The state of F&B investments in 2023

The state of F&B investments in 2023

This year, the state of global food and beverage investments is affected by factors including ongoing economic uncertainty, persistent inflation, geopolitical instability, and supply chain disruptions. 

The current value of the F&B industry is estimated to be USD $7,221.73 billion. But in spite of challenging times, the market is expected to grow at a CAGR of 6.3% until 2027, when it’ll reach $9,225.37 billion. 

While it’s difficult to pin down specific values for regional investment markets in F&B, we have seen a decline in venture capital funding for F&B startups – which is closely related to the challenges the broader industry is facing. 

According to data provided to Food Dive by Pitchbook, there were 1,030 F&B investment transactions in Q1 2023, totalling about $1 billion – compared to 1,349 deals at $1.3 billion in Q1 2022. In Q4 2022 there were only 785 deals, raising $800 million; down from 2,316 deals in the same period in 2021, which raised $2.3 billion. 

But F&B startups are still emerging and attracting investments

It’s not all bad. Food and beverage startups are still launching into markets around the world – and while it’s likely that a higher percentage of them are bootstrapping, many are still securing VC funds. 

The median VC deal size in the food tech category was $3 million in Q2 2023 (down 12.4% from 2022). And tech-powered food startups are a key area of focus for investors, as innovation is a key indicator of future business growth in rapidly shifting markets. 

Beyond food tech, other startups sectors that are in demand include: 

  • Startups that make sustainable food products – because sustainability is a top emerging priority for F&B consumers, and sustainable brands are gaining a positive e-commerce foothold.
  • Startups in the health and wellness segment – it’s an area where consumers are still willing to pay premium prices for high quality products.
  • Startups that offer unique food choices, enable faster payments at restaurants, or hyper-convenient food delivery services.

The overall focus is on potential for long-term growth – with reports suggesting that major VC firms including First Beverage Group, Khosla Ventures, and S2G Ventures are opting to invest in startups that prove they can build and deliver returns well into the future. 

F&B conferences a key point of opportunity for startups and investors

In a competitive investment market, startups are jostling for VC attention – and VC investors are competing to identify and secure the most profitable investments. 

This means that food and beverage conferences are becoming a key area of opportunity for both startups and investors. Being in the room at a major event allows you to engage directly with potential partners, and build relationships that will make you memorable. Startups get to showcase their products and growth strategies, while investors can highlight why they stand out from other funding options – showing startup founders how they can support business expansion by providing connections and mentorship, as well as money. 

Top F&B startup investors in the Middle East include Shorooq Partners, BECO Capital, and Middle East Venture Partners. But InFlavour will host investors from all over the world – from food-focused investors at an early stage of building out their portfolios, to high-profile VC firms. 

It’s an opportunity for local and international startups to network with a huge range of investors who are actively seeking the next big thing in food. So if you’re a startup or an investor, attending InFlavour is a valuable way to mitigate the challenging ecosystem for investments in 2023 – and gain a real competitive edge.

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