. As food prices soar, the incentive for businesses to reduce waste intensifies, potentially accelerating the adoption of innovative solutions.

The consumer landscape is also shifting. High grocery bills are compelling households to reconsider their waste habits, even though measuring waste reduction at this level remains challenging. The retail sector, however, has made considerable strides, as evidenced by the Pacific Coast Food Waste Commitment’s report of a 25% reduction in grocery retail food waste since 2019.

**Food Waste Solutions: A Closer Look**

ReFED’s categorization of food waste solutions provides a clearer understanding of where investments are directed. These categories—Recycling, Rescue, and Prevention—encompass a range of strategies aimed at different points in the food supply chain.

Recycling strategies have seen significant investment, focusing on transforming surplus food and scraps into valuable commodities for various industries. This includes composting, anaerobic digestion, and the innovative use of insects to convert waste into animal feed. Despite the overall investment downturn, the Recycling category has witnessed some substantial deals, including Sevana Bioenergy’s acquisition and Ynsect’s considerable venture capital raise.

**Zooming in on Recycling**

In 2023, the Recycling category secured $681 million across 44 deals. Although this represents a decrease from the $1 billion raised in 2022, the number of deals only slightly declined. The resilience of this category is partly due to a few large-scale investments, including Sevana Bioenergy’s leveraged buyout and Ynsect’s funding round. These major deals have not only injected capital into the sector but also highlighted the growing interest in scalable solutions capable of managing large volumes of waste.

**The Maturation of Food Waste Tech**

Signs of maturation within the food waste tech sector are becoming more evident as companies progress to later stages of development. The rise in later-stage deals, particularly in the insect farming sub-sector, is a testament to this growth. Companies like Ynsect, Protix, and Grubbly Farms have all secured significant funding, indicating that corporates are ready to back solutions that have demonstrated scalability and impact.

As the food waste tech sector navigates a challenging investment climate, the continued interest and progress in certain areas suggest that it may indeed “outperform overall trends,” as Gunders posits. With businesses and consumers alike feeling the economic pressure to reduce waste, the sector’s solutions could become increasingly relevant and financially attractive.

The recent dip in investment, while part of a broader trend, does not detract from the sector’s potential to innovate and scale. As the market adjusts, opportunities for growth and investment in food waste technologies may well emerge, driven by necessity, environmental consciousness, and the pursuit of sustainability in the agrifoodtech industry.

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