Cultured Meat

Cultured Meat Will Cost Startups $150m-$370m (and Take At Least 4 More Years) to Bring to Market

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There is a reason that high profile investors and entrepreneurs — and therefore media outlets globally — are getting increasingly excited about alternative protein-based food sources.

The UN’s Food and Agriculture Organization estimates that animal agriculture contributes to around 15% of greenhouse gas emissions of which 60% comes from cows getting consumers. And with increasing demand for protein from the developing nations of the world that have typically only been able to afford plant-based diets, the situation seems critical.

Consumer demand for protein is still at all-time highs in developed countries too, but increasingly cognisant of the resource-intensive nature of animal agriculture, these consumers want alternatives as the vegan movement spreads across the western world.

Innovators and entrepreneurs are therefore creating solutions that aim to cut animals altogether from the meat industry with alternative meat substitutes.

The most prolific and successful alternative meat approach to-date uses plant proteins to try to mimic the taste and feel of meat, commonly in the form of burgers. But there is also a small subset of startups using cellular agriculture to physically culture meat in a laboratory.

The first lab-grown burger was produced in 2013 by Mark Post, a Dutch professor of vascular physiology who is founder of Mosa Meats. After taking muscle stem cells from a cow’s shoulder in a gentle biopsy, he used established tissue engineering methods to painstakingly nurture the 20,000 individual muscle fibers that made up the burger in several large flasks in his lab at Maastricht University in The Netherlands. 

That burger famously cost around $1.2 million per pound, and while entrepreneurs and enthusiasts in the space argue that the cost will, and already has, come down as technology advances, there are still some question marks about how long and how much money it will take before these meat options actually hit our plates.

How Much is a Burger?

If an article in the Wall Street Journal is correct, Memphis Meats, a startup out of San Francisco that revealed the world’s first cultured meatball in February 2016 and the world’s first cultured poultry in March 2017, has brought the cost down of cultured chicken to $2,400 per pound.

Back in May, David Kay, business analyst at Memphis Meats, said that the company would bring a product to market by 2021 as long as ample funding was available. Funding does not appear to be a challenge for Memphis Meats after the startup raised $17 million in Series A funding in the summer from a bevy of high profile investors including Richard Branson, Bill Gates and Kimbal Musk. Tesla and SpaceX investor DFJ Venture Capital led the round with AtomicoNew Crop CapitalSOSVFifty YearsKBW Ventures, and Inevitable Ventures as well as billionaires Suzy and Jack Welch, Kyle Vogt, and Kimbal Musk all participating. Even ever-cautious agriculture multinational Cargill got in on the round, bringing Memphis Meats’ total fundraising to date to just over $20 million since the company’s founding in 2015.

Mosa Meats also got high profile backing for that first burger from Sergey Brin, cofounder of Google.

“[These investors] are not just doing it out of altruistic reasons; there are real financial opportunities here,” says Rosie Wardle, director of the Jeremy Coller Foundation, another investor in animal agriculture alternatives.

But how many times will they need to go back to these investors before they can get an affordable meat product onto the market? Industry insiders say it could cost startups somewhere between $150 million and $370 million.

(It is important to note here that cellular agriculture yielding other animal products such as milk can be simpler and cheaper; this discussion is focused on cultured meat specifically.)

Why is it so expensive?

As with a handful of slowly commercializing medical technologies with food and agriculture applications, a major challenge for cultured meat startups is scaling the process.

Input ingredients are a key part of this, according to Camille Delebecque, a microbiologist by training and founder of Afineur, a startup using microbes and controlled fermentation to alter the taste and nutrition of coffee.

“I think one of the barriers to industrial-scale cultured meat is the fermentation medium that is used for cell cultures currently still relies heavily on animal product (bovine serum albumine) most of the time,” he told AgFunderNews.

This fetal bovine serum is a big expense — not to mention an animal product slightly diminishing claims that no animals are used in the process. Both Memphis Meats and Hampton Creek claim to have developed a plant-based serum replacement, though it is likely more expensive than its animal-derived counterpart.

Jason Kelly, founder of Ginkgo Bioworks, a startup genetically engineering microbes for the flavor, fragrance, and food industries, offered a guess of $200 million all-in to get cultured meat to market.

