Foodtech innovation does not match the weight of the Spanish food industry
Mila Valcárcel: In the case of Cocuus, for example, although the visible part is currently its activity in 3D food printing and laser technology, the motivation for its selection comes from its technological development in the field of scaffolding, which is basically where the cells are supported to grow in the production process of the cultured meat industry, and this work is absolutely cutting-edge worldwide.Eatable Adventures, the innovation hub specialising in the agrifoodtech sector, yesterday presented its programme aimed at national start-ups 'Spain FoodTech Startups Program', which has the technological support of the National Centre for Food Technology and Safety (CNTA) and institutions such as ICEX and Food for Life, and announced the six projects selected for this call.
At the same time, it also launched the first study carried out in our country on the state of foodtech in Spain. Today we interviewed Mila Valcarcel, managing partner at Eatable Adventures, with whom we talked about the current state of the foodtech ecosystem in our country, about open innovation and about the opportunity represented by this new programme for start-ups that is now beginning.
Alimarket FMCG: In the study you have just presented, you state that 63% of national start-ups active in foodtech believe that the food industry does not support open innovation and the start-up ecosystem. What is the current state of open innovation in the national food industry, and how does it compare to our main competitor countries?
Mila Valcárcel: We are at a very early stage. Currently, the situation of open innovation and the collaboration of the food industry with the start-up ecosystem does not yet correspond to the weight of the food industry in the Spanish economy. There are some corporations that are taking a leading position, but Spain continues to lag behind Europe in the development of tools aimed at promoting open innovation. What benchmark could we have at the European level? The example of the Netherlands is perhaps the most interesting. Although it is not the country that attracts the most capital investment, we do see that the food industry plays a very important role. This means that Dutch start-ups do not need very high investments, because they find a high level of collaboration in the industry, either by working as suppliers, having the industry as a client, or by developing joint projects. This vision has not yet caught on in Spain. The Dutch model is also very interesting because of the relationship it develops with the university world, which sets the standard for technological development, and because of the clear commitment on the part of the state.
In our neighbouring countries, there is greater mobilisation and use of vehicles and more sophisticated tools focused on open innovation. And there is a very enlightening fact in this respect in Spain. Here, the rate of investment in R&D&I has fallen by 8% in recent years, while in the rest of Europe it has increased by 38%, according to a Cajamar study. This is a very relevant fact: what is Spanish industry saying: why am I going to invest in innovation if they are going to copy me, and this is also very important. Innovation is not valued and the developments that are made are not respected. It is very difficult to work with the food industry when the percentage of branding in distribution is very low.
A.G.C.: We also find very high levels of penetration of the hard discount model and distribution brands in countries such as Germany and England. And yet you point to a more determined commitment to open innovation in these markets as well.
M.V.: Because there is also sufficiently strong distribution, where there is room for innovative products. In the case of Germany or England, together with the hard discounter, you have a very high level of competition that does introduce innovation, with benchmarks such as Sainsbury's in the UK, for example. On the other hand, spending on food is higher in these markets. This means that there is a commitment to innovation in the industry, which can also make this innovation profitable in exports. The national industry, on the other hand, prefers to compete on price in third markets.
A.G.C.: The study also states that the average investment received by national foodtech start-ups - excluding 'Glovo' - is €0.6 million. Are we very far from the average investment in competing countries?
M.V.: Without including markets such as the US or Israel, which distort the measurement a lot, average rounds in countries such as France or Germany are approximately €1.6m. For us, this has a double reading. On the one hand, there is the maturity of the start-ups. The proposals that receive large investment ranges are those that are already mature in their development, that have been on the market for two or three years and have a clear technological component and a global business plan. In Spain we still find that 76% of start-ups are at a very early stage of investment. The second aspect is the Spanish investor, who asks start-ups for commercial traction, even in the initial phases, when by nature in those phases they will need investment without having commercial traction. This is the main difference between what international venture capitalists see and what national investors do not see: the competitive advantage of technological development. And there are also domestic investors who still do not see foodtech as a technology sector. This is a mistake of vision.
A.G.C.: You describe a polarised scenario between national and international investors. Are the latter contributing more to closing the investment gap with respect to other European countries?
M.V.: The main operations in Spain have come from international investors. For example, in Glovo, most of the investment is international. We are now raising a fund and we are doing it with foreign investors. In Spain there is no commitment to this sector, due to a lack of knowledge, and this is important. Here we can only highlight players such as Moira Capital who, in terms of volume and investment, are the ones who are making the most decisive commitment.
A.G.C.: Following on from your study, you state that 60% of national start-ups base their proposals on technology, is this in line with other markets, and are the barriers to entry sufficiently high to make the effort profitable?
M.V.: In Spain there is a very high technological level, and that is a very good thing for the foodtech sector, because it is what is going to help us position ourselves internationally. I think we are in line with or slightly below our closest competitors. There is a fundamental issue that ties in with this, and that is where this technology comes from. Right now in Spain, technological development is done from within the start-up itself. This has a gap, and that is that with low levels of investment, these developments are slower. Here we see how universities and technology centres play a limited role, while in other countries the role of these institutions is much more important.
A.G.C.: Eatable has just announced the start-ups that will be part of its foodtech programme. What criteria have been used for their selection?
M.V.: The most important criteria are the equipment and the technological component. In the case of Cocuus, for example, although the visible part is currently its activity in 3D food printing and laser technology, the motivation for its selection comes from its technological development in the field of scaffolding, which is basically where the cells are supported to grow in the production process of the cultured meat industry, and this work is absolutely cutting-edge at a global level. H2hydroponics, for its part, responds to the need of many countries to reduce their dependence on imports of agricultural products, and what it does is to propose solutions for indoor and vertical crops. Or in the case of Innomy, for example, they are dedicated to the development of vegetable alternatives to meat from mycelium, and this is one of the fastest growing areas of plant based. In all cases, we are dealing with cutting-edge technologies and, moreover, with absolutely competitive business models and a very high global market potential.
A.G.C.: How did the 'Spain FoodTech Startups Program' come about and what is its proposal?
M.V.: We came to this programme a little fed up with the fact that Spanish companies were not in the big leagues. There are countries where food is less important, but there are more start-ups and, moreover, more powerful ones. This is a programme aimed at very high-level start-ups, not a typical acceleration programme. We are going to incorporate very important additional inputs, such as, for example, the participation of global experts or mentors who are leaders in their areas of work, or internationalisation. Right now we are at around 60 international events, from New York to Singapore, Israel, etc. This is the way to attract clients and investment outside Spain, which is basic, and it means starting to compete in the big leagues of their businesses. At Anuga, for example, there has been a stand of Israeli start-ups, and we want there to be a stand of Spanish start-ups at the next edition as well. The work is going to be very intense. We are also going to work with the CNTA, to perfect the entire technological section of their proposals, and this will also be of great help to us in attracting investment. And, of course, collaborating with ICEX will allow us to have a very important visibility in different events.