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BFY Snack Start-Ups Attract Investors Amid Upcoming HFSS Rules

May 14, 2022: 12:00 AM EST
Investors are increasingly funnelling money into better-for-you snack companies due to healthy eating trends and upcoming HFSS rules. More specifically, the HFSS rules have given confidence to investors that healthier eating will accelerate. 

While online crowdfunding has proven successful for many snacking start-ups and SMEs, others have sought support from specialist investment vehicles. Mission Ventures is a key operator of accelerator programs in the UK, with two programs: Good Food Fund and Batch Ventures. The Good Food Fund supports brands tackling childhood obesity through providing funding, scaling up manufacturing and managing costs. The program has taken on start-ups including quinoa crisps brand Nombots, healthy marshmallow maker Lexi's Treats, jelly supplier Naturelly, and chocolate-covered carrot biscuit brand Rootles. It now intends to back a further 10 to 15 healthier food and drink brands in the coming year, with a specific focus on non-HFSS snacks. Batch Ventures is the other business support program by Mission, created in partnership with Warburtons to back baking related innovation. While not aimed exclusively at better-for-you brands, Batch Ventures has already supported baked sorghum snack brand Insane Grain and non-HFSS oat cookie brand Snackzilla. Batch Ventures also backs Dorset biscuit supplier The Artful Baker. 

Other notable start-ups backed by other investors include Perkier, Fitbakers, The Savourists and Boundless. Last year, healthy snack bar maker Perkier raised more than £1 million in an oversubscribed crowdfunding round, smashing its £400,000 target. Fitbakes, which makes non- HFSS cakes and snack bars, enjoyed a successful bout of crowdfunding in 2021, securing £525,000 from 313 investors. Savory snack bar brand The Savourists raised £200,000 and is available at Whole Foods Market and Amazon. Germinated nuts and seeds snack brand Boundless has raised a total of £1.6 million from angel and other investors. 

Investor support is increasingly important due to cost-of-living increases and delays in the UK government’s HFSS regulations. Increases in the cost of living due to war in Ukraine has upped supply and production costs for start-ups, which are more vulnerable to cost increases than large corporations. Smaller brands are also less likely to be able to pass the higher costs through to the shopper, and delays in introducing HFSS rules will give larger corporations more time to innovate and reformulate.  
Niamh Leonard-Bedwell, "Going bananas for health: healthier snacking category report 2022", The Grocer, May 14, 2022, © William Reed Business Media Ltd
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