Historically, venture investors have focused on one primary sector:
Technology.
Sure, what it means to “invest in tech” has changed over time…
In the 60s, for example, it meant backing the makers of silicon chips, whereas today it might mean backing drone start-ups, or artificial intelligence companies…
But tech is where fortunes were being made. So tech is where they focused.
Recently, however, a surprising number of “smart money” venture capitalists have been placing bets on a new sector.
And today, I’ll show you how to join them.
Hungry For a New Sector
The sector I’m referring to is the Food & Beverage industry.
Over the years, we’ve preached about the benefits of investing in this sector many times (for example, here, here and here).
You see, we believe this sector is easier to understand than high-tech industries like Drones or Artificial Intelligence—and as it turns out, it can be just as profitable to invest in:
For example, Naked Juice put all-natural juice into a bottle—then it got snatched up by Pepsi for an estimated $450 million…
A small company called Chobani started making Greek-style yogurt. Now the company is valued at several billion dollars…
And you might not know this, but the most profitable “start-up” investment of all time was none other than Coca-Cola: when Coke’s first investor sold his stake in the company 32 years after it was established, he made 10,868x times his money.
But even with all this sector’s profits, traditional Silicon Valley venture investors have shied away from Food & Beverage companies.
But now, as the research company CB Insights just reported, the world’s top professional investors finally seem to be taking Crowdability’s advice to heart:
They’re finally making the Food & Beverage sector a key investment area.
As CB Insights reported: “Out of our list of 24 smart money VCs, nine have invested in food and beverage startups since 2013, backing 14 startups between them.”
Let’s take a look at who these “smart money VCs” are, and then let’s see what they’re investing in.
Smart Money VCs
To analyze the new sectors that the “smart money” are investing in, CB Insights started by creating a list of the Top 24 Investors in the World.
To build its list, it reviewed the performance of dozens of venture capital firms.
The final list includes “white shoe” firms like Kleiner Perkins and NEA, as well as upstarts like Andreessen Horowitz and Khosla Ventures. Combined, these firms manage early-stage investment funds worth over $15 billion.
From there, CB Insights looked at which sectors these top firms were investing in.
When it discovered that a key sector was Food & Beverage start-ups, it dug in to learn more.
Here’s what it found…
What They’re Investing In
Smart Money investors are currently investing in several different Food & Beverage categories:
Next-Gen Foods: Products in this category aim to replace meals with something that’s easier to prepare, but just as good for you. For example, Andreessen Horowitz invested in Soylent, which creates high–nutrition meal replacement drinks. It’s estimated that Soylent is now valued at more than $100 million.
Animal Replacement: Companies in this category focus on animal-free meat and dairy products. This may sound like a niche industry, but make no mistake: some of the smartest money in venture capital has been pouring into this space. For example, Impossible Foods raised more than $180 million from Khosla Ventures, and Beyond Meat raised more than $40 million from Kleiner Perkins.
Direct-to-consumer fruit and vegetable meals: A start-up called Juicero offers a home-kitchen juicing device along with packets of chopped fruit and veggies. It’s raised nearly $100 million from Kleiner Perkins and others. And Hungryroot, which raised more than $13 million from smart money like Lightspeed, sells packages of healthy items like cauliflower rice and chickpea-based cookie dough.
As you can see, the smart money is betting on alternative food and food delivery services. They’re betting that, in the future, consumers will be more health conscious, and more likely to order their groceries online than from a supermarket.
If they’re right, backing start-ups in these categories could turn into big gains for early investors.
Now It’s Your Turn
Ready to explore some Food & Beverage start-ups that you can invest in?
Here are three investments that are open to all investors, regardless of your income or net worth:
Vera Roasting—This delicious, patent-pending craft coffee is infused with an all-natural antioxidant that offers the same health benefits as red wine.
Click & Grow—This Y Combinator-backed nutrition company enables everyday people to grow fresh food indoors.
Fizzics—Fizzics is a beer dispenser for the home that delivers a “fresh-from-the-tap” experience. Mark Cuban from “Shark Tank” is an investor.
Good Place To Start
To be clear, I’m not recommending that you run out and invest in these start-ups.
These are risky ventures and they require substantial investment research.
But if you’re intrigued about exploring this fast-growing sector, they’re a good place to start your research.
Happy investing.
Please note: Crowdability has no relationship with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.
Best Regards,
Founder
Crowdability.com
