Foodtech investor doubles down with new €80m fund: "One needs to be patient"

The foodtech sector has ridden a rollercoaster in recent years, from record investments in 2021 and 2022, to bankruptcies, downsizing, and cautious capital flows ever since.

Nordic Foodtech VC has consistently stayed its course with its fund (Fund I), avoiding hyped sectors like vertical farming, delivery services, or plant-based meat. Instead, it kept its focus on research-based solutions that can contribute to transforming the food system.

Today, the fund holds 18 portfolio companies, including Swedish startups like specialty fat producer Melt & Marble and iron-enrichment company Ironic Biotech.

"There is incredibly strong science coming out of Nordic research institutions, but innovations too often remain stuck in the lab," says Louise Heiberg, Investment Director at Nordic Foodtech VC.

She sees significant business potential in the commercialisation of deeptech. This strategy is the backbone of the portfolio of the first €42 million fund that invested in companies from Finland, Sweden, Denmark, and Estonia.

The fund's latest investment was a pre-seed round of €1 million in Danish startup Endless Food Co, which produces a cacao alternative using side streams from breweries.

"We have reserved a large part of the capital for follow-on investments, but investments in new companies will be made from our new fund. The portfolio has developed according to plan – and without write-offs, which is positive given the current market climate," says Louise Heiberg.

New €80 million fund

Nordic Foodtech VC is planning to launch its second fund at the beginning of 2025. In summary, the recipe will remain the same but the pot will be bigger − the fund aims to raise about €80 million. And there is still room for more investors to join.

"We'll continue to invest in early-stage companies but will have the opportunity to increase the ticket size. This time, we also have a broader mandate to invest in companies outside the Nordics," says Louise Heiberg.

What kind of innovations are you looking for?

"We are very open in our search − we never know what might be brewing in research labs out there. Personally, I have food waste high on my agenda. We are also keen to explore high-value ingredients that can have a significant impact per kilogram."

What’s the timeline?

"We hope to begin to invest out of the new fund in Q1 and have the full €80 million raised by the end of 2025. After that, the timeline aligns with other funds of this type. We haven’t exited any companies from the first fund yet, which says a lot about how long this type of innovation takes to grow. One needs to be patient."

Capital must flow

At the same time, Louise Heiberg emphasises the importance of reigniting capital flows in the sector.

“A lot of capital is currently stuck. We need more exits in foodtech so that investors can reinvest in new companies and funds. Foodtech is still a young investment space, and every part of this sector still has a long way to move forward and mature.”

Can investments return to previous levels?

"I don’t think we’ll see 2021 levels any time soon, but many of those investments lacked a genuine impact focus. The fundamental need for solutions in the global food system has not changed. The foodtech sector will recover, and in the long term, the outlook is very promising", Louise Heiberg concludes.