According to Digital Food Lab, “FoodTech is an ecosystem made of all the agrifood entrepreneurs and startups (from production to distribution) innovating on the products, distribution, marketing or business model.”
Pitchbook recently released their newest Emerging Tech Research for Quarter 1 focusing on FoodTech and the industry’s newest trends. They specifically shined a light on new developments in delivery, virtual experiences for food and wine lovers, lab-grown meat products, and plant-based meat alternatives.
FoodTech and QSBS
Savvy investors with an understanding of the complexities of QSBS tend to keep their finger on the pulse of industries experiencing a transformation or secular shift, and for that reason, we wanted to briefly unpack how the upward FoodTech trend intertwines with QSBS and Section 1202.
There are rigid restrictions in Section 1202 around the general food industry as both farming and restaurants are specifically included in the paragraph outlining unqualified trades.
According to the IRS, “You are in the business of farming if you cultivate, operate, or manage a farm for profit, either as owner or tenant. A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. It also includes plantations, ranches, ranges, and orchards.”
Luckily, these innovative and inventive FoodTech startups are showing us all that there is a lot more to food than just farm-to-table.
Find businesses within the FoodTech industry in our Company Directory.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.