FABID’s 2023 Annual Report: Deal Doldrums

For those of you looking for a variety of levels of investment capital, the frustration was real in 2023. Deals were down.

That’s the read from the FABID 2023 Annual Report, one of the startup food and beverage industry’s most prominent homegrown financial services, which hit our screen yesterday. The report’s conclusions as drawn by FABID founder Ryan Williams put the numbers to a lot of the grumblings we heard over the course of last year.

To Wit: the report noted that brands receiving venture funding dropped for the second year in a row, down from nearly 400 in 2021 to 231 in 2023. Last year, 77 fewer brands raised venture capital than in 2022, when the number was 308.

Additionally, total investment was down by 36 percent from last year, for a total of $1.6 billion, according to Williams, with average investment per brand falling to $6.9 million from $8 million in 2022.

Williams noted that one key element driving down that average was that even the largest raises were smaller than the previous year, with the total of the top 10 deals he tracked dropping from $816 million in 2022 to $496 million last year.

One sector getting crushed in the deal environment? Plant-based meat, which attracted more than $1 billion in investment in 2021. Last year, just two brands, Meati and Rebellyous, were the targets of nearly all of the plant-based meat funding tracked by FABID, with a total that stayed under $100 million.

It wasn’t just the big deals that were down, Williams told us, noting that the smallest brands were having the toughest time finding investors. Raises at the small end – about $3 million or less, so at the “Seed” or “Seed+” stage – dropped the most.

Meanwhile, new funds launches have also dropped drastically, from a peak of 88 in 2018 to what the report termed “a handful.” Williams pointed to a few launches, including 458 Capital, Freedom Trail Capital, Full Frame, VHS Ventures, and Humble Growth as signifying that interest remains in CPG investment.

One clear signal coming through the grumbling, however, was the rise of the celebrity brand, according to the report. Williams noted that there are 265 “Famous Founder Brands”, including 75 alcohol brands. Among the founders, actors and musicians are most popular, followed by social media influencers, athletes, and “public figures.”

If the institutional cash isn’t there to support brands, it seems, actors are willing to play a role at startup, at least, according to the report, which noted that “at this rate, over 100 actors will have launched a CPG brand by the end of 2024.”

It was a big year for FABID itself, noted Williams. The company has joined an investment banking platform, GT Securities, and is now able to execute deals on behalf of its clients. A former Wall Street banking analyst, Williams spent much of the last half of the year taking exams to qualify to work as part of a registered broker-dealer.

“I just wanted to be able to help people in an unrestricted way,” Williams noted. “And one by the book and in keeping with government regulations.”