Foodtech that mimics nature promises sizeable returns

Shen Tong is a well-known student leader of the 1989 Tiananmen Square protests, writing about his experience in a memoir, “Almost A Revolution.” He came to the U.S. to study at Harvard and Boston University and soon found a path to another powerful movement: sustainable food. 

Tong has spent decades investing in and working directly with pioneering companies in the food tech sector. He founded Food-X, the first startup accelerator focused entirely on food-related companies, named one of Fast Company’s top 10 most innovative companies in food in 2015.

He’s now the Managing Partner of FoodFutureCo, a scale-up accelerator for established startups providing unique products and solutions across the food system. Tong talked about his life’s passions, the trends driving innovation in food tech and where investors are looking for not-yet-ripe apples.

How did you go from a student protester in Beijing to a foodtech innovator in the U.S.?

I always felt a calling for there being something larger than our physical and narrative itself, and whether it was art or poetry, I was very passionate about things. Then I was given the opportunity in the 1980s to be involved with the Beijing students and their large social movement formed with friends from China. It was still early on in my life, and a way to be very intentional about what I love, and what I'm good at, and what the world needs, and of course, today, also making a living and being practically sustainable. Later on in life, I realized that finding and turning ‘a moment’ into ‘a movement’ is the win. It’s part of the theme to how I approach impact and the food space. 

How important is foodtech to the impact investing movement?

I think food is central and that's not because I'm doing it, Food agriculture globally is a $12 trillion dollar market. That's 25-plus times the entire global software market. The sheer size of this sector warrants it. When I started this journey with my TEDx Talk in 2015, I shared the contrarian but logical fact that food is the new Internet for investors and it’s centrally impactful. This is a very rare opportunity where we can have our cake and eat it. Impact investors can do very well in the food space. 

What types of startups are you looking to work with? 

We’re looking for companies in the scaling-up stage. Typically we’re tracking companies with $250,000 to $1 million in revenue; that’s our sweet spot, but it can be a long-term program of involvement. We look for nature-based solutions that utilize the advanced help of modern science and technology, in the areas of consumer products, local food, plant-based food, sustainable seafood, ag tech, food tech and food waste. Food scarcity is such a bizarre phenomenon; 60% of food that is produced is wasted. Worldwide we have nearly a billion people hungry and over a billion who do not have enough water. Innovations in the food sector are needed to address this serious misalignment.

Companies can apply to our accelerator, with cohort companies receiving $10,000 in addition to the in-kind value of the program, the ongoing mentorship and advisor network after the program period, and the possibility for follow-on investment from Food Future Fund. About 80% of our 40 portfolio companies are U.S.-based, but our company’s ecosystem thesis and search strategy is global. We work with some unique companies in India, Taiwan, the Philippines and Bolivia.

What are the unique challenges in commercializing food products and services?

Everybody has a grandma's recipe, right? Food startups are very easy to come up with an idea for, and there's no shortage of ideas so the entry barriers are very low. That’s why at FoodFuture I have moved to a later-stage model. It’s easier for a food company to survive initially, from zero to $1 million is much easier than for a general tech company. But at $10 million and above, basically you hit the what's called the ‘crossing the chasm’ stage, also known as the ‘valley of death.’ That’s where food companies drop like a stone in the lake. When the brand has already broken out, it really has somewhat of a small sustainable operation as the growth stage begins with meaningful revenue and margin. Then most severe challenges begin. To address this in the food sector, we're optimized to focus on how to cross that chasm. Basically from $5 to 10 million, to add a zero to that, we catch them one base before, which is when they're tracking $1 million. We help them form the DNA that’s right for the new economic layout land so that they can survive the valley of death and then thrive.

What’s your take on Generative AI someday being used in foodtech?

I suspect generative AI and machine learning will transform personal information on nutrition and the understanding of our own physical constitution, which is massive. We’ve barely scratched the surface of the impact of the genome project from 15 years ago, decoding the human genome, and we don't understand most of the microbiomes in our body, in the soil or in the water. AI and machine learning and massive computing will give us so much understanding to look into who we really are, what we really are, and how we relate to the universe and to Earth and to other species. I envision a future where a person’s nutrition, DNA, genomes, epigenetics, junk DNA, social circles, and social and environmental factors are all easily computed so fast. A simple app on an iPhone can tell you exactly what you need to do, for what purpose and the impact that it will have on our lives, our ancestral evolution, and to our children, and our energetic well-being and our health span. So generative AI is great as long as we use it responsibly, intentionally and consciously, for an inspired human flourishing, not just getting more of the same. We just need to use this with the right balance with planetary nature, human nature and elevated consciousness.

What are some of the latest innovations shaping investors’ appetites?

Supply chain and logistics will continue to be a big focus. We all got so lucky with this years ago. You talk about supply chain innovation, and now people look at it like you had ‘sixth head’ sense. The world started very early, and now we look smart with a local food economy centric, food-waste conscious supply chain. That slight perspective change in recent times has really translated well in terms of transforming transportation costs and nutritional density because you're shortened the time from harvest time to eating. We now have a series of challenges with U.S.-China relations and of course the supplies affected by the Russia-Ukraine war. One of the things I’ve seen is crowd financing for farms in places like Ghana.

Plant-based animal protein replacements are an area of focus. Nature-based and nature-mimicking solutions are not just big return areas, they're sustainable return areas. 

Local economy sources for food are also a trend for addressing supply chain and food waste. They can sell for a premium price without being ‘organic’ conditional. In New York you’ll have strawberries from Connecticut or from New Jersey. There’s an awareness factor, and it's a behavioral shift. We work with several food startups in this space around regenerative agriculture and local family farms. 

A final one is in the carbon space, exploring how food and agriculture relate to carbon emissions. 

Tell us a little about your portfolio today. 

Harvest Returns is a crowdfunding platform for those with an interest in investing in the agriculture industry. CEO Chris Rawley was really visionary in terms of democratizing investments in agriculture. I didn’t think the crowdfunding model would work for smallholder farms, but I was proven wrong. They’ve raised $30 million across 50 farming, ranching, and agribusiness investment opportunities. Peelon addresses the food waste challenge with a packing solution—a plant based protective coating technology—that extends the shelf-life of food by 3 times.  Seal the Seasons works with farmers to freeze locally grown produce for sale in local stores and now has a line of local-frozen smoothies. Molinos is a woman-founded Filipino local supply chain company that allows their customers to easily and affordably gain access to ingredients and sources sourced from Kashmir, Kerala and even Japan.