Foodtech Startups Serving up Returns for Patient Investors

Jake Safane
Jul 22
6 min read

Every day, consumers make decisions that affect their health and that of the planet, often without realising the ripple effect of what’s on their plates.

The current global food system accounts for one-third of human-caused greenhouse gas emissions. And yet, not enough change has been made to improve the way we produce, consume, and dispose of food. From agricultural practices and supply chain processes to consumer products and food waste management, nearly every level of the food system presents an opportunity for innovation that can drive sustainability.

Foodtech startups are seizing these opportunities. The inaugural Sustainable Times RISE Awards, taking place on 6 November in London, will celebrate innovation in the sector, featuring award categories for startups, investors, and businesses addressing sustainability-related issues.

As startups submit their entries, we spoke with several foodtech leaders and identified a key theme that emerged from our conversations: A mission alone isn’t enough to change the world; product-market fit and investability matter just as much.

Balancing environment and economics

Foodtech startups often create products and processes that deliver clear, compelling environmental and social advantages over the status quo. However, these can coincide with higher prices.

“Balancing price point and perception has been the biggest challenge,” says Daniela Haydar, Marketing Manager at JUX Food, a UK-based startup that freeze-dries produce to make it shelf-stable, thereby tackling food waste and nutritional accessibility.

“JUX is a sustainability-led brand. But doing the right thing—for the planet, for farmers, for future generations—often comes with a higher cost, for a plethora of reasons.”

Unfortunately, sustainability alone doesn’t inspire behavioural change for most buyers, particularly in cost-sensitive markets.

"When we underwrite an investment, we’re not assuming that customers or parts of the supply chain are suddenly going to spend more for being more sustainable. There has to be cost parity,” shares Archie Burgess, Investment Director at Cibus Capital, a UK-based private equity and venture capital (VC) firm.

That's not to say startups must achieve cost parity from day one. But they must be working towards it, building a strong case for why buyers should ultimately choose their product or solution.

For example, Phytolon, an Israel-based startup in Cibus’ portfolio, uses fermentation to create natural food colours. It is working on process efficiency to drive down unit economics, while also delivering environmental impact.

Of course, sustainability can coincide with additional benefits—e.g., health or convenience—that might justify a premium.

"We’ve had to work hard to educate our customers on the value of freeze-dried ingredients: their nutrient density, versatility, long shelf life, and role in reducing household food waste,” explains Haydar.

Getting the timing right

Innovation inevitably drives up cost and time to market, especially in foodtech. While technologies like AI are speeding up processes, physical food products generally can’t go from conception to market as quickly as software.

For example, adding new ingredients to existing products, such as the shift among major US food brands from artificial to natural food dyes, often requires extensive testing and formulation. This can take a considerable amount of time, explains Burgess. That makes innovations like the pigments created by Phytolon exciting, he says, because they can directly drop into existing formulations.

But speed isn’t everything.

“The challenge is moving quickly without losing depth. We’re working to shift food systems, but not by building technology that’s too complex or too early for the market,” says Larry Kotch, CEO and Co-founder of Flybox, a UK-based company whose technology converts organic waste into insect feed and fertiliser.

“Some clients are just looking for a simple compliance solution. Others are committed to full circularity. We’ve designed our system to serve both, offering an immediate benefit with the potential to grow into something deeper over time.”

This flexibility enables startups to deliver immediate value (through working with some clients on a smaller-scale, near-term basis), while building towards longer-term transformation (through working with other clients on more comprehensive solutions).

“Start with something that works today. Not what the system should look like in theory, but what customers are ready to buy now,” Kotch suggests.

“Build for that, and design with enough flexibility to adapt as the market evolves. Be clear on what kind of business you’re building—whether it’s tech, operations, or services. You can’t be everything, especially not at the start. Focus on your core competency and bring in partners for the rest.”

Aligning with investors

This timing issue also ties into investment challenges: Startups with longer research and development (R&D) cycles or other lengthy workflows, such as those that need to consider compliance processes, may struggle to attract funding from traditional sources.

