Nordic Foodtech VC Announces First Close of Second Fund

Early-stage investor Nordic Foodtech VC has successfully announced the first close of its second fund, raising €40 million ($45.2 million). The final target size for the fund is set at €80 million ($90.4 million).

Investment Strategy and Stakeholders

• The fund is backed by institutional investors including Tesi and Elo Mutual Pension Insurance Company, as well as food industry stakeholders like Valio Pension Fund and Heino Group.
• Investment checks will range from €500,000 ($572,000) to €2 million ($2.3 million), with a substantial portion allocated for follow-on investments.
• Nordic Foodtech VC aims to lead early seed and pre-seed rounds in the Nordics and Baltics while also co-investing across Europe.

Insight from Partner Lauri Reuter

In an interview with AgFunderNews, Nordic Foodtech VC partner Lauri Reuter, PhD, discussed the current economic climate. “VC funds have not really been returning capital in the past few years,” he explained. “With rising interest rates and a more cautious approach to long-term investments, it has indeed become challenging to raise capital.”

Reuter expressed optimism about the future, stating, “We see light at the end of the tunnel, and I think people are feeling slightly more optimistic about the future now.” He emphasized the unique position of agrifood tech investments, noting, “We are not hunting for unicorns in foodtech and agtech. The exits will likely be smaller, but we aim to support companies that are most likely to succeed.”

Collaboration with Academia

Another core focus for Nordic Foodtech VC is the collaboration with research institutions and universities. Drawing from his past experiences at VTT, Reuter shared, “The culture of spinning out companies from academic institutions in Europe differs significantly from that in the US. We identified a backlog of valuable technologies that needed to be commercialized.”

Focus on Biomanufacturing

Nordic Foodtech VC directs its investments toward B2B companies specializing in specific products, like colors and aromas, rather than foundational technologies aimed at improving efficiency in the broader industry. “It’s crucial to be mindful of timelines,” Reuter stated, highlighting the long lead times associated with emerging sectors like cultivated meat.

Unit Economics in Precision Fermentation

According to Reuter, producing food ingredients via precision fermentation must meet financial viability. “Being vegan or sustainable isn’t enough of a selling point,” he commented, stressing the importance of competitive pricing. Products that offer higher value at lower inclusion rates will have a distinct advantage in profitability.

Understanding Market Needs

Reuter emphasized the need for technology developers to align closely with the food industry. “We need to involve big food and ag companies earlier in the process to ensure that we’re solving real problems,” he advised, cautioning against attempts to “disrupt” established systems without understanding their complexities.

Cultural Considerations in Foodtech

Reuter also reminded stakeholders not to overlook the cultural significance of food. With ongoing supply issues in staple ingredients like cocoa, the focus should be on helping manufacturers adapt rather than merely offering alternative solutions.

Conclusion

Nordic Foodtech VC is well-positioned to spearhead investments in the agrifood tech space, leveraging partnerships and a deep understanding of the industry’s nuances to foster sustainable growth. With a pragmatic approach, the firm aims to navigate the evolving landscape of food technology effectively.