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Photo credit: Memphis Meats

Is a whopping $161m Series B enough cash for Memphis Meats?

January 23, 2020

AFN has been closely tracking the progress of Memphis Meats since its first attempts to grow animal products with cell cultures. There have been a few eye-catching moments, like when Memphis Meats revealed the world’s first cultured meatball in 2016, and when it heralded the world’s first cultured poultry in 2017. By January 2019, we saw how these sorts of announcements had won over a traditional protein incumbent like Tyson Foods, which duly muscled its way into Memphis Meats’ Series A — joining a celebrity-encrusted list of investors.

Not quite $250 million…

By October 2019, things seemed on course to ratchet up yet another notch, when we got a sizzling scoop. Memphis Meats, we reported: “is expected to announce a very large Series B deal in the coming weeks, according to several industry sources. Sources say SoftBank is one of the investors negotiating the round with an expected close of around $250 million. Memphis Meats did not respond to requests for comment.”

This Wednesday, Memphis at last lifted the lid: it has indeed closed its Series B funding round, the company confirmed — but for $161 million, bringing the company’s total funding raised to-date to around $180 million. Our sources had also been right about SoftBank Group, which co-led the round along with Palo Alto private equity firm Norwest and Singapore’s state-owned investment company Temasek. Also joining the round are new and existing investors including Richard Branson, Bill Gates, Threshold Ventures, Cargill, Tyson Foods, Finistere, Future Ventures, Kimbal Musk, Fifty Years and CPT Capital.

Did Memphis miss its target? Memphis Meats vice president of operations, Steve Myrick, denied any $90 million shortfall during a conference call with AFN. (Myrick was on the line alongside Eric Schulze, vice president of product development, and a few other executives.)

“We raised what we aimed to raise in this round, and we think that it’s an appropriate amount to allow us to hit the set of milestones that are up next for us,” said Myrick, rebuffing any suggestions that a $250 million round had been on the cards. Those milestones, according to the company, are to build out a pilot production facility, triple its team size, and bring products to market. The pilot facility, Myrick said, will be “animal agnostic,” capable of alternating between a range of beef and chicken products, able to “feed global demand as it shifts.”

SoftBank, he added, would be a key partner in navigating the company’s Asian expansion. The Asia Pacific region will be home to a rising appetite for protein in the years ahead as populations grow and incomes rise. Elsewhere in our interview, Myrick also described a “clear path” toward competitiveness with conventional meat products, but said the company does “not want to wait until we’re at cost parity,” adding that it would come to market as a premium price. He did not pinpoint a date, however, or specify what sort of premium. On the regulatory side, Schulze took stock of talks with regulators, expressing optimism but was sparing on detail. None of that spoke much to any prospect of medium-term investor returns. After all, the fact remains that investors are still having to grin and bear how cellular agriculture is an expensive pursuit — one that involves deep science, skeptical regulators, wary incumbents, and untested manufacturing processes. Besides, in the growing hype over alternative proteins, the lion’s share of attention and funding is veering toward plant-based meat substitutes, which in many cases have proved easier to bring to market, at times with a helping hand from hip hop stars like Snoop Dogg.

In a statement, Priti Youssef Choksi, a partner at Norwest Venture Partners, seemed prepared to take a longer-term view: “The reality is that conventional production methods for meat can’t keep up with global demand, which is expected to double by 2050. Cell-based meat addresses this issue while offering enormous potential to improve the environment and have a positive impact on food safety and animal welfare. Memphis Meats is on a mission to serve up real meat without the compromise.”

…a whopper for a cultivated meat company

Short of that $90 million or not, this is a whopper for a cultivated meat company, and potentially a sign of a catch-up for cultivated meat versus their plant-based rivals. Before today, a big close meant something in the ballpark of the tens of millions. BlueNalu’s $20 million Series A in September 2019 stood out; as did Future Meat Technologies with its a $14 million Series A in October last year. “Memphis Meats just more than doubled the total amount invested in all of human history on cultivated meat. Before today, the total invested in cultivated meat companies was $155 million,” said The Good Food Institute executive director Bruce Friedrich, in a statement sent to AFN.

“This is still an industry that has sprung up almost overnight and it’s important to keep a sense of perspective here. While the idea of cultivated meat has been percolating for close to a century, the very first prototype was only produced six years ago. Continued resources will be needed for years to come, including after mainstream commercial entry, to ensure that the cultivated meat industry continues to become more efficient, more adaptable, and produce ever-more compelling products.”

Memphis Meats was one of the first, if not the first, cultivated meats startups out there and this funding round certainly extends that early mover advantage. Yet there could be some snapping at their heels from arrival on the scene of some promising competitors like Aleph Farms, New Age Meat, or Meatable. Other, more established players are also creeping into the cultivated space, like plant-based egg producer Just, whose CEO has promised to bring out some cultivated chicken nuggets, though these are still yet to appear.

“Continued resources will be needed for years to come,” said Friedrich, “including after mainstream commercial entry, to ensure that the cultivated meat industry continues to become more efficient, more adaptable, and produce ever-more compelling products.”

Friedrich also noted the need for public funding as well if this industry is to take off: “While private investments in cultivated meat are essential, they need to be supported by public funding in order to sustain the industry moving forward. There is just too much innovation required for a single company or even a handful of companies. After all, the entire industry stands on the shoulders of the stem cell and biopharmaceutical fields that came before it, which are fueled by decades of both public and private investments. Public funds can also provide training, fuel talent, and lower the barrier to entry for new companies and research groups.”

What do you reckon is the alternative protein that will win the day? I’d be glad to hear your view at [email protected]

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