Earlier this week, food tech entrepreneurs and investors gathered at the Future Food-Tech Summit in New York. A number of subsectors of the food tech space were represented during the event, but perhaps one of the hottest discussions was over alternative proteins.
On a mission to reduce the carbon footprint of meat production, and the inhumane industrial farming practices associated with much of the global animal agriculture industry, there’s a group of startups using plant proteins or culturing techniques to manufacture alternatives to animal-based produce, mainly meat, eggs, and milk.
While each startup takes a different approach, those producing meat alternatives usually use similar ingredients such as soybean and split pea, extracting the amino acids and materials they believe can help to produce a meaty feel and flavor, and even a blood-like liquid when raw.
These startups still represent a relatively small segment of the wider food and agtech universe — alternative protein startups raised $160 million last year of the $4.6 billion annual total for agtech overall — but they’ve captured the attention of high-profile investors.
Horizon Ventures, the VC arm of Hong Kong billionaire Li-Ka Shing, Bill and Melinda Gates Foundation, Khosla Ventures, and Peter Thiel’s Founders Fund are just a few names invested in the space. There are also some investors focused on this segment such as New Crop Capital, which recently closed a $25 million fund, and New Harvest, a non-profit tasked with commercializing relevant research.
Under today's unique circumstances, AgFunder is re-opening Fund III for a limited time to enable investors to join our mission and invest alongside us as LPs in a second close. Learn more here.
The wider investment universe is also paying increasing attention to animal farming. A couple of weeks ago, a group of institutional investors worth $1 trillion joined forces to put pressure on listed companies in their portfolios to reduce the use of antibiotics in their products. And this week, 18 institutional investors, worth £1.5 trillion, became the founding signatories to the first investor statement on farm animal welfare. The signatories believe that farm animal welfare is potentially material to long-term investment value creation in the food sector. They have committed to taking account of farm animal welfare when analyzing food companies and to encouraging high standards across the food industry.
For the more advanced startups in the alternative protein space, the timing couldn’t be better. Just this week, Beyond Meat announced that it had started selling the ‘Beyond Burger’ in a Whole Foods store in Boulder, Colorado. Impossible Foods is also set to release its first product this summer; the ‘Impossible Burger’ will be sold to selected restaurants and chefs. Hampton Creek, which is the most advanced as its first product Just Mayo hit the shelves in September 2013, was this week revealed to be raising $200 million to construct new R&D facilities and expand its product line. Hampton Creek is raising the funding at a valuation of over $1 billion, according to an investor presentation seen by Bloomberg.
Speaking a Future Food-Tech, representatives of these three startups discussed getting their products to market, some of the controversies inherent in the food sector, and consumer demand.
We captured their responses to two of the questions put to them by Bernhard van Lengerich, the former chief science officer for General Mills.
What does it take to bring a product to market?
David Lee, COO, Impossible Foods: We have been around for close to five years now, and we’ve taken the time to go after our mission to really transform the food system and to recognize that you better have a product that’s craved; that’s made for meat eaters. It’s important to recognize that consumers want great taste first. You can remind them of the other benefits second; that’s the most important lesson.
Jim Flatt, director of food safety & quality, Hampton Creek: We are dedicated to a simple question: what would it look like if we started all over again in food? The food products we’re developing are not only better for you and the planet, but they’re also affordable and appealing. And that’s quite a tall order. We are focused on discovering highly functional ingredients from principally the plant kingdom, which also have high nutritional value, but also good functional properties like taste and texture. From a supply perspective, we look very carefully at the ability to scale products. Our mission is sustainability, and so we evaluate the life cycle of the ingredients very critically. Then we also make sure it can be done cost effectively. And last, but not least, we’re trying to help provide options for consumers, and this requires changing habits, so you’ve got to have a compelling story behind the ingredient and the product.
Jody Puglisi, scientific advisor, Beyond Meat: With my background as an applied physicist, I never imagined I would do any work related to food, but Beyond Meat called me and asked for help with their R&D program. Our main challenge was how could we mimic real meat with plant-based products, and that got my juices flowing. Meat is a particular type of tissue with a particular function; it is muscle tissue which provides motion, so already you have the problem of mimicking the function of muscle with plant proteins, which just don’t exist. So how can we mimic the texture and flavor, and the textual transitions in cooking meat? It’s a challenge I like. So we tried to use the basic principles of biology, physics, and chemistry and build a team to look at the problem from this distinct angle. Does it fully mimic the experience eating a burger? No, but it’s very enjoyable. At the end of the day, this is a scientific project, but it’s got to taste great.
Impossible Foods’ Lee: What’s great about our field and our mission is that it’s so large, and the need is so great, that it’s nice to have peers addressing it. There’s an important lesson regarding how we inform consumers about our products. We had a chance to serve the famous chef David Chang the Impossible Burger, and his reaction was so quick and positive that he immediately posted to Instagram. Having taste-makers like David spread the word can make a big difference in how quickly the Impossible Burger catches on.
How far can we tweak something from nature? A lot of food technology has not always been accepted by the masses. So what is your perspective on GMO, particularly when related to your own products?
Beyond Meat’s Puglisi: There is lots of controversy in that area, but I think we have to be really humble. One problem with scientists is that we think we have all the answers, but the consumer does. We have lots of solutions, but we will let the marketplace choose what it wants, and if it wants GMO products or not. We’re at a confluence of so many technologies, and the data revolution is a key component, particularly when it comes to sequencing power. The power of genome editing is also clearly going to revolutionize life sciences and ag, so I don’t think the problem will go away, but I think we need to listen to consumers.
Hampton Creek’s Flatt: Having seen the beginning of GMO and how it’s played out over the last 20 years, perhaps the biggest mistake from a science perspective, and from the industry, has been a lack of transparency and a lack of consumer orientation. The focus was that the science was safe, but the industry lost sight of who the real customer was, who deserved to know where their food comes from. Our brand is really dedicated to that, and to providing simple food, free of things you don’t want. It also represents equity and fairness and as part of that brand we’ve set a non-GMO basis for our products, which we think is consistent with consumer perceptions right now. It will take a generation to change if the industry is transparent and willing to provide choice.
Impossible Foods’ Lee: I totally agree on transparency. The bottom line is that the consumer is confused and probably not just around GMO. There are many shades of gray, but we are focused on bringing a smaller environmental footprint, and creating cheaper food, so it will come down to what the trade off are that you need to make.
What do you think of alternative proteins? Are you craving a meatless burger? Get in touch Louisa@AgFunder.com.