Asia became the ‘world’s factory’ for manufacturing. It’ll do the same for alt-protein, says Better Bite VC

Over the past several decades, Asia has developed a well-worn reputation as the ‘factory of the world,’ churning out manufactured goods for the increasingly voracious global market at a pace and a price that can’t be beaten by anywhere else.

With the UN forecasting an extra 1.78 billion mouths to feed by 2050, amid diminishing cultivable land and mounting climate change-related problems: can it do the same for protein?

That’s the thesis behind Better Bite Ventures, the foodtech VC set up by founding partners Michal Klar and Simon Newstead last year.

“Asia is not just a very exciting consumer market, but also has access to unparalleled talent and production capabilities,” Klar tells AFN. “Asia is already used as a manufacturing hub for production at scale, and we think the same will happen with alt-protein.”

This week, Better Bite announced the first close of its maiden fund on $15 million to invest in early-stage alt-protein startups from across the Asia-Pacific region. It claims the vehicle is the first to exclusively invest in Asian alt-protein ventures.

“Our limited partners include family offices, impact investors, and current and former food and tech execs from companies like Danone, Google, Airbnb, Gojek, Tencent, and Carousell,” Klar says.

“Among them are successful founders of Asian startups like Steve Melhuish, PropertyGuru co-founder and active climate tech investor; JJ Chai, Rainforest co-founder [and former Carousell exec]; and Joel Neoh, the exited founder of Fave.”

The fund is around 80% committed, he adds.

Portfolio so far

It has already cut several checks over the past year, targeting pre-seed and seed rounds, and will continue in that vein. Startups that have received investment from Better Bite so far include:

• Blue Canopy (China) – using biomass fermentation to create meat analogs
• CellX (China) – cultivated meat
• Change Foods (Australian-founded, relocated to US) – creating dairy products through precision fermentation techniques
• Fable Food Co (Australia) – low-processed meat alternatives made from mushrooms [disclosure: AFN‘s parent company, AgFunder, is also an investor in Fable]
• Green Rebel Foods (Indonesia) – plant-based meat and dairy products [disclosure: AgFunder is also an investor in Green Rebel]
• Me& (Australia) – cell-cultured human breastmilk
• Meatiply (Singapore) – cultivated poultry meat
• Next Gen Foods (Singapore) – maker of Tindle plant-based chicken replacement, just raised the segment’s biggest Series A round yet
• Umami Meats (Singapore) – cell-cultured seafood

These startups cover everything from consumer brands to B2B models. “We wouldn’t shy away from much” in the broad, alt-protein category – though investment prospects must present an opportunity for international scale, Klar says.

Avoiding ‘niche’ alt protein

“There are a lot of alt-protein brands that are very niche — either very local without ambition or need to expand internationally, or niche in terms of having specific product lines — and we often love those brands and are regular consumers of them, but simply [there is not] enough market size. Realistically, they cannot get big enough to provide venture-level returns.”

Better Bite won’t “go first check” into anything beyond a seed round, Klar adds; but it will reserve around 30% of its committed capital for follow-on investments at Series A or B stages.  

This focus on ultra-early fundraising rounds is reflective of Klar’s and Newstead’s own experience in both tech entrepreneurship and angel investing – as well as plant-based eating.

Newstead founded several startups; among them was vegan confectionery company Bite Society, which counted retailers 7-11, Wellcome, and Lotte among its customers before being sold. He also co-founded the Hong Kong Vegans group and hosts the Vegan Startup Podcast.

Klar cut his teeth at Polish e-commerce company Allegro, where he was one of the first employees and helped it become the country’s first tech unicorn before it was acquired by Naspers in 2008. The South African conglomerate posted him to Singapore to run its e-commerce operations in Southeast Asia; at the same time, he also began working with its growing venture capital business.

“It gave me this combination of startup experience from both the investing and the operating side,” he says. “I had been plant-based myself for a few years, but [work and diet] were always two separate worlds for me: plant-based eating and sustainability on the one hand, and tech on the other. But then I decided I wanted to align [those two aspects of life]. I realized I can actually use my experience, and my passion for alt-protein, and I just got involved.”

Leveraging first-mover advantage

Since Beyond Meat‘s IPO in May 2019, there’s a growing sense that VC investors who haven’t already entered the alternative protein space, have probably missed the boat.

But Klar suggests such observations are focused on the more mature North American scene. The Asia Pacific alt-meat market is still nascent, he says; moreover, it’s traveling a somewhat different trajectory in order to cater to regional tastes and food cultures, presenting numerous opportunities for investors.

“The timing is right for Asia. Future unicorns are being created as we speak. And just like with other sectors of tech, you’re seeing local startups often winning out – like Gojek and Grab beating Uber,” he says, referencing the two regional ride-hailing apps that eventually forced their US interlocutor to quit the market.

“We believe this will happen in alt-protein too, and we already see signs of this. For example, Green Rebel is a market leader in Indonesia, and is shaping up to be the Southeast Asia market leader, by making products really catered to Southeast Asian needs,” Klar claims.

It’s the only plant-based protein brand to have partnered with the likes of Starbucks, Domino’s, and Ikea in Indonesia – pointing to its first-mover advantage in its home market.

And while Better Bite is focused on seed and pre-seed investments, it’s hoping that this overall trend promises big returns farther down the line.

“This is the time when we really see [Asian alt-protein] markets and consumers taking off; where things really go big on all fronts,” Klar says. “On the investing side we’ve already seen some two nine-figure rounds — Starfield in China and Next Gen in Singapore — and that’s the first time we’ve seen these kind of rounds in Asia.”

He adds that he’s aware of at least two other Asia Pacific startups in talks to close fundings of a similar size.

“That also translates into scalability, from the VC perspective. It means these companies will have to fuel up [on funding] to scale at an unprecedented level. [They’re] coming out of this early stage of product prototyping and market testing into scaling up commercially, for product rollout, setting up factories, to scale at that level.”