Bits x Bites has raised $30M in the first close of its new $70M fund. The new fund boosts its position as the leading and only Chinese venture capital investing in transformative technology to build a more resilient and sustainable agrifood supply chain.

LPs backing Bits x Bites include Temasek, a global investment company headquartered in Singapore; Heritas Capital Management, a Singaporean investor primarily focused on health and related food technology; and the CEO of Monde Nissin, a Philippine food company that also owns UK meat replacement company Quorn. Several food conglomerates and family offices in China and Southeast Asia have also joined in. TheseLPs’ industrial footprint spreads across food and biosciences. The VC anticipates a final closing in the coming months.

Bits x Bites is managed by general partners Matilda Ho and Joseph Zhou to invest exclusively in the agrifood tech sector with a focus on the Chinese market. By backing early-stage Chinese and international founders, it aims to advance bioscience, data science, and processing technology to tackle challenges along the Chinese food supply chain, from precision agriculture, crop and animal health to protein alternatives and nutrition.

“With African Swine Flu, COVID, and uncertain trade relations, nothing else is more urgent in China today than growing the self-sufficiency and sustainability in food production,” says Matilda Ho, founder and managing director of Bits x Bites. “Whether it is a discovery platform for novel agri inputs, bio-manufacturing of high-demand functional ingredients, or machine learning for farm automation, these process innovations are vital for raising our food system’s productivity and improving the nutritional and safety performance of our food product.”

“China has built a vast digital ecosystem with impressive e-grocery and food delivery penetration, and these downstream platforms have been driving food and retail investment in China,” continues Ho. “However without investment in upstream innovation, we won’t see meaningful improvement in farm production efficiency to sustain the rapidly growing food demand. And without biotech and ingredient innovation midstream, food products will fall short of consumers’ expectation in nutrition, clean label, taste, value, and transparency. These opportunities are what brought Bits x Bites and our LPs together. We are grateful to have investors who share our vision so that in this economic watershed year, we can invest in emerging companies like Mojia Bio to shift our production toward sustainability.”

Mojia Bio is the first new portfolio company in Bits x Bites’s new fund. It is a Chinese bio industrial company that produces essential nutrients. Its proprietary bio-manufacturing process increases yield and limits by-product and environmental pollution associated with conventional chemical synthesis.

In addition, the new fund has deployed capital in follow-on investments in Bits x Bites’s previous portfolios. They include Tropic Biosciences, a UK CRISPR gene editing company, and InnovoPro, an Israeli chickpea protein concentrate company.

Frequently Asked Questions

Q: Why does China need an agrifood tech fund, and why now?
When we launched in 2016, it was evident that China was crying out for its own VC to back agrifood tech companies. With its massive population and growing middle class demanding better food quality, the status quo in how food is produced and delivered to consumers was simply not sustainable. We saw tremendous opportunities where technology could be tapped to drive production efficiency, food safety, nutrition and food waste. There is a clear gap in early-stage financing for local companies in this category, and in the bridge needed to transfer global technology to the Chinese market.
Since then, we have seen an exploding class of scientists and innovators addressing the Chinese market opportunity in agrifood. Many of these talents are returning to China from overseas, with the international political climate being a major factor. At the same time, the Chinese government and SOEs have injected vast amounts of capital to modernize agriculture and expand industrial farm operations. All of this is welcome news to the local ecosystem and is serving to attract capital to the segment.

Q: Compared to global agrifood tech investors, what sets Bits x Bites apart?
Like most other global agrifood tech investment investors, we are driven by the question of how we’ll meet food demands sustainably as world population grows. The biggest difference here is our focus on China.
China offers a huge market for tech companies and will continue to play a formidable role in the supply of food products and ingredients. Global companies may balk at the regulatory hurdles, IP concerns, complicated supplier and distribution workflows. Our main goal when we invest internationally is to help our companies maneuver over this terrain and to set them up for success. And of course, simultaneously, by providing early-stage capital to local midstream and upstream agrifood tech companies, we are working to build a startup ecosystem, where companies can thrive by targeting solutions that our food system needs to become more sustainable.
To do that, we have built a broad network on the ground with local companies and multinationals looking to collaborate with startups in China. We are also pleased to have a number of formal and informal advisors whose expertise in regulations, manufacturing, distribution are crucial for our investment assessments and in our post-investment support. Our China market resources are a major value we lend to our global co-investors as well.

Q: What stages do you invest in? What is your average cheque size?
Pre-A to B stage companies. We prefer companies that have proof of concept and can show field validation. Our average check size is US $1-3M.

Q: What specific areas post the most exciting opportunities for the Chinese market in the next 5 years?
Since the trade war and African Swine Fever, self-sufficiency in food production has become a national priority. Covid has accelerated the timetable for investment in supply chain efficiency. In the past two years we have seen tremendous investment from SOE and other corporates to consolidate agriculture. Without industrial-scale operations, it is very challenging to apply technology and modernize production. So in agriculture, we are looking at IOT and bioscience solutions that can help producers improve yield while reducing input, address soil degradation, and protect animal, crop, and farmers’ health.
Midstream, cold chain logistics in China cover only 19% of production, far below other developed countries which exceed 95%. We are looking at how automation and data can improve food safety and cut down spoilage in storage, processing, and transportation.
Also midstream, health and nutrition are a main area of concern. More than 11% of China’s adult population is diabetic. One in five children is obese. Our interest here is bioscience and patented food processing that will introduce new functional ingredients, or reduce the use of sugar, salt, and fat without compromising on taste. This includes applications that will elevate the health and sensory performance of animal-free protein alternatives.