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Cultured Meat Startup Aleph Farms Raises $12m Series A from VisVires New Protein and Cargill

May 14, 2019

Aleph Farms, an Israel cell cultured meat startup, has raised $12 million in Series A funding led by Singaporean investor VisVires New Protein. Commodities trading and ag products group Cargill participated in a rare venture capital outing for the Minnesota-headquartered behemoth.

Plant-based proteins have been snagging the spotlight lately particularly after Beyond Meat’s recent blockbuster IPO, but that doesn’t mean that cell cultured protein products are lagging. In fact, these lab-based innovations that are grown from animal cells may offer conscious consumers the perfect compromise: they get to have their cake — or, in this case, beef — and eat it, too.

Aleph Farms plans to begin building bio-farms and move toward a limited consumer product launch with steak grown under controlled conditions within three-to-five years, according to a press release.

“Aleph Farms is the third company to have successfully raised Series A funding. It stands out in a number of respects,” Kenneth Lee, senior Partner of VisVires New Protein, told AgFunderNews. “First, it has the ability to grow multiple cell types simultaneously in a 3D structure, thereby recreating the structure of meat and its texture/mouthfeel. Second, it doesn’t rely on genetic engineering or modification. Third, its strategy and progress towards diminishing the cost of production.”

VisVires, which describes itself as a disruptive food system venture fund, has been an active player in several different food tech segments recently, backing In Ovo’s technology to combat male chick culling, Ynsect’s insect farming operation, and ViAqua’s viral infection combatting technology for aquaculture to name a few examples.

Cargill was joined by another new investor M-Industry, the industrial group of Swiss retailer Migros. Existing investors renewing their support include The Kitchen FoodTech Hub and its backer Israeli food manufacturer Strauss Group, Peregrine Ventures (Israel), CPT Capital (UK), Jays Third Eight (Israel), and protein alternative-focused investors New Crop Capital (USA).

“Aleph Farms has already demonstrated the ability to grow together various cell types making a beef cut and to ensure they form a 3D texture similar to meat. The difficulty lied in mimicking the same conditions as inside the cow for those cells to form the same tissue as they would on the inside. More importantly, consumers do not want to compromise on taste and we intend to create, juicy, delicious steak made of cow cells. The main remaining challenges are related to scale-up and cost of commercial products,” Berger adds.

The new round of funding will be used to help Aleph Farms boost its product development efforts, taking its prototype to commercial scale. Aleph Farms’ technology builds on the natural process by which tissues regenerate in cattle. The company has pioneered a way to isolate the cells responsible for the process, and to grow them outside the animal into a structure similar to a steak. Other companies in this nascent field have only succeeded in producing unstructured meat like burgers and nuggets.

Plant-based or Cell-Cultured

Many backers of cell-cultured meat products claim that producing more protein through this method will help alleviate some of the pressure that conventional beef production has put on the environment will mitigating some of the animal welfare concerns that consumers have with how cattle are treated in feedlots. The big red flag looming above every advancement in cell-cultured protein to date, however, has been whether the technology can ever achieve scale at a price that’s affordable to a broad enough demographic of consumers.

Another major concern is whether meat that’s grown in a lab will ever match the texture, mouthfeel, and flavor of beef from cattle. As a testament to the difficulty of cell cultured meat companies’ task, startups dabbling in the space have largely focused on developing ground meat, which poses fewer challenges than recreating the sinew-like texture of steak cuts.

“Making a patty or sausage from cells cultured outside the animal is challenging enough, imagine how difficult it is to create a whole-muscle steak,” Jonathan Berger, CEO of Israeli food tech hub The Kitchen, told AgFunderNews. The Kitchen co-founded Aleph Farms through its food tech incubator that provides capital as well as business mentorship and networking.

Aleph Farms claimed in December 2018 that it was the first company to demonstrate that it can grow steak directly from bovine cells without harming the cow.

The Race to the Dinner Table

Now cell-cultured startups are racing to beat each other to the supermarket. The three best-funded cultured meat startups — Memphis Meats, CUBIQ Foods, and Mosa Meat — have all announced that they expect to start selling products in 2021.

“There are probably 25 to 30 teams working on cultured meat around the world compared to the hundreds working on plant-based alternatives,” Berger said. “Relatively speaking, the cultured meat space is fairly open. Also, the companies are working on different species of products, i.e., poultry, pork, beef, and fish, and have different product strategy. approaches ranging from growing a whole steak like Aleph Farms to providing ingredients to the plant-based industry. As a result, there is little competition between companies that are active in this field.”

Venture capitalists are providing them with plenty of financial fuel to reach those targets. In 2018, cell-based meat companies raised $50 million in capital across 14 deals. This was double the capital invested in 2015, 2016, and 2017 combined. Memphis Meats also counts Cargill among its investors, along with Tyson Ventures, suggesting that Cargill is trying to double down on reaching the market with a cultured meat product regardless of which startup gets there first.

“We all need to work together to address the increasing global need for protein in the coming years, especially as more consumers move into the middle-class and the demand for protein increases. We have a responsibility to look at all innovations that can help us feed the world,” said Jon Nash, president, Cargill Protein-North America in a statement.

After following Aleph Farms for close to a year, VisVires New Protein is convinced that it has the best technology to overcome cell-cultured meat’s obstacles, including scalability. Unlike Cargill, the fund does not plan on investing in another cell-based meat company with another similar approach to Aleph Farms.

JUST (formerly Hampton Creek) has also claimed that it will have a cultured meat product on the market next year, but we do not know how much of the company’s $220 million in total funding is going toward this end. Mosa Meat hosted the first tasting of a lab-grown burger in 2013. Memphis Meats revealed the world’s first cultured meatball in February 2016 and the world’s first cultured poultry in March 2017.

Can Cultured Meat Obtain Social License?

“Several recent surveys have found that when cultured meat is put into context for consumers – by explaining its benefits – there is typically a favorable level of acceptance,” VisVires’ Lee says. “Nevertheless, it is clear that public and consumer acceptance of cultured meat cannot be taken for granted. There remains a need to communicate proactively to the broader public on the ‘what and why’ of cultured meat.”

Social license refers to the general public’s willingness to accept a new technology. The best example of social license gone wrong is the public’s response to GMO technology, culminating in the passage of a federal law requiring food companies to label products that were produced with bioengineering.

Consumer interest in cell-based meat shows some promise that social license won’t be a dealbreaker, with a 2018 survey of 3,030 consumers finding that 30% of U.S. consumers, 59% of Chinese consumers, and 50% of Indian consumers were very or extremely likely to purchase cell-based meat regularly.

But poor marketing or messy messaging could deter the remaining skeptics from trying cell cultured meat products. It may also hinge on which products are offered at commercial scale first. A disappointing debut could seriously deflate the ever-increasing anticipation that consumers and foodies are cultivating around these products.

“Aleph’s first products will be beef steak slices. We will start building bio-farms and work toward a limited launch within 3 to 4 years. At Aleph Farms, this is not science fiction. We’ve transformed the vision into reality by growing a steak under controlled conditions,” Berger says. “Aleph Farms is focusing first on beef meat, because cattle are the most pressing environmental issue, in terms of water, land usage, and GHG emission. From there, we’ll expand quickly to other mammalian meat, like lamb and pork. Then, we’ll adapt our technology platform to poultry and fish.”

Find out what AgFunder CEO thinks about cell cultured meat in his editorial here.

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