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The Line for Food Is Getting Longer for Venture Capitalists

Recently, there has been a surge of interest in food among Americans. More people obsess about particular superfoods, check which farms certain ingredients come from, and become fans of certain celebrity chefs.1 Packaged gourmet foods, as well as foreign foods, are being sold at an unprecedented rate, and food co-op membership is at an all-time high.2 The National Association for the Specialty Food Trade released information that in 2012, 53% of adults in the US regularly watch cooking shows and 76% enjoy talking about new or interesting foods.3 Even when many American businesses lost profits and even went under during the recession, the U.S. restaurant industry grew by 1.4% and has continually grown to its highest level in thirty years.4 Some of this sudden increase in the interest of food can be explained by the many medical studies about nutritional issues like obesity in children, diabetes, and allergies5 Effects from these medical studies can be seen every day. People are willing to pay twice as much for certain product simply because it is organic nowadays.6 Moreover, when people have never heard of gluten-free products five years ago, it is now impossible to go to a grocery store without seeing the large sections of aisles filled with gluten-free products.7 In 2012, venture capitalists invested $350 million in the food industry, which is 37% higher than the year before.8 This is a huge difference from just five years ago, when venture capitalists invested less than $50 million in the food industry.9 When American consumers spend an average of $1 trillion on food, it’s not surprising that investors want to be a part of it, but size is not the only reason.10 Another reason why venture capitalists are so interested in food is because, like the energy industry, it impacts numerous things such as the environment, health, and animals.11

Some of the food production companies that are being backed by venture capitalists strive to offer organic foods such as Unreal Candy, which offers candy made without corn syrup, chemicals, or genetically modified organisms.12 Nu-Tek Salt is another company that is heavily backed by venture capitalists.13 They make a reduced-sodium salt replacement for those who are conscious of their blood pressure by using potassium chloride instead of sodium chloride.14 Others include companies that seek to transform the way foods are produced, delivered, and purchased.15 Legislatures have been supportive of such startups that are part of the budding slow-food (as opposed to fast-food) movement.16 Earlier this year, California passed the California Homemade Food Law, which allows entrepreneurs to sell food cooked in a home kitchen.17 Such products have become popular since consumers can eat organic, homemade food without having to make it themselves.

However, the food startups that investors are taking an interest in the most are those that provide alternative choices to meat.18 These food companies create the serious innovations that capture the attention of investors because they fit into investors’ sustainability portfolios in the same ways that solar energy or electric cars do by reducing environmental harm.19 Hampton Creek Foods is a great example. They have come up with an egg-alternative product called Beyond Eggs, which is a mix of peas, sorghum, beans, and other plants that claim to have the same functionality and taste of real eggs.20 Sand Hill Foods and Beyond Meat both create veggie burgers that taste almost indistinguishably to real beef.21 The two companies are focused on replacing animal protein with plant protein to create nutritional value at lower costs and are more environment-friendly.22 A more radical approach is taken by Modern Meadow, which plans to use 3D printing technology to manufacture meat.23 To do this, they will use bioink, made of lab-grown muscle cells, and print the meat, layer by layer.24 They have already come up with a prototype that tastes like beef, but have plans to create pork or tuna alternatives in the future.25 With new technology and markets that are changing, venture capitalists are hopeful of these upcoming startups that envision revolutionary ideas that were once thought to be impossible.

  1. Julie Alvin, Venture Capitalists Hungry for Food Innovation, CleanTechIQ (July 31, 2013),

  2. Trivet LA, Why Venture Capitalists Are Banking on Food Startups, SlideShare (June 19, 2013),

  3. Alvin, supra note 1. 

  4. Trivet LA, supra note 2; Karen Klein, Why Food Startups Are Getting Hot, Bus. Wk. (July, 2011),

  5. Klein, supra note 4. 

  6. Trivet LA, supra note 2. 

  7. Klein, supra note 4.)

    Venture capitalists have noticed this trend and have started to inject large amounts of money into the food industry. ((Knight, Venture Capital Is Looking to Transform the Food Industry, Support Center (May 1, 2013, 11:01 PM),

  8. Id. 

  9. Id. 

  10. Food & Restaurant Venture Capital Information & Stats, FindVenture, (last visited Nov. 29, 2013). 

  11. Gary Gerew, Venture Capitalists Hungry for Food Opportunities, Albuquerque Bus. First (Apr. 29, 2013, 7:28 AM),

  12. Alvin, supra note 1. 

  13. Id. 

  14. Jenna Wortham & Claire Cain Miller, Venture Capitalists Are Making Bigger Bets on Food Start-Ups, N.Y. Times (Apr. 28, 2013)

  15. Knight, supra note 8. 

  16. Christina Farr, California Relaxes Laws so Entrepreneurs Can Sell Homemade Food, VentureBeat (Jan. 8, 2013, 9:23 AM),

  17. Id. 

  18. Alvin, supra note 1. 

  19. Gerew, supra note 12. 

  20. Id. 

  21. Sam Dean, Silicon Valley Venture Capitalists and Start-Ups Are Going Vegan, Bon Appétit (Apr. 29, 2013, 2:45 PM),

  22. Id. 

  23. Id. 

  24. Id. 

  25. Id.