7 ms·

The Coming Food Bubble

31 points by kposehn 12y ago

rjbwork 12y ago
>Money is flowing into the food sector; VCs raised $48 billion for food startups in 2014, the highest amount since 2000. This is just amateurish, or intentionally completely misleading. that 48bil is for ALL startups, not food. That number would be absurd otherwise. The words "food" and "agriculture" and "delivery" do not appear once in the referenced source @ http://nvca.org/pressreleases/annual-venture-capital-investment-tops-48-billion-2014-reaching-highest-level-decade-according-moneytree-report/ http://nvca.org/pressreleases/annual-venture-capital-investm... That said, yeah instacart seems kind of over valued. Its a thing i do when I don't feel like leaving the house once every couple of months - not a weekly thing. Then again, $10 * 100,000,000 adults * 2x / quarter is approximately a ton of money.
- oldmanjay 12y ago
  I suspect that link is only available to members of some sort or another. Or it's been removed. In any case, it doesn't work.
  - rjbwork 12y ago
    Interesting...It appears to work when clicking from the article itself, but linking doesn't work... I wonder if they have referrer based permissioning.
- azinman2 12y ago
  Ya it's way too early to be calling a bubble on food startups. Most exciting don't even reach the majority of potential markets! Hell, even uber isn't yet in a lot of places they will end up being in... that's how much growth potential there is in the physical-tech world. Plus it's early days. Food is so important to every single individual for it not to become large is impossible. I wonder what the author would say about how restaurants are financed and if there's a bubble there given the 9999999999 other restaurants competing. I have a friend that's doing a munchery-like service. At first I thought what are you doing different than sprig or spoonrocket. Then I remembered SF alone has more restaurants than I could uniquely eat at within a year. There's so much to be done -- from delivery, to cooking, to helping you cook, to group organizing, grocery shopping, farming, nutrition and more. In fact I think it's category that's barely even formed. The big winners likely haven't even incorporated yet. Exciting times.
plink 12y ago
So, San Francisco is doomed revamp its grocery shopping?
ajhit406 12y ago
Investment at 200x MRR for such a low margin business is extremely overvalued IMO. The only case for that type of multiple is if instacart grew more than 100% YoY (which they probably did). Also of note and let's not forget -- $100M 2014 revenues are the "groupon-esque" pass through revenues -- Whole Foods, Safeway, etc... are also booking these as revenue. Remember when Groupon, on the eve an IPO, cut it's reported revenue in half? Yeah, only a $300,000,000 difference. > "On Friday, Groupon said it would change what it books as revenue after discussions with the Securities and Exchange Commission. It will now only count as revenue its commission on sales, rather than the total value of an online coupon." http://www.wsj.com/articles/SB10001424053111903791504576589211214409214 http://www.wsj.com/articles/SB100014240531119037915045765892...
jqm 12y ago
There might be a "food related start-up" bubble but I don't think there is actually a "food" bubble. If anything, its the reverse. More mouths to feed. Less water and land and pristine ocean to do it with. Providing sufficient food efficiently has been a primary challenge since day 1 of human history and probably will be right up until they invent those titanium bodies.
- trhway 12y ago
  >Providing sufficient food efficiently has been a primary challenge since day 1 of human history and probably will be right up until they invent those titanium bodies. those containers with blue&red LEDs (pioneered by marijuana growers) is pretty much the solution (or at least preview of a very large part of the solution) as it allows to not waste water and energy and multiplies square footage by using several layers of shelves. Due to such efficiency, it also allows to grow food where normal open-air agriculture wouldn't be very feasible. Non-mobile versions, more like warehouse scale than container, can be built-in into cities (even underground like parking) or suburban areas.
  - seiferteric 12y ago
    I am extremely skeptical that this type of agriculture will ever make up significant portion of food produced. Pick a random spot in the middle of the US on google maps and zoom in, it will most likely be agricultural fields. USDA says ~51% or 2.3 BILLION acres of land is used just in the US for Ag. Much of that relies on "free" resources like rain and sun shine to be economical. The cost of creating the infrastructure to replace even a tiny fraction of this land would be huge. Plus now you want to replace sunshine with artificial light? Where does this energy some from? Maybe there is some application for this in cities for fresh produce, but I don't see it for staple crops. The only reason it works for marijuana growers is due to the extremely high price they can sell their "crop" for.
    - klibertp 12y ago
      There are countries where land is more scarce than in the US where area efficiency is more important than water/light efficiency.
Jedd 12y ago
"Entrepreneurs are the foundation of a growing economy and goodness knows, we need growth." Well that's certainly an opinion. I know it's TC, so a certain agenda is assumed, but facts not in evidence and all that.
SocksCanClose 12y ago
...is it me, or did I miss the argument here?
- penprogg 12y ago
  The argument was money -> bubble It's not very good
lotsofmangos 12y ago
Perhaps we are in a bubble-bubble, where the idea of being in a bubble is so popular that many investors are betting on being in a bubble even when there isn't one.

