As the world’s largest food producer, and with an expanding prosperous middle class, China offers food tech companies huge potential. We spoke with Winnie Leung, Vice President of Chinese food tech startup VC Bits x Bites, to learn more about market opportunities and challenges, as well as the role of venture capital in supporting innovative solutions.
March 8, 2021
“More multinational and domestic F&B brand owners operating in China are looking at partnering with startups to upgrade their processes and differentiate their product offerings,”
notes Winnie Leung, Vice President of Chinese food tech startup venture capital firm Bits x Bites.
“We believe that the China market is becoming ripe for startup companies that have the right technological solutions to address its challenges.”
In China, firms with innovative ideas on achieving production efficiencies, or tapping into consumer trends with sustainable ingredients, have real opportunities to prosper. Leung notes that self-sufficiency in food production has become a national priority, with the COVID-pandemic increasing pressure for investing in supply chain efficiency.
“In the past two years we have seen tremendous investment to consolidate agriculture,” she says.
“Without industrial-scale operations, it is very challenging to apply technology and modernise production. So in agriculture, we are looking at Internet of Things (IoT) and bioscience solutions that can help producers improve yield while reducing input, address soil degradation, and protect animal, crop, and farmers’ health.”
Midstream, cold chain logistics in China cover only 19% of production, far below other developed countries which can exceed 95%.
“We are looking at how automation and data can improve food safety and cut down spoilage in storage, processing, and transportation,” adds Leung.
Also midstream, health and nutrition, are a main area of concern.
“More than 11% of China’s adult population is diabetic,” notes Leung.
“One in five children is obese. Our interest here is bioscience and patented food processing that will introduce new functional ingredients, or reduce the use of sugar, salt, and fat without compromising on taste. This includes applications that will elevate the health and sensory performance of animal-free protein alternatives.”
Taking advantage of these opportunities means having to navigate regulatory rules, and understand the specificities of the domestic market.
“Global companies may balk at the regulatory hurdles, IP concerns, and complicated supplier and distribution workflows,” continues Leung.
“Our main goal is to help companies maneuver over this terrain, and to set them up for success.”
Bits x Bites invests in companies that are advancing bioscience, data science, and processing technology to tackle challenges along the Chinese food supply chain, from precision agriculture, crop and animal health to protein alternatives and nutrition.
“We’re a purpose + profit fund,” explains Leung.
“That means we invest in companies that can demonstrate they have a sustainable business model to achieve meaningful growth and scalable impact. We carefully select founders with purpose in their core, and empower them to build great enterprises of the future.”
This is achieved by providing early-stage capital to local midstream and upstream agrifood tech companies. Bits x Bites is working to build a startup ecosystem, where companies can thrive by targeting solutions that the Chinese food system needs to become more sustainable. A broad network has been built on the ground, with local companies and multinationals looking to collaborate with startups in China.
“We are also pleased to have a number of formal and informal advisors whose expertise in regulations, manufacturing, and distribution is crucial for our investment assessments and in our post-investment support,” adds Leung.
The company also supports both Chinese and international companies.
“We have invested in an Israeli chickpea protein concentrate company, InnovoPro, and a cellular agriculture company called Future Meat Technologies. In the UK, we have invested in genetic engineering company Tropic Biosciences. And in China, we most recently added nutrient biomanufacturing company Mojia Bio.”
