How do food tech investors pick winners?

• Seek first-in-class, patentable tech with a clear, lasting competitive edge
• Prioritise cost-effective solutions that scale and rival conventional pricing
• Back innovations solving real industry pain points with proven market demand
• Invest in transparent, adaptable teams with strong technical and commercial skills

Venture capital investors spend much of their time sizing up start-ups for financial success. Whether scanning pitch decks or weighing up ideas, the goal is always the same – to back a winner.

What excites one investor – be it cutting-edge technology, a confident founder or early profits – might leave another cold. Some have firm criteria when backing the next big thing in food tech.

So what are these criteria and how do they help sway investment decisions? What makes a start-up so compelling that the term sheet practically writes itself?

Protectable, ‘first-in-class’ innovation

It’s unsurprising that investors are attracted by breakthrough innovation. After all, much of food tech is about novel ideas. If a start-up develops a technology that’s already produced the world over, it’s unlikely to develop the right USP to succeed.

“Innovation is critical”, says Leeat Bar-Eyal, head of the Ag&FoodTech Portfolio at Israeli investor OurCrowd. “I look for first-in-class solutions, not just another entry in a crowded category. We want to see real technical or scientific edge.”

And that cutting-edge technology, whatever it may be, should be patentable. That’s what UK-headquartered Synthesis Capital believes. The VC’s principal Shivani Oberoi says a food tech start-up is attractive if it has a protectable, differentiated and scalable underlying technology. Importantly, the technology must “maintain its competitive edge” as the market matures.

Cost-competitive food tech

What’s less attractive for investors are start-ups developing costly solutions industry can’t afford.

Customers of new B2B technology must get good return on investment, believes OurCrowd’s Bar-Eyal. Sustainable unit economics are also crucial, she explains. “While there’s always room for premium products, I’m particularly drawn to solutions that deliver measurable benefits at or near price parity with conventional options.”

Bar-Eyal’s not the only one. Erich Sieber, founding general partner at VC firm PeakBridge suggests being realistic about the environment start-ups are operating in is “crucial”. “The food industry is a complex, low margin business, so when evaluating a food tech start-up, we have a high barrier to entry.”

That barrier not only includes protectable, scalable technologies, but also “smart cost of goods at scale”.

Also read → The red flags that turn food tech investors off

If cost of goods isn’t low enough just yet, innovators need to show how they’ll get there. A “clear pathway to compelling unit economics” can be a deciding factor for Synthesis Capital, explains Oberoi.

“Food tech products must be able to compete on cost and price with animal-derived products at commercial scale.”

Addressing a clear market need

Sometimes scientists develop a technology that’s so innovative, so groundbreaking, and so far ahead of the curve, that it grabs everyone’s attention. But unless that same technology addresses a market need, it may struggle to win over customers.

That can be a red flag for investors. But on the other hand, if a start-up plans to launch an innovation on the market with “perfect timing”, then it’s time to talk, suggests Louise Heiberg, partner at Nordic Foodtech VC in Helsinki.

“Is the value chain ready for this solution? We are not hunting for unicorns,” she explains. “We back founders solving real, systemic challenges in food and ag.”

For Synthesis Capital, finding that pain-point and meeting it head on is the aim of the game. The VC firm is always looking for a product or service addressing an industry pain point, explains Oberoi, where there is a “clear market lead”.

“Finding and demonstrating product-market fit is more important than targeting a huge addressable market.”

This can prove difficult if the technology is completely new. How can consumers want something they don’t know exists? It could be argued this is the case with novel technologies like cell cultivated meat or precision fermentation-derived dairy.

Finding clear market and consumer demand is often a challenge with novel technologies, explains OurCrowd’s Bar-Eyal. “So strong indicators of product-market fit are essential.”

Good start-ups don’t have bad teams

And finally, it may sound cliché, but a good team counts for a lot. For many VC firms, it’s a top priority when evaluating a start-up for potential investment.

Also read → What’s exciting food tech investors in 2025

A founding team must combine several qualities, according to Synthesis Capital’s Oberoi. These include strong technical and commercial skillsets, drive, leadership skills, and adaptability. In the right combination, these factors can help start-ups navigate the challenges of scaling a food tech business.

Evaluating the quality of the team is a first port of call for Nordic Foodtech VC. “It starts and ends with the team,” says Heiberg. “We look for founders who act with integrity and transparency.”

No VC firm appreciates being kept out of the loop, especially when things go awry. Nordic Foodtech VC wants openness and honesty from the get-go. Transparency is key, suggests the founding partner.

“Something will always go wrong. It might be the first time for the founder, but definitely not for us. We need to be the first to know, not the last.

“We need the founder to be radically clear with themselves, their teams, and their investors. That clarity builds the foundation for trust and resilience when challenges inevitably pop up.”

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