Pizza, Pasta, Lasagna and...Technology?

18th May 2017  

Italy and the Foodtech opportunity



The greater the challenge the greater the opportunity. So what is the biggest challenge of our age? In a world with scarce resources and a population that grew from 1,5 to 6,1 billion between the years 1900 and 2000, many would point to what is on their plates. Current animal protein supply cannot sustain dietary needs of the global population anymore. This dilemma was already evident at the beginning of the last century, and visionary leaders such as Churchill were already trying to point out the right direction back then. In 1931, he wrote, “We shall escape the absurdity of growing a whole chicken in order to eat the breast or wing, by growing these parts separately under a suitable medium”. Churchill’s idea of producing a chicken without the animal could seem distant even for our times but let me assure you, we are almost there.

New technologies available in the market, together with growing awareness, are making the food tech industry one of the hottest sectors worldwide. Sure enough, we are witnessing the rise of several companies aiming at disrupting the decades-old factory farm model.

Specialized VC funds support and drive the growth of those type of companies. A good example could be Khosla Ventures, backed by Bill & Melinda Gates Foundation. The 13 years-old fund supported companies such as Impossible Foods from inception to market launch, which has not been a simple step to take considering that the company develops meats and cheeses made entirely from plants! In March 2017, Impossible Foods launched its first large-scale production facility, which will be able to produce enough plant-based meat to serve 4 million Impossible Burgers per month.

Another important player in the field is SOS Ventures (SOSV). Founded in 1995, SOSV has ca. $ 300M under management and, with a +30% IRR registered in its two-decade history, positions itself in the top 5% of all venture funds worldwide. SOSV owns seven top-tier accelerator programs around the world that focus on various sectors ranging from synthetic biology, to software and hardware devices. This player further raised the bar since some of its companies are accomplishing Churchill’s vision by trying to cut the animal out from the food creation process. This is the case with Memphis Meat and Clara Foods, which are creating the first hamburger and egg produced without the animal. Market launch may take longer in this case, but it is only a matter of time before we will find these kind of products on our shelves.

Something extraordinary will arise in next 10 years from the food industry. It will not necessarily substitute entirely what we eat now but more likely, it will complement it. This new generation of food will probably go mass market increasing the quality and healthiness of fast food-like products. Therefore, not only we will still be able to go to Florence and eat the wonderful fiorentina, but also it is more probable that the meat we are going to eat will be produced exclusively in the protection of the genuineness and quality! If used properly, the power that science gives us could have a strong impact on the quality of food we will eat (at all levels), on global population health, on the quality of life for animals raised for food, and on world’s sustainability.

Food industry revolution is imminent but who is going to drive the change? Silicon Valley will surely play an important role but there are also countries whose food excellence is renowned worldwide that will have the opportunity to deeply affect this revolution. Given its tradition, Italy is in the position to be one of the main characters, if not the character. We have a great mix of established players and young companies that are developing new solutions with a technology that nowhere short of top Silicon Valley start-ups. Two examples could be Barilla, which in 2009 launched the Barilla Center for Food & Nutrition Foundation (BCFN) with the scope of analyzing the primary topics related to food and nutrition in the world, and Hi-Food, a 4-years old company hosted by Università di Parma that develops natural-functional ingredients.

Even if we are well on way, we still miss something to be competitive in today’s world. The DNA of our business culture always revolved around small and medium-sized enterprises. This model, that focuses more on the quality of the product rather than scaling the business, allowed us to make the “Made in Italy” brand an equivalent of quality, safety and reliability. While it has brought great success in past decades, to continue apace this model must adapt to a new era where our markets have become global. The best way in my opinion should be to cooperate with large US players and go to market together. We have always been able to create valuable products and they are probably the best in class in marketing them appropriately.

US-based VC funds make of global reach their strong point. US-based VC funds point to their global reach as a main strength point. They source deal flow from all around the world and sometimes they even build their own incubators locally. Would they invest in Italy, home to what many of us perceive as comfort food, should they see the potential of the opportunity? They would love to! For our mindset, it is very difficult to realize that with the right partner they could easily invest large amount of cash to launch an incubator in our country. We are talking about funds that invest dozens of millions of dollars into each start-up in their portfolio. Could you imagine how much more effective we could be? Our attitude and our focus on the product could definitely be more efficient. Having said that, luck helps those who help themselves and we have to break the ice! VC funds invest anywhere where there are great opportunities and as of today, there are too many countries with a more developed startup ecosystems rather than Italy. We have to think bigger if we want to succeed also in this point in history. We must start today from building a solid startup ecosystem and be open to collaborating with the ones that are driving innovation. Italy has the culture, the resources and the human talent to drive the imminent food industry revolution. Are we hungry enough to devour this opportunity?

 

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