Green Shoots For Smart Foods and Agritech Investment
The rampant pandemic and a problematic previous administration were major setbacks for the world’s largest economy leading to a lengthy period of nervousness among economic soothsayers. But there are now early signs of green shoots. Recovering economies in both China and America appear poised to drive an uptick in global business activity. In the meantime the cost of capital is at an all time low, meaning that now is the time to invest in assets with future growth prospects. Foodtech is likely to be a winner, on current trends.
Recent analysis by The Economist research unit indicates that U.S. employment is now growing by almost a staggering 1 million per month. This could return the country to pre-pandemic levels of employment by the end of this year, in turn creating additional economic activity. A timely trillion dollar federal aid package championed by President Biden softened the economic crash landing by bolstering savings and allowing viable small businesses to remain open. High frequency economic data derived from digital sources already indicates subtle growth indications in U.S. travel and dining-out spending as the vaccine rollout continues apace.
Closer to home, unstoppable growth in the economy of China continues to drive investment activity across Asia. On current trends, China will overtake America in 2026 as the largest global economy. That represents both a threat and an opportunity. On the one hand tensions around security are likely to increase. On the other hand, underpinned by China, APAC offers the fastest growing consumer market in the world. Increasing trends towards health consciousness open the door for new value added food products and the ready availability of capital means the likelihood of more M&A activity in the future.
But the global picture is more nuanced than this. With population growth and changes in consumer patterns, there is forecast to be an increase in food demand of approximately 70%. over the next three decades. Meanwhile climate change and poor land and water management practices in some places are actually reducing the amount of arable land available for farming. So the manner in which we grow, process and distribute food must change enormously. This is where food and agricultural technologies can assist and precisely why specialist food and agritech investors are emerging and becoming more active.
The economic recovery may not yet be universal and there will no doubt be setbacks along the way, but the signs are encouraging. So with interest rates remaining low for the time being, capital is looking for a home. That means the stars are aligned for startups in consumer markets and especially in foodtech. Rebounding economies and ongoing accelerated public investment in infrastructure should result in more money in customer pockets globally. Legislative changes are increasingly favouring protecting the environment. So startups that enable intensive agriculture and food production, whilst reducing environmental footprint, are garnering increasing interest.
This is great news for companies in the foodtech and agritech space that are already poised to take advantage. For startups able to demonstrate some early revenue traction and good execution there will be increasing competition from among potential investors. So now is the time to be polishing pitch decks and building the investment story.
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