State of the European food-tech ecosystem in 2023

After a boom year, investments are decreasing, but things are still looking quite good for the future of Europe’s food-tech. That's according to a new report from DigitalFoodLab, a European food-tech insight and strategy consultancy.

Food-tech investments decreased by 36% between 2021 and 2022. Still, €5.9 billion was invested in European food-tech startups in 2022, almost twice as much as in 2019 and 2020. In such a context, one could think that investments would concentrate on a handful of big and already profitable startups. Actually, the report concludes, as it is mostly large deals that suffer, investments in early-stage startups were much less affected.

Indeed many startups without any realistic prospect of reaching profitability were left behind. These will have a hard time financing themselves in 2023 and beyond. As some already have, the report's authors expect many of them to simply go bankrupt.

In short, this means that investments in the future of the ecosystem are preserved, with many new ventures being well-financed. Even more importantly, this also means that investors, many of them corporate VCs, are still seeing food-tech startups as long-term profitable bets.

Investments in grocery delivery are the main contributor to this decrease, while the 'rest' of food-tech grew by 21%.

2021’s boom was mainly correlated to the explosion of grocery delivery startups. It is no surprise that this has been the most affected food-tech category, with a 68% decline in investment in delivery startups (with still almost €2 billion invested in these startups).

On the other hand, 2022 has been positive, almost surprisingly, given the context, for other food-tech categories. Indeed, investments in the food-tech ecosystem rose by 21% when delivery startups were excluded. Investment in agtech, food-service, and supply chain startups has notably driven this increase.

As for categories, not all countries were affected to the same extent. While the UK and French ecosystems kept growing and confirmed their position as leading hubs of European food-tech, investments in German startups were severely affected, with a decline of almost 90%.

The investment boom stretched over five quarters and ended in Q1 2022. Since then, investments have continued to decline quarter after quarter. Hence, the question now is how deep the bottom will be, when we’ll reach it, and how strong an eventual rebound could be. Considering all the positive indicators displayed in this report, DigitalFoodLab thinks that we may not be too far from it and that the rebound could be quite powerful.