Food- and drink-tech VC deals slide – research

Simon Harvey

Tue, Jun 10, 2025, 9:05 AM 3 min read

Venture-capital deals in food-tech are likely to decline sharply this year in both value and transaction terms, Pitchbook research has suggested.

Presenting its latest food-tech VC trends report, which includes deals in the beverages segment, Pitchbook painted a tough picture for the investing environment from both the buy and sell sides, with valuations still proving to be problematic.

While the data set only covers the first quarter, the numbers look bleak for the rest of 2025 if extrapolated out over the full year, with the slope of the declines suggesting a substantial recovery would be needed to gain ground on 2024.

Food-tech venture-capital deals slid 49.6% quarter-on-quarter to $1.4bn and the number of transactions fell 15.1% to 202, according to PitchBook, which provided perspective on previous years as a whole: 2024 at $10.3bn and 1,127 deals; Covid-19 “era highs” in 2021 of $49.8bn/2,721; and pre-Covid figures in 2019 of $22.4bn/1,591.

“Investor caution remains elevated, with a marked shift toward more mature start-ups boasting proven business models. This has led to a sharp reduction in seed and early-stage funding,” PitchBook noted in the report commentary.

PitchBook indicated VC investors remain selective, although it highlighted the functional foods sector “emerged as one of the strongest near-term opportunities in food-tech amid the broader funding downturn”.

PepsiCo’s sizeable deal for US beverage group Poppi in March was singled out as one that “could spur further acquisitions as major brands look to expand their functional food portfolios”.

Valuations continue to be a headwind, with VC funds more demanding when it comes to the investment criteria.

“For investors, the sharp rise in median valuations signals a flight to quality, with capital being concentrated in fewer, more mature start-ups that can demonstrate proven business models and scalability,” the report, led by PitchBook’s senior research analyst for food-tech Alex Frederick, suggested.

“For start-ups, the environment is increasingly challenging, especially at the early stage, where median valuations have dropped to $6.1 million from $12.1 million in 2021, reflecting tougher fundraising conditions and elevated expectations from investors.”

The insights report added: “Start-ups must demonstrate not only innovation but also clear market traction, operational efficiency, and alignment with major trends such as sustainability, health, and supply chain resilience to stand out.”

Despite the ongoing challenges in alternative proteins – Beyond Meat being one such example given by PitchBook – there are some areas in the space that are grabbing investor attention.