Q2 startup roundup: Investment records, food without fields and smart waste reductions

It’s July, and summer is well underway. With it, the time to review this year’s second-quarter developments in the food and agriculture industry has come. I’ll kick us off with a startup roundup today and look at what large companies have been up to next week. 

In the startup world, it can be hard to predict where the market will go. This applies to the buzzing food innovation ecosystem as well. But while some things are ever-changing, there are also solidifying trends, especially in regenerative agriculture and alternative proteins. These sectors continue to announce technological and commercial breakthroughs and receive significant investments. The past quarter was no exception. But I’ve also observed exciting newer developments, including an increased focus on upcycled foods and tools to cut waste along food supply chains.

Staying strong: Regenerative ag and carbon markets

Three startups stood out in the regenerative world. The technology platform Regrow Ag measures and verifies supply chain emissions reductions and secured a $38 million Series B funding. It also entered a new commercial partnership with General Mills to monitor the environmental impacts of its agricultural practices across 175 million acres of farmland. Indigo Ag, a soil carbon market provider, announced the verification and sales of its first 20,000 credits. The company worked with 175 farmers to produce carbon offset credits for $40 each. 

As Indigo and Regrow scale, more competitors enter the market. Perennial (formerly Cloud Agronomics) raised an $18 million Series A to continue the build-out of its soil carbon insetting and offsetting marketplace. The startup claims to have developed sufficient machine learning, ground observation and remote sensing capabilities to get around expensive soil sampling to determine soil carbon concentrations. This would be a precious contribution to the growth of regenerative agriculture, but I’d take this statement with a grain of salt and question the accuracy of Perennial’s models. Soil carbon measurement is still a hotly debated topic, even more so without taking on-the-ground samples. 

However, all three updates point to the accelerating interest of companies within and outside the food and agriculture industry to leverage soil carbon for their net-zero targets and hone measurement and verification technologies underpinning their respective claims. 

Cultivated meat is breaking records

The alternative protein and cultivated meat space also had significant causes for celebration last quarter. Upside Foods closed a $400 million Series C in April, breaking the record for the largest cultivated meat funding round to date. Meanwhile, its competitor Good Meat has broken ground on a 30,000 square-foot manufacturing facility in Singapore and announced plans to build out a large plant in the U.S. as well. Another record-breaking announcement came from the Netherlands, where the Dutch government is injecting $60 million into the industry, marking the biggest global government investment in cultivated meat. 

Another notable development is the growth of combined plant-based protein and cultivated meat solutions. Several companies are working to introduce cultivated ingredients such as beef cells or fat into plant-based proteins to improve their taste while circumventing the high costs and still challenging the manufacturing process of pure cultivated meat products. 

In the past quarter, Mission Barns announced that its cultivated fat was ready for market and SciFi Foods bagged $22 million to scale up production of a mixed plant-based and cultivated beef product. It’s an exciting development, demonstrating that companies are moving away from purely solving the cultivated meat R&D challenge to developing more pragmatic ways of going to market sooner and faster, accelerating their impact potential. 

Precision fermentation is another rapidly expanding niche within the alternative protein industry. It’s a form of synthetic biology typically using genetically engineered microorganisms to produce organic molecules such as proteins from plants that are identical to their animal-derived counterparts. Israel-based Imagindairy and Remilk are working to scale their production of animal-free milk. Imagindairy raised $15 million in a seed extension round, and Remilk announced plans to build a full-scale precision fermentation facility in Denmark with the capacity to match the production of 50,000 cows annually. Additionally, MycoTechnology, applying precision fermentation to mushrooms instead of dairy, brought in an $85 million Series E round in Colorado. 

Like cultivated ingredients, precision fermentation can add more complex tastes and textures to plant-based products, increasing the possibilities and consumer adoption of new climate-friendly protein alternatives. The continued growth of these startups is very encouraging news to the planet and should be on every climate investor’s to-do list. 

In a recent analysis, the Boston Consulting Group found plant-based meat to be the best climate-tech investment by far, delivering the most emissions reductions per invested dollar compared with solutions such as green cement, electric vehicles and electricity. We need investments across all these sectors to effectively address the climate crisis, but this finding shows that protein improvements should be further mainstreamed. 

Emerging tech: Decoupling food from fields; refining waste management 

There’s a growing cohort of companies joining alternative protein startups in their quest to find more sustainable foundational ingredients and technologies for some of the world’s most loved foods with large environmental footprints. Coffee, peanuts, vodka, chocolate and bars are the latest additions to the alternative food list. 

Air Company uses captured carbon dioxide to make vodka, among other products, and just raised a $30 million Series A to ramp up production. Similarly, Atomo raised a $40 million Series A to further develop its beanless coffee made with upcycled date seeds and manufacturing capabilities. In yet another Series A, Voyage Foods banked $36 million to work on peanut butter, chocolate and coffee products that make do without the traditional ingredients. In addition to these VC rounds, upcycled news arrived from chefs in Denmark and a food scientist in Japan who developed chocolate alternatives from spent grain and used coffee grounds. 

On the one hand, these initiatives should be applauded for their out-of-the-box thinking and efforts to make the most out of leftover food ingredients while lowering agriculture’s pressure on natural ecosystems. On the other hand, I wonder what the social implications of these products would be if scaled, especially in the case of coffee and cocoa, whose farming provides essential livelihoods for many smallholder farmers in developing countries. Win-wins could be possible for both if these alternatives could replace more industrial production while maintaining smaller-scale sustainable production that creates good jobs.

I’ll note one last trend to round out this second-quarter review: Efforts to improve supply chain management and cut food waste. A wide range of software platforms, including Choco, Rooser, Crafty, Freshflow and FreshCo, have pocketed checks over the past three months to continue refining tools that help retailers and food service teams streamline and automate orders and keep track of inventory to reduce waste and cost. Investing in supply chain efficiency tools certainly makes sense when global food prices are soaring and inflation is hitting the shelves. I hope these new technologies can alleviate some burdens on low-margin companies and struggling consumers.