Boom Times Are Over for Food Startups, But That’s a Good Thing

If ever there was a great year to run a food startup, 2021 was it. In that not-quite-post-pandemic moment, when going on vacation or even out to dinner was still a real risk, few consumer-facing sectors of the economy looked as promising as food: e-grocers, delivery apps and, of course, the food itself. Whatever was happening in the world, investors seemed to reason, people still needed to eat. And, of course, interest rates were near 0%.

This translated into an explosion of innovative products. Plant-based meat companies took over supermarket shelves, along with faux dairy products made from nuts and fungus, and even some made with genetically modified fungi that have copies of cow DNA. Alt-protein companies pulled in $4.8 billion in funding, more than double what they had the year before, while venture capital for more mainstream, consumer-ready food and beverages jumped by a billion dollars, according to researcher Fabid.