Dumplings stuffed with meat grown from fish cells in Petri dishes. Alcohol brewed from unwanted tofu whey. In Singapore, a small but growing number of startups are betting that they can change the way we eat. Their work with novel foods stems from the same concerns. It’s either the environment they’re trying to save from disrepair, or the general health of the people.
The murmurs here echo a louder movement in North America, Europe and Israel, where foodtech – the re-engineering of food to be healthier or “cleaner” while tasting just as good – has gained a following, and mainstream investors have poured millions of funds into plant-based meat companies like Beyond Meat and Impossible Foods.
Abhinav Mehra, vice-president of portfolio management at ID Capital, a Singapore-based venture investment and consulting firm, tells BT that 2018 has been a milestone for foodtech. Earlier innovations in food supply were concerned with productivity tools or how to connect farmers to markets.
“We’ve passed that phase,” Mr Mehra says. “Now we’re hearing more about how to change what’s on the table. Especially in Singapore, I’m hearing a lot of innovations geared to consumer products. I think 2019 can be a breakout year when you can see a lot more innovations hitting the shelves of 7-Eleven and Cheers, not remaining exclusive and high-value products.”
Established firms up and down the food chain are watching the space closely. Gurpreet Singh Vohra, who helms Wilmar Ventures, the venture capital arm of agri-food giant Wilmar International, says: “There is an increasing awareness in the world that we are what we eat. That has become very clear now.
“Life expectancy has increased many-fold in all markets, so for a company like Wilmar in the basic food ingredients space, it becomes very important to look at healthier protein, fibre, carbohydrates.”
For serious investors, foodtech is not about digital solutions, food delivery apps or vending machines. An iPad that takes orders at a restaurant is a productivity tool, not innovation.
Foodtech is about food reformulation, using new processing technologies to improve the flavour, nutritional value or shelf life of food, and finding novel ingredients and methods that could fundamentally change food production.
Dr Rebecca Lian, a food technologist who heads the WIL@NUS Corporate Laboratory opened earlier this year, explains: “Foodtech is how you engineer food. In terms of its product design, in terms of its processing, so that you come up with a healthier, nutritious food that is sustainable and yet at the same time delighting consumers.
“For the longest time, we (the food industry) have looked at just satisfying consumers’ tastes. We forgot to address the fact that food has to be healthy as well as tasty.”
BT speaks to four foodtech startups to find out what’s brewing.
Singapore has set its sights on becoming a leading food and nutrition hub in Asia by 2025. Yet conversations with various industry players give the sense that Singapore’s foodtech ecosystem is small and nascent, lacking in critical mass.
Mr Ow of Hoow Food says: “Food and nutrition research and education is surprisingly lacking among Singaporeans, which is ironic given the fact that Singapore professes to be a foodie nation.”
“If we are to develop into a food innovation hub, we need more scientists who are passionate about disrupting the current norms in food and nutrition.”
Other entrepreneurs say that it’s difficult to find the backing they need here. Sophie’s Kitchen, a US-based foodtech firm that makes plant-based smoked salmon, had talked about moving its operations to Singapore a year ago. It no longer plans to do so.
Founder Eugene Wang tells BT: “You will find most VCs and investors here in Asia are not really enthusiastic about investing in local foodtech ventures. If the money does not flow this way, it will be hard to nurture new startups. We have problems finding money in Singapore to back up our ambitious goals.”
Culture could be another reason behind Asia’s lack of homegrown success stories. Mr Wang says: “We Asians have so much ego about our food, history, and culinary skills. It makes it really hard for new and creative ideas to be born and embraced.
“Plus, sustainability issues are only discussed among professionals and in the media. Most consumers do not really practise good sustainable behaviours. Therefore, it is hard for a foodtech ecosystem to be born anywhere in Asia, and that includes Singapore.”
This is disappointing, considering that Sophie’s Kitchen has Asian roots, literally. One of the key ingredients that gives the company’s faux seafood its texture is konjac, a Japanese yam known for its medicinal value that is also made into konnyaku jelly.
In fact, Asia’s separate food heritage from the West could be an advantage for startups here.
ID Capital’s Mr Mehra says: “There’s traditional Chinese medicine, Ayurvedic medicine. That can really add value. We don’t have to make a burger, we can have our own products. Asia has a lot of food innovation that’s really transformed the West.”
For investors, foodtech valuations here are also “far more reasonable” than in North America or Europe, he adds. ID Capital’s foodtech investments are made with private capital for now, as Mr Mehra would like to see the industry mature a bit more before he raises a fund.
In 2016, Wilmar received a S$10 million co-investment grant from the National Research Foundation to make early-stage investments in local startups focused on agtech, industrial biotechnology and future foods. To date, none of that money has been deployed.
Mr Vohra explains: “A lot of companies are doing work in areas that unfortunately will not lead to fruitful outcomes, that’s the nature of innovation… Today in the market, there are lots of healthier products in every category. But only a very small percentage of these product are repurchased. They’re not sticky because they’re not tasty.”
Consumers have also been numbed by years of conflicting research and misleading claims about the health risks and benefits of various food ingredients.
Dr Lian, a Wilmar Distinguished Fellow, says: “You need to have clinical science results behind it (your product) to demonstrate that it really works. And clinical studies are very expensive to do, so that’s the challenge.”
Food is a risky business – margins are not high and customers are lost forever if you disappoint them in taste or texture. But there are “low-hanging fruits” to be plucked, Dr Lian says.
In the preparation of cooked meals for example, something as simple as healthier cooking oil could make a big impact.
Wilmar remains open to collaboration, and has let a number of agtech startups use its estates for field tests. Mr Vohra says: “In the agtech space, there are a lot more Singapore companies.”
The pieces are slowly falling together for Singapore’s fragmented foodtech ecosystem.
In May, John Cheng, who owns sugar manufacturing and trading firm Cheng Yew Heng Candy Factory, set up Singapore’s first food incubator with a food factory licence and manufacturing facility that will be ready next year. Innovate360 is incubating six startups, and has helped three of them secure government grants so far.
Temasek Holdings has thrown its weight behind Singapore’s foodtech dream, planting the Singapore flag overseas with investments in Impossible Foods and Modern Meadow, a lab-grown leather company.
Singapore’s ministers are raising the profile of the food industry by headlining various industry events. TechInnovation, the IPI’s annual tech matching event, has also featured a food innovation track since 2017.
Being a foodtech hub is a logical pursuit for Singapore in light of the ageing population and war on diabetes, as well as from a food security and climate change perspective.
Eugene Wong, managing director of Sirius Venture Capital and an early investor in foodtech startups overseas, says: “Singapore is well suited for agri-food tech, more so than other technologies in Silicon Valley. We have the basic technology and we have a lot of money. We can try.”
“At this stage, we still need to grow the expertise of managing foodtech companies. We’re not talking about research, but how to build a big foodtech company – you need to have entrepreneurs with a vision. You cannot rush that, and maybe we’ll see good quality companies in the next five to 10 years.”
“But I think it’s important to create a critical mass of foodtech startups. You need some foodtech warriors to farm the concrete jungle.”
This article was originally published in The Business Times.