A report from plant-based data and insights agency Keskorra Insights has revealed that 2022 saw record-breaking levels of funding for plant-based businesses in the UK and Ireland.
The report, which covered 66 UK and Ireland-based plant-based businesses and 17 investors involved in their funding, found that £137.6 million was invested into 40 companies during the calendar year.
Investment grew significantly between 2020 (when £52.4 million was raised by 19 companies) up to the end of 202, before investment began to slow considerably in the first half of 2023 (£36.7 million raised by 18 companies in H1).
Keskorra described 2022 as representing an evolution of the vegan start-up landscape, with more Series A and B rounds and an increasing number of businesses looking to grow through seed funding.
Chief among the beneficiaries of investor funding were meal replacement company Huel (£19.8 million, Series B), plant-based fat manufacturer Hoxton Farms (£19.8 million, Series B), precision fermentation business Better Dairy (£18.9 million, Series A) and Lewis Hamilton-backed burger chain Neat Burger (£13.7 million, Series B).
The average raise in 2022 rose from £1.8 million to £3.1 million, but the average seed raise decreased slightly to £1.9 million from £2.1 million, reflecting a shift in focus towards later-stage funding rounds for established market players.
Ben McCabe, founder of Keskorra Insights and primary author of the report, said: “Two years on from a significant wave of investor funding in 2020, it is logical that 2022 saw several more established businesses claiming a larger share of the available investor money through Series A and B rounds”.
“However, the year-on-year increase of seed and crowdfunding from 2021 to 2022 suggests that investors still believe there is room in the plant-based segment for new entrants to flourish.”
Investment for 2023 is looking on course to return to levels closer to those seen in 2020 – the number of investments during H1 2023 almost halved compared to H2 2022, while the average raise dropped to £1.9 million compared to £2.7 million in H1 2022.
Established companies have benefitted from most of the funding, with This, VFC and Oddbox receiving £21.6 million between them.
While the economic pressures of the year have seen many plant-based businesses fall on hard times, such as Meatless Farm (now acquired by competitor VFC) and Plant & Bean (acquired by Vbites founder Heather Mills), McCabe believes that plant-based start-up funding is not in crisis.
He commented: “While there is clearly less funding available for plant-based start-ups than we’ve seen over the past couple of years, many businesses are still managing to raise capital. Interestingly, crowdfunding remains a strong avenue for those looking for smaller investment sums – and I’d expect to see more businesses continue to take advantage of this in the short term.”
McCabe added that to secure investment, plant-based businesses need to prove how they will stand out in an increasingly crowded market – through demonstrating innovation, clear nutritional advantages, or familiar tastes and textures to “an increasingly flexitarian” market.
© FoodBev Media Ltd 2024
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