Agrifood VC firm Bits x Bites has announced a $30 million first close for its latest fund, with Singapore sovereign fund Temasek among the limited partners backing the new vehicle.
The Shanghai-based firm also revealed its first investment out of the new China-focused fund, backing biotech startup Mojia Bio’s ongoing Series A round.
Bits x Bites is aiming to secure $70 million in committed capital for the fund by its final close, which is expected within the next few months.
It will invest in areas such as advanced bioscience, data science, innovative nutrition, food processing technologies, precision agriculture, crop and livestock health, and alternative proteins with the objective of making the food supply chain more sustainable.
The fund will invest in Chinese startups, as well as international teams that can offer solutions suited to the Chinese market. It will focus on pre-Series A to Series B investments with an average ticket size of between $1 million and $3 million, according to managing partner Joseph Zhou.
“We prefer companies that have proof of concept and can show field validation,” he told AFN.
The fund’s maiden investment comes with Bits x Bites’ participation in the Series A raise of Mojia Bio, a China-based startup producing “essential nutrients” using a “proprietary bio-manufacturing process [that] increases yield and limits by-product and environmental pollution associated with conventional chemical synthesis,” according to a statement.
Mojia Bio has reportedly raised $14.9 million for its Series A round, which is still open. Other investors include Beijing-based Asia Green Fund, said Zhou.
“China has long been the ‘global factory’ for the chemical production of many essential nutrients for animals and humans. But many of these chemical synthesis processes have byproducts that are also environmental pollutants,” he said.
“We believe a bio-based manufacturing approach is a viable path forward to capitalize on China’s position in the global market and to enable sustainable nutrient production for the future.”
Bits x Bites were drawn to Mojia Bio for a number of reasons, Zhou continued.
“First, it has a much cleaner environmental footprint than traditional approaches. Second, its conversion rate and production efficiency are significantly better than conventional production, and therefore more cost-effective. Third, its series of novel enzymatic production approaches also provide a competitive barrier.”
The startup will mainly use it Series A funding for research and development and to scale up manufacturing, he added.
Joining Temasek in backing Bits x Bites’ latest fund is fellow Singaporean outfit Heritas Capital Management, as well as Henry Soesanto, CEO of Monde Nissin – the Philippine food company that owns mycoprotein brand Quorn. Several undisclosed food conglomerates and family offices from China and Southeast Asia also invested in the fund.
“With African swine fever, Covid-19, and uncertain trade relations, nothing else is more urgent in China [than] self-sufficiency and sustainability in food production,” Matilda Ho, Bits x Bites managing partner, said in a statement.
“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. However, without investment in upstream innovation, we won’t see meaningful improvement in farm production efficiency to sustain [rapidly] growing food demand. And without biotech and ingredient innovation midstream, food products will fall short of consumers’ expectations in nutrition, clean label, taste, value, and transparency.”
According to AgFunder‘s 2019 China Agrifood Startup Investing Report (produced in collaboration with Bits x Bites) total funding into upstream categories in the country halved in dollar terms compared to 2018, hitting $490 million in total – though the number of deals in these segments grew by 44%.
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