Plant-based ingredients foodtech startup Nutriati has raised $8 million in Series A funding led by Tate & Lyle Ventures, a London-based firm focusing on food science startups.
PowerPlant Ventures, the relatively new, vegetarian food fund, also participated in the round, alongside Blueberry Ventures, a San Francisco-based food and beverage venture firm, and NRV, a Virginia-based multi-sector investor. Tate & Lyle Ventures manages a £25 million ($32.12 million) fund independently from its sugar company parent but brings deep knowledge of the ingredients space to the table.
Headquartered in Virginia, Nutriati is bringing two flagship products to market soon that it will sell to food processors and manufacturers. The first is a protein concentrate derived from chickpeas and the second is a high-protein, gluten-free chickpea powder. The startup aims to provide nutritious, protein-rich alternatives to the traditional ingredients found in pasta, cookies, bread and more.
The startup will use the Series A funding to commercialize these products, in partnership with PLT Health Solutions. PLT Health Solutions performs R&D as well as commercialization of science-backed ingredient offerings for the natural products, food & beverage, and cosmetics markets.
Nutriati’s chickpea products could hit the market within the next nine to 12 months, with PLT already performing product sampling and teeing up its US sales and marketing endeavors, according to Food Ingredients First.
Nutriati’s technology “fractions,” or disassembles, garbanzo beans into compound ingredients with which to make its productions. The funding will also go towards setting up a factory to performing this ‘fractioning’ step with specialized equipment, CEO Richard Kelly told Richmond BizSense.
According to PowerPlant Ventures partner T.K. Pillan, this technology is what sets Nutriati apart.
“Based on the research we did, they’re offering a really unique set of properties for taste, texture, color, and solubility,” he recently told AgFunderNews. “It provides another option for manufacturers who want to incorporate plant-based ingredients into their products.”
Nutriati marks PowerPlant’s second investment in the plant-based ingredients space. It also invested in TerraVia, which creates ingredients using algae, which an increasingly popular plant source for food processing.
PowerPlant launched in August 2016 after closing the largest animal-free food fund to date and doesn’t typically invest in ingredient companies, tending to select consumer-facing startups instead. Some of its notable portfolio companies include Beyond Meat, plant-based dairy alternative provider Ripple Foods, and vegan condiment maker Hampton Creek.
With Tate & Lyle Ventures leading the round, however, PowerPlant felt more confident in making an investment outside the scope of its usual thesis.
“We felt comfortable with their ability to do due diligence on the processing side, while we did more diligence on the value and need processing manufacturers have for these ingredients,” Pillan explains. “So, if we can really validate the need and value of an ingredient with a consumer product manufacturer that we work with, and we can get enough of our own validation, we will make an ingredient investment.”
Consumer Fad or New Industry Mainstay?
It increasingly looks as if plant-based foods and ingredients are here to stay, with major food companies positioning themselves for the change such as Tyson Foods which bought a 5% equity stake in Beyond Meat last year, and French yogurt company Danone, which is in the process of acquiring plant-based dairy startup WhiteWave Foods.
Investors clearly think so, channeling $78.2 million into “alternative protein” startups in 2016, and even more in 2015 when plant-based burger company Impossible Foods raised as much as $108 million in a single round.
What do these investments mean for the plant-based food industry? Some may view major traditional protein companies’ foray into the sector as a threat to its authenticity, but Pillan has a more optimistic view.
“I think it signals that there is a broad shift going on regarding consumer understanding of the benefits of plant-based protein. It starts with consumers realizing that it’s good to diversify their intake to be more plant-strong,” he says. “The investment from large companies will only accelerate the trend. It’s a great validation and an acceleration of the move to a more nutritious and sustainable food supply system.”
Pillan does see some challenges facing plant-based ingredient startups, however.
“We are early in the innovation stage of plant-based ingredients, and there is work to be done to meet certain taste, texture, and solubility profiles. But, we are excited that companies are responding to this opportunity.”
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