Yfood, a direct-to-consumer food technology startup that has emerged over the past decade has been growing around the concept of meal replacement beverages. Nestle, the food and beverage giant, has acquired a 49.95% stake in the company, with an option to buy existing Yfood shares over the next few years. The financial terms of the deal were not disclosed by the companies, but according to reliable sources close to the deal, TechCrunch understands that the Nestle acquisition values Yfood at 430 million euros ($469 million), which means the investment Nestle is making here is valuable. at a value of 215 million euros.
The venture takeover will see all of Yfood’s venture backers — including Felix Capital, dairy giant Fonterra, agricultural startup VC Five Seasons, and several others — sell their shares to Nestle, according to documents reviewed by TechCrunch. Yfood’s founders and co-chairs, Ben Kremer and Noël Bollmann, will continue to hold 50.05% of their shares and run the business independently. Nestlé will have an option to buy the shares outstanding in the next three years.
This is a significant exit for investors of Munich-based Yfood, which was founded in Munich in 2017 and has only raised $22.6 million in outside support (including $16 million in 2020).
The deal — which was initially reported as being in the works at the beginning of March and officially closed today — wouldn’t involve any new investment in Yfood, which is a lucrative investment that has been around for a while.
The startup currently sells ready-to-drink beverages, make-your-own-drink powders and direct-to-consumer nutrition bars online and through a network of retailers. Although it is usually classified as a meal replacement business, its premise is not to replace all foods.
Before founding the startup, the two founders were in investment banking and worked late hours, and they lamented the few options they had when they got hungry and needed sustenance quickly.
“We had a problem that we were solving for ourselves,” Polman told TechCrunch in the past. “All there were were candy machines and the choice was snickers or potato chips. We couldn’t understand why fast food always had to be so unhealthy. That was the inspiration.”
Looks like they kind of caught the zeitgeist with Yfood. The business is seeing 100% year-on-year revenue growth and last year generated sales of 120 million euros ($131 million), according to a source. The company is focused on Europe, and claims to have sold at least 95 million “meals” — that is, meal replacement drinks, powders and bars — to date in that region.
The Yfood milestone should give the food tech community something substantial to chew on. The intersection of technology and food has been a topic in the startup world for years, with technologists and entrepreneurs bringing their hacker mentality to the field to take on new approaches to sourcing, preparing, selling and distributing things to eat and drink.
But not all of these prescriptions were implemented as planned. Remember Juicero? Or the various questions hovering over genetically modified (GMO) products? And this is apart from the many efforts that have gone bad due to general problems that can affect any startup, such as not getting the unit economics, market demand, or culture right.
At a time when funding for startups is hard to come by, and many are seeing their valuations cool amid a broader downturn in the technology sector and macroeconomic pressures, mergers and acquisitions will be a path that a number of these companies are going down.
The Yfood deal is an encouraging development on this front, not least because there are some notable examples of deals in food technology that it has no Well played for startups and their investors.
Soylent — like Yfood, built around the concept of whole-food meal replacement beverages — garnered quite a bit of buzz when it launched in 2013, opening up a worthwhile conversation about whether Soylent and its ilk (or milk, as the case may be) It heralded the end of food. The crowd teased it, but it seemed like they didn’t really want to motivate Soylent herself.
After securing more than $70 million in funding from the creme de la creme of investors — names like Andreessen Horowitz, backed by Google Ventures, Index Ventures and deck accelerator Y Combinator — it reached a $430 million valuation in 2017 per PitchBook; When Starco Brands acquired the company in February 2023, the all-share deal appeared to be worth no more than $29.4 million.
We’ve reached out to Yfood for comment and will update this story when we learn more.