Amy Pierechod quoted in The Grocer discussing the UK food tech startup scene

Amy Pierechod, partner and head of start-ups and emerging companies, has been quoted in the latest issue of food and drink retail magazine The Grocer discussing the UK food tech start-up scene.

The UK’s food tech sector came to prominence with the rise of Quorn, the fungi-based meat substitute. Today there are more than 800 agrifood tech companies operating in the UK according to Forward Fooding’s FoodTech Data Navigator.

Last year, UK-based companies attracted 10.5 per cent of all global agrifood tech investments (£1.36bn), according to Forward Fooding.

Considering the consumer demand for food tech products, Amy says: “One potential factor is that as a society, we are now taking far more of an interest into what we are eating and drinking, especially when it comes to ingredients and potential nutritional benefits.

“Social media platforms have become a huge source of information about wellness and diet.”

According to Amy, investment in the food tech start-up scene comes from a range of sources.

“A lot of venture capital (VC) funds target B2B businesses, so most food tech businesses with a D2C model would fall outside this.

“However some interesting businesses seem to be pushing through with VCs. Our client Spacegoods, a mushroom-based supplements and nootropics brand, recently received VC funding, but this was led by a French VC Five Seasons Ventures.

“In the UK it is common to see food tech start-ups attracting crowdfunding and angel investors as they can see and taste products, and in doing so, have another means to understand any potential risks to their capital.”

To support the food tech sector, Amy points to key government initiatives and departments. Investment tools apply equally to any start-up regardless of the sector they operate in, and it is important for entrepreneurs and investors to be aware of them.

“Growing businesses in the UK can apply for advanced assurance under the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). This makes them hugely attractive to early stage investors due to the tax advantages in investing.

“Obviously bodies such as the Food Standards Agency exist to ensure food sold in the UK is safe to consume. So any new food tech company should make sure it understands how to be compliant and safe from an early stage.

“This is another example of where the UK’s legislative framework potentially benefits food tech start-ups.”

However, when a start-up progresses, different operational challenges emerge. Amy comments: “Once a business reaches a certain level there are inherent challenges – for example, greater production levels will require a large-scale production facility and more employees. As such, start-ups have to adapt to the reality of operating a significantly larger organisation, which can present a challenge.

“Getting your product into supermarkets is rightly seen as a huge achievement but also comes with a host of contractual challenges and tough margins.

“This highlights the risks of wider economic conditions. If we see significant price volatility again in areas like raw materials, ingredients and energy, this will no doubt pose a challenge to future growth.”

Amy’s comments appeared in the 18 May magazine issue of The Grocer. Click here for details about subscribing.

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