While some investors are willing to provide impact-first capital and accept returns below the market rate, at least until the startup scales, the broader private market expects market-level returns or better.

That’s why transparency—from both the startup and the investor—is vital.

This can start at the investor selection stage. As Flybox’s Kotch tells Sustainable Times, “Being upfront early on about our vision and timelines has also helped filter out those who aren’t aligned.”

JUX has been discerning in its choice of investors as well. “We’ve been intentionally selective about who we approach. For us, that’s mostly meant angel investors and industry experts who have a deep understanding of the food/consumer space and share our vision for a better future,” says Haydar. “There have been times [when] we’ve turned capital away despite needing it, as we didn’t think the investors were the right fit for the business.”

From the startup’s side, if it wants investors to take a more impact-first approach, that needs to be clearly screened for and communicated on an ongoing basis.

“If you truly believe a certain decision will have a positive impact on your longer-term mission but may come at the expense of your margins, you need to make a good case to your shareholders,” says Haydar.

Investors, too, must be upfront about expectations. As Kotch tells us, “Some investors still look for SaaS-like returns in businesses that involve hardware, regulation, and behaviour change. To be fair, the good ones bring a lot of value, but they can be cautious when it comes to regulatory challenges. That’s especially true if you’re introducing novel ingredients or new uses for organic material that fall under existing legal restrictions.”

To fill early-stage capital needs, some startups have looked to grants and pilot funding. “Staying lean gives you more options when things get serious,” Kotch notes.

Other startups, Burgess shares, are good candidates for investment from the venture arms of large consumer goods companies. This is especially true for startups that require longer development and implementation timelines than those typically feasible for a VC fund.

“[These companies] can bridge that gap; as R&D as a percentage of sales has come down in [agriculture] and food, a lot of them are using VC instead as a kind of outsourced R&D,” Burgess explains.

Proving market fit

Without strong demand signals and viable economics, even the most promising innovations risk stalling out. “If it’s a commercial success, it’s a sustainability success,” Burgess says. In other words, the best way for foodtech startups to make an impact is to create a product or solution people actually want—and are able—to buy.

Adamo Foods, a UK-based company that makes steak-like meat alternatives through a fermentation process using mycelium, shares this philosophy. Founder Pierre Dupuis is quick to acknowledge the startup’s longer timelines compared to others in the sector, but stresses that the potential payoff is worth it.

“It does require a longer investment horizon than some other foodtech companies out there. But also, the potential is much larger,” says Dupuis. “Any company, even if it’s more sustainable or greener or has climate goals, should not use that to justify lower returns or asking investors to be more patient.”

Adamo Foods’ focus isn’t on matching what’s already on the shelf—it’s on creating something better: fewer ingredients, better taste, and a product consumers actively choose. “Our solution has to be great enough, different enough, innovative enough to sell itself, so that consumers will buy more, and that inherently will have a better sustainability impact,” Dupuis explains.

This distinction between ‘nice to have’ and ‘must have’ is something investors look for early. Burgess notes that certain changes, such as regulatory shifts around synthetic ingredients, can create clear demand signals. “A lot of the big majors have now announced that they’re going to ban synthetic colours earlier than the regulation,” he says. That creates a pull for solutions like Phytolon’s natural food pigments.

Of course, proving market fit doesn’t happen all at once. But startups need to show they’re building towards it—through customer traction, formulation compatibility, supply chain readiness, and a clear commercial strategy.

Fueling the future of food

Are you a UK-based startup, scaleup, or investment manager tackling key sustainability concerns?

Across 19 categories, the Sustainable Times RISE Awards recognise the most impactful early-stage and growing companies forging a brighter future through innovation in sustainability, environmental, social, and governance (ESG) areas.

Entering the awards offers a chance to share your story with impact-driven investors, connect with like-minded companies and individuals, and earn recognition that can amplify your message and open doors to new opportunities.

Enter the 2025 Sustainable Times RISE Awards today to shine a spotlight on your innovations. Applications are open until 31 August.