Investors driving up deal flow in biotech & agtech and food

Nutrition and health & wellness deals are on pace for a record year, with the number of first half transactions nearly hitting the 2013 full-year level.

Nutrition Capital Network (NCN), which tracks deals in the sector and introduces investors to potential investees, reported 235 transactions from January to June this year, compared to annual totals of 372 in 2014 and 253 in 2013.

The company splits deals into equity and mergers & acqusitions; in equity, biotech and agtech has already outstripped 2014. There have been 15 transactions so far this year, while all of 2014 saw only 11. Four companies raised between $50 million and $100 million – drone manufacturers DJI and 3D Robotics, and Seres Therapeutics and Allergen Research.

NCN recorded 32 equity investments so far in 2015 in Branded Food & Beverage (mostly natural and organic, but also including foods targeting a particular health condition), against 33 for all of last year. Investments of greater than $10 million were made into seven companies including meal replacement plan Soylent, snack boxes NatureBox and negative calorie drink Celsius.

The organisation’s Grant Ferrier attributed some of this growth to the increased number of private equity firms interested in the sector. “A decade ago you really didn’t have that many dedicated private equity companies looking into the natural organic food industry, now you have about 15 to 20 of them  The number of corporates investing in the industry has also increased over the past decade.” He added, “The growth in dedicated funds as well as the entry of some larger-named investors is notable.”

Private equity firms are also investing earlier, he said, so there is now competition between private equity and strategic investors. “More players in the pool is driving the completion, the valuation and more companies into the market to partner up to win the race.”