Raising Your Seed Round: Food and Beverage

The UK’s food and beverage sector has never been more dynamic — or more competitive. For founders launching challenger brands, raising a seed round isn’t just a funding milestone; it’s the difference between shelf presence and being shelved. Whether you're building a better-for-you beverage, a zero-waste snack brand, or the next protein alternative, securing early capital is essential to scale operations, develop strong unit economics, and build momentum in a crowded market.

But food and drink fundraising comes with its own set of quirks. Here’s what you need to know.

Why Food & Beverage Is a Category Like No Other

Seed funding in food and drink doesn’t just support R&D or team expansion — it often underwrites the entire supply chain. From manufacturing minimum order quantities (MOQs) to costly certifications, product sampling, and packaging, capital needs are front-loaded.

What makes this sector uniquely challenging is that despite being product-driven, it requires early signs of commercial traction. You’re expected to prove velocity and unit economics before you’ve had the chance to scale.

Yet investor interest is strong. Recent trends show increased appetite in:

• Functional beverages: nootropics, adaptogens, gut health and no & low alcohol
• Alt-protein and plant-based innovation: driven by ethical and sustainability demands
• Sustainable, low-waste packaging: aligned with UK environmental regulations and consumer sentiment
• Regenerative agriculture and climate-positive supply chains

These trends can be powerful leverage points if baked into your proposition early.

What a Seed Round Really Looks Like in F&D

In the UK, food and drink seed rounds typically range from £250k to £1.5m, depending on ambition and capital intensity. They’re raised once you’ve:

• Finalised product development and initial branding
• Launched in retail (or have early listings in pipeline)
• Demonstrated early traction via D2C or marketplace sales
• Nailed the gross margin story (30–50% at least)

Too often, founders confuse “proof of concept” with “investor readiness.” While friends-and-family rounds can get you on the shelf, seed capital is about proving that you can stay there — and grow.

For a breakdown of what a seed round typically involves, see our guide to How to Raise Capital for a Startup.

What Investors Want to See

Food and drink investors are increasingly savvy. They’re looking for:

• Velocity: Do you know your velocity of sale by channel and where does this compare vs. the benchmark?
• Repeat purchase rate: Are customers coming back, or is it just a novelty?
• Differentiation: Can your brand clearly articulate why it exists in <10 seconds?
• Gross margin: Is there room to scale and pay a distributor or co-packer?
• Operational plan: Can you meet demand without imploding?

They also like to see sector fluency. Have you mapped out your route to supermarket listings, B Corp certification, or co-manufacturing? If you're launching a probiotic soda, how does that fit into the wider wellness trend?

Learn what specific investor types in food and drink are looking for in food and drink startups.

Where to Look for Seed Capital

Food and drink founders have access to a rich — but scattered — ecosystem of funding options:

• Crowdfunding (e.g. Seedrs and Crowdcube): Great for brands with a strong D2C following and visual storytelling. Be cautious of premature dilution
• Angel investors and syndicates: Seek out those with FMCG or retail backgrounds. They bring distribution connections and shelf-level insight
• Accelerators and incubators: Programmes like YFood, Seed Haus, or Emerge can open doors to networks and retail partners
• Institutional brokers: Better suited to larger seed raises or when moving towards Series A
• ThatRound’s fundraising marketplace: Provides access to all of the above, plus the ability to compare services, fees, and outcomes — essential for saving time and maximising fit

We built ThatRound to cut through the clutter — browse the funding partners in one place.

Pitfalls to Avoid

Too many founders fall into common traps:

• Launching a crowdfund too early, before demonstrating traction, building community, or securing any lead investment (which is typically required)
• Underestimating cash flow constraints, especially if you're scaling production or paying listing fees
• Failing to forecast margin compression when dealing with wholesalers or supermarkets
• Getting lost in brand, without proving unit economics

The funding market is competitive, but avoid giving away too much equity too soon just to secure runway. Use our guide on how to value your startup when considering how much equity to give away before you pitch.

Are You Ready to Raise?

Before approaching investors, you should:

• Have a tight pitch deck and clearly modelled 18–24 month forecast
• Know your CAC, AOV, and retention metrics (especially for D2C)
• Have traction data, even if small — a pop-up, a pilot, a repeat order
• Be able to explain your supply chain and manufacturing scalability
• Know your raise size and what milestones it will unlock

Getting ready to raise isn’t just about having a great product — it’s about telling a credible growth story backed by data, focus, and strategy. The more clarity you bring to the table, the more confidence you’ll inspire in the right investors.

Find Smart Capital, Not Just Money

In food and drink, your capital partners are often more important than the cash. A former head of buying at Waitrose or a founder who scaled an exit to Nestlé brings more than just a cheque — they bring leverage, wisdom, and credibility.

And credibility is what buyers, distributors, and retailers want to see before they take a chance on your brand.

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