Foodtech VC Investment Declines in Q1 2025

Venture capital activity in the foodtech sector saw a pronounced slowdown in the first quarter of 2025, with investments totaling $1.4 billion across 202 deals. This represents a significant decline of 36% in capital and an 18% drop in deal count compared to the same period in 2024. In comparison to the previous quarter, the decline is even steeper, with a 49.6% drop in capital and a 15.1% reduction in deal count, according to data released by Pitchbook.

Investor Sentiment Shifts

“Notably, some investors have pulled back from foodtech or from venture capital altogether,” states Pitchbook. “Investor caution remains elevated, with a marked shift toward more mature startups that possess proven business models. This trend has resulted in a sharp decrease in seed and early-stage funding.”

Challenges for Startups

For emerging foodtech startups, the landscape has become increasingly challenging. Median valuations dropped to $6.1 million in Q1 2025, down from $12.1 million in 2021. This decline is indicative of “tougher fundraising conditions and heightened expectations from investors,” notes Pitchbook.

“Startups that cannot demonstrate near-term viability may find it difficult to secure funding, facing pressure to accept lower valuations or explore alternative financing options like venture debt,” the report adds.

The AI Dominance

While 71% of all venture capital deployed in Q1 was directed towards AI and machine learning startups, few AI-native foodtech startups were able to close significant funding rounds, according to Pitchbook.

“As capital increasingly gravitates toward AI, generalist investors might overlook attractive foodtech opportunities to gain exposure to AI. However, applications of AI in restaurant management software, food intelligence, and supply chain traceability could reignite interest in the foodtech sector,” Pitchbook highlights.

Silver Linings Amidst the Decline

Despite the downturn, several notable transactions took place in the quarter. Tapcheck, an earned wage access platform for the restaurant and retail sectors, raised a substantial $250 million Series A. Additionally, Dorsia, a membership platform for exclusive restaurant reservations, secured $50.4 million in Series A funding.

Companies like Augury and GrubMarket successfully closed funding rounds “without a valuation cut, diverging from 2024’s trend of down rounds for maturing startups,” claims Pitchbook.

Robust Activity in Alternative Proteins

While established alternative protein companies like Beyond Meat and Meati struggle, early-stage deal-making in alternative proteins remains vigorous, particularly in fermentation technology. Notable funding rounds include Liberation Bioindustries ($52 million), Vivici ($33.8 million), Aleph Farms ($29 million), and Project Eaden ($15.5 million).

Emerging Opportunities in Functional Foods

Functional foods have emerged as one of the most promising near-term opportunities in foodtech amid the general funding downturn. The report highlights significant funding achievements such as Supergut’s $22 million Series B, hiyo’s $19 million Series A, and Olipop’s $137.9 million Series C1. Moreover, Poppi’s acquisition by PepsiCo for $1.7 billion could encourage further acquisitions as major brands seek to expand their functional food portfolios.

Acquisition Trends and Market Dynamics

Regarding exits, public market volatility has kept the IPO window tightly shut throughout Q1, leading mergers and acquisitions (M&A) to become the primary exit route for foodtech companies. Pitchbook tracked 23 acquisitions of VC-backed foodtech companies in the quarter—excluding the ongoing PepsiCo-Poppi deal. Wonder made its fifth acquisition by purchasing Tastemade, a media company focused on food and travel.

Furthermore, significant acquisitions by LG Electronics of Bear Robotics and DoorDash’s billion-dollar-plus acquisitions of Deliveroo and SevenRooms highlight ongoing consolidation and the expansion of delivery incumbents into broader restaurant operations.