31 points by kposehn 12y ago

>Money is flowing into the food sector; VCs raised $48 billion for food startups in 2014, the highest amount since 2000. This is just amateurish, or intentionally completely misleading. that 48bil is for ALL startups, not food. That number would be absurd otherwise. The words "food" and "agriculture" and "delivery" do not appear once in the referenced source @ http://nvca.org/pressreleases/annual-venture-capital-investment-tops-48-billion-2014-reaching-highest-level-decade-according-moneytree-report/ http://nvca.org/pressreleases/annual-venture-capital-investm... That said, yeah instacart seems kind of over valued. Its a thing i do when I don't feel like leaving the house once every couple of months - not a weekly thing. Then again, $10 * 100,000,000 adults * 2x / quarter is approximately a ton of money.

oldmanjay 12y ago
I suspect that link is only available to members of some sort or another. Or it's been removed. In any case, it doesn't work.
- rjbwork 12y ago
  Interesting...It appears to work when clicking from the article itself, but linking doesn't work... I wonder if they have referrer based permissioning.
azinman2 12y ago
Ya it's way too early to be calling a bubble on food startups. Most exciting don't even reach the majority of potential markets! Hell, even uber isn't yet in a lot of places they will end up being in... that's how much growth potential there is in the physical-tech world. Plus it's early days. Food is so important to every single individual for it not to become large is impossible. I wonder what the author would say about how restaurants are financed and if there's a bubble there given the 9999999999 other restaurants competing. I have a friend that's doing a munchery-like service. At first I thought what are you doing different than sprig or spoonrocket. Then I remembered SF alone has more restaurants than I could uniquely eat at within a year. There's so much to be done -- from delivery, to cooking, to helping you cook, to group organizing, grocery shopping, farming, nutrition and more. In fact I think it's category that's barely even formed. The big winners likely haven't even incorporated yet. Exciting times.

plink 12y ago

So, San Francisco is doomed revamp its grocery shopping?

ajhit406 12y ago

Investment at 200x MRR for such a low margin business is extremely overvalued IMO. The only case for that type of multiple is if instacart grew more than 100% YoY (which they probably did). Also of note and let's not forget -- $100M 2014 revenues are the "groupon-esque" pass through revenues -- Whole Foods, Safeway, etc... are also booking these as revenue. Remember when Groupon, on the eve an IPO, cut it's reported revenue in half? Yeah, only a $300,000,000 difference. > "On Friday, Groupon said it would change what it books as revenue after discussions with the Securities and Exchange Commission. It will now only count as revenue its commission on sales, rather than the total value of an online coupon." http://www.wsj.com/articles/SB10001424053111903791504576589211214409214 http://www.wsj.com/articles/SB100014240531119037915045765892...

jqm 12y ago

There might be a "food related start-up" bubble but I don't think there is actually a "food" bubble. If anything, its the reverse. More mouths to feed. Less water and land and pristine ocean to do it with. Providing sufficient food efficiently has been a primary challenge since day 1 of human history and probably will be right up until they invent those titanium bodies.

trhway 12y ago
>Providing sufficient food efficiently has been a primary challenge since day 1 of human history and probably will be right up until they invent those titanium bodies. those containers with blue&red LEDs (pioneered by marijuana growers) is pretty much the solution (or at least preview of a very large part of the solution) as it allows to not waste water and energy and multiplies square footage by using several layers of shelves. Due to such efficiency, it also allows to grow food where normal open-air agriculture wouldn't be very feasible. Non-mobile versions, more like warehouse scale than container, can be built-in into cities (even underground like parking) or suburban areas.
- seiferteric 12y ago
  I am extremely skeptical that this type of agriculture will ever make up significant portion of food produced. Pick a random spot in the middle of the US on google maps and zoom in, it will most likely be agricultural fields. USDA says ~51% or 2.3 BILLION acres of land is used just in the US for Ag. Much of that relies on "free" resources like rain and sun shine to be economical. The cost of creating the infrastructure to replace even a tiny fraction of this land would be huge. Plus now you want to replace sunshine with artificial light? Where does this energy some from? Maybe there is some application for this in cities for fresh produce, but I don't see it for staple crops. The only reason it works for marijuana growers is due to the extremely high price they can sell their "crop" for.
  - klibertp 12y ago
    There are countries where land is more scarce than in the US where area efficiency is more important than water/light efficiency.

Jedd 12y ago

"Entrepreneurs are the foundation of a growing economy and goodness knows, we need growth." Well that's certainly an opinion. I know it's TC, so a certain agenda is assumed, but facts not in evidence and all that.

SocksCanClose 12y ago

...is it me, or did I miss the argument here?

penprogg 12y ago
The argument was money -> bubble It's not very good

lotsofmangos 12y ago

Perhaps we are in a bubble-bubble, where the idea of being in a bubble is so popular that many investors are betting on being in a bubble even when there isn't one.