Nick Rosa, managing director at agtech VC Cultivian Sandbox, who has assessed the cultured meat path to market in the past, offered the most detailed look at a potential breakdown of go-to-market expenses. He said the technology itself would cost $200 million, with a further $85-170 million going towards packaging, marketing, and regulatory work.

Further, cultured meat manufacturing facilities (bioreactors) at scale will likely look much like a modern brewery, which can cost tens of millions to construct. New Harvest, a nonprofit research institute dedicated to the advancement of cultured meat, laid out these two elements as the major barriers to commercialization both in technology and cost in AgFunderNews in 2016.

Kay of Memphis Meats did not respond to inquiries regarding the total cost of getting a product to market.

How Long Will This Take?

The estimated sum is not necessarily surprising in itself; game-changing new technologies can be expensive. And though it is not necessarily common for startups to raise north of $100 million before bringing products to market, it’s not unheard of either.

Indoor agriculture firm Plenty raised a $200 million Series B in August bringing their pre-revenue fundraising total to $226 million.

And a recent announcement from Bayer CropScience, Viking Global Investors, and Ginkgo Bioworks of a $100 million investment into an as-yet-unnamed biological crop input company, also seems to fit the bill.

Looking at other tech sectors, virtual reality startup Magic Leap has raised $1.89 billion since its founding in 2011 and still hasn’t launched a product. And e-commerce startup Jet.com raised $225 million before launching its platform, which raised eyebrows back in 2015. The company went on to raise $570 million total in five rounds before being acquired by Walmart in August.

It’s too early to tell if any of these cases offer caution or encouragement. If the products in question are going to have a positive impact on the health of the planet and sustainability of the food industry, and in the case of Memphis Meats, bring a new and desirable product into the multi-trillion dollar global meat market, then it will be worth the wait.

But these estimated costs call into question the timelines presented by some startups to bring their products to market.

There is at least one cautionary example from the cleantech bust to heed. Solazyme, a Silicon Valley-based algae biofuel company raised $146 million from 2004-2010 to produce a sustainable ethanol equivalent that it publicly assured would reach price parity with traditional ethanol. Though the company built a large-scale production facility in Mexico, it was never able to meet the goal of competitive pricing. The company transitioned to an algae-based food ingredient company, renamed TerraVia in March and filed for chapter 11 bankruptcy soon after, voluntarily selling the entire company at auction to Corbion, a maker of acids, enzymes, and emulsifiers, for $20 million cash on October 3.

Memphis Meats estimates it will have a product on the market by 2021, which they admit will be at a premium price initially, but expect to bring it down to parity with conventional meat eventually. Hampton Creek, which was focused on plant-based alternatives until just a few months ago, has promised to bring a product to market as early as next year. While Hampton Creek has raised $220 million to date, it’s unclear how much of that is going to its cultured meat efforts, which began earlier this year when the company’s CEO Josh Tetrick announced that he had acquired some decades-old patents around lab-grown meat.

Tetrick’s claim has met some skepticism as other players working solely on cultured meat communicate real challenges around scaling and Tetrick has blown through public self-imposed deadlines in the past.

Molecular biologist Daan Luining, co-founder of the Cultured Meat Foundation, recently told the LA Times, “To think of Hampton Creek doing it in a year, I don’t want to sound pessimistic, but I don’t believe that it would be possible.”

Lisa Feria, CEO of animal welfare impact investor Stray Dog Capital recently expressed skepticism of Hampton Creek’s expressed timeline to AgFunderNews: “I am not privy to their internal developments, but from the four other clean meat companies I’m invested in, I think it would be hard to do at scale in that timeframe. Can they come out and show a small amount of something? Sure, as others have. If they were to scale nationally or regionally in that timeframe, that would be fantastic, but I’d be surprised. It’s an incredibly complex process and product, with many incredible minds working on it and they’re struggling to get that scale at this point.”

Hampton Creek declined to comment on this issues raised in this article.

Three hypotheses of the necessary investment to bring cultured meat to market do not a consensus make. But the clear message in this inquiry has been that we should see big raises from multiple players in the cultured meat space in the coming months and years if the 2021 to-market goal of is to be met. Cultured meat received early hype and continues to captivate the media and the public, but even Memphis Meats, the firm farthest ahead in fundraising (excluding Hampton Creek), might not be more than a few miles into this marathon.

Do you have thoughts on cultured meat’s path to market? Email emma.cosgrove@agfunder.com.

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