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UPSIDE Foods cultivated meat plant mock up Glenview
Mockup of UPSIDE Foods' large-scale cultivated meat plant in Glenview, Illinois. Image-credit: UPSIDE Foods

UPSIDE Foods’ large-scale cultivated meat plant on hold until it delivers ‘key proof points” at smaller site

February 15, 2024

Less than five months after announcing its first commercial-scale cultivated meat plant in Glenview, Illinois, UPSIDE Foods has hit pause on its Chicagoland plans and is instead focusing on expanding its far smaller ‘EPIC’ site in Emeryville, California.

According to emails sent to staff by UPSIDE Foods founder and CEO Dr. Uma Valeti that were leaked to tech publication WIRED, UPSIDE has also made “selective role eliminations” and “other changes” as it stops “non-critical” work and conserves capital to extend its runway.

The startup, which has raised $608 million since 2015, shared publicly as recently as January 4 that it was “building a commercial facility to enable the next level of scale,” but is now holding fire at Glenview until it has “delivered key proof points” at its EPIC facility, according to emails sent by Valeti to staff.

Unit economics

The fact that a startup is prudently cutting back to extend its runway during a challenging funding environment may not appear to be especially newsworthy in the current climate.

However, the fact that UPSIDE had only just announced the new plant and is now hitting the pause button could dampen confidence in the firm, the performance of which is fairly or otherwise regarded as a proxy for the wider cultivated meat industry given the vast sums it has raised to date and its status as an industry pioneer.

Steadily building up bioreactor scale and validating tech at each stage is a sensible strategy. However, most players acknowledge that the unit economics of cultivated meat will only begin to make sense at larger scale, at least for low-value products such as chicken, which requires the construction of facilities that investors appear increasingly reluctant to fund in the current funding winter.  

Meanwhile, GOOD Meat, the only other player to have secured regulatory approval to sell cultivated meat in the US, is currently embroiled in an ugly dispute with bioreactor partner ABEC over allegedly unpaid bills.

However, Believer Meats, which is building what it claims is the “largest cultivated meat production facility in the world” in Wilson, North Carolina, says its expects to be “fully operational in 2024” although it has not yet secured regulatory approvals to sell cultivated meat products in the US.

UPSIDE Foods: Pivot is “reflective of the changes in the macroeconomic environment and increasing costs of construction”

Scaling up UPSIDE Foods’ the EPIC plant—which opened in late 2021 with capacity to produce 50,000 lbs of cultivated chicken per year with the potential to scale up to 400,000 lbs—will cost “substantially less” than building the first phase of the larger plant in Glenview (dubbed ‘Rubicon’), said the firm.

UPSIDE interim head of communications Melissa Musiker told AgFunderNews that the pivot was “reflective of the changes in the macroeconomic environment and increasing costs of construction.” She added: “After careful evaluation we have decided to double our investment in EPIC and significantly expand our operations there, before continuing with our Rubicon plans.

“In the process of planning for Rubicon, we identified a more efficient and cost-effective way to achieve a similar capacity and timeline of the initial phase of Rubicon by significantly expanding our operations at EPIC, with a similar commercial launch date.”

She added: “We have conducted dozens of runs at the 2,000 liter scale, tech transferred multiple processes into the facility, and produced thousands of pounds of delicious cultivated meat in just the last few months. Having our first commercial production co-located with our existing team will allow us to scale, learn, and iterate more effectively. We still plan to build a full-scale commercial facility as originally envisioned.

“The incredible hard work and resources that have been invested in the process to date  — as well as the proof points we anticipate from EPIC — will allow us to move with speed when that time comes.”

Whole cuts vs processed products

UPSIDE  has acknowledged that its whole cut technology (for which it has regulatory approval) is not yet ready for prime time, telling AgFunderNews last June that its chicken fillets were still being made in 2-liter flasks. However it recently shared bullish comments about the performance of its hybrid approach, whereby it grows cell biomass in suspension in 2,000-L bioreactors and then combines it with plant-based meat to create processed products such as nuggets and patties.

“We have a scalable technology (something we call ‘suspension’) and have consistently and successfully run large cultivators at our EPIC pilot facility.”

Back in September, COO Amy Chen told us that the Glenview plant would house a range of bioreactors going up to 100,000-liters and would have “attractive unit economics.”

This week, Musiker explained: “As part of our EPIC expansion, we will be adding larger cultivators that will demonstrate our ability to transfer our process into successively larger and more efficient scales while maintaining the taste, quality, and safety that we have been able to consistently achieve at the 2kL scale.”

She added: “We are getting incredibly positive initial feedback on our next generation suspension product prototypes [the hybrid products, which have not yet secured regulatory approval] and continue to delight new customers with our whole-cut product, which we’ve started taking on the road.  We will use our larger scale production at the expanded EPIC facility to demonstrate product-market fit for our next generation of products through larger-scale sales volumes, pending completion of the regulatory process.”

Investors: Move is a smart one in the current environment

Andrew Ive, founder at Big Idea Ventures, which has invested in multiple players in the cultivated meat ecosystem, said UPSIDE’s decision was smart given the current funding environment.

“UPSIDE has chosen to prioritize expanding their main facility to produce cultivated meat in increasing quantities, while keeping a prudent eye on CapEx and increased efficiency. Cultivated meat companies worldwide are focusing on expanding production to align with the current funding environment and consumer demand. Scaling up a whole new food sector is hard and will take time, even for the leading cultivated meat companies like Upside foods.”

He added: “At Big Idea Ventures, we’ve been advising our founders to prioritize practical growth, even with available funding. We advocate a prudent rather than the ‘build it and they will come’ approach to scaling. I think Upside are doing the right thing for their company, investors and the future of the cultivated meat industry.”

Costa Yiannoulis, managing partner at foodtech investor Synthesis Capital, added: “We were aware, as investors, that the option of scaling out EPIC vs building Rubicon in this macro environment was being considered, and we think on balance that the decision makes sense.

“This isn’t specific to Upside, if you look at many companies in our space (cultivated or otherwise) there are others that were planning to build capex intensive scale facilities and decided to conserve cash at the moment given the current macro and fundraising environment.”

He added: “This is nothing to do with the scalability of their technology. The “proof points” they are referring to are getting scalable product out to consumers (which they can do from a scaled up EPIC – even if it wouldn’t be at the same scale as Rubicon initially). As far as I know, they still plan to produce and offer all the products they have been talking about with the EPIC expansion.”

‘To me this doesn’t stand out as a good or bad sign…’

Nick Cooney at foodtech investor Lever VC added: “To me this doesn’t stand out as a good or bad sign… We’ve seen lots of companies across the cultivated, fermentation, and plant-based space cutting back on staff and planned capital expenses in light of the shift in fundraising environment, so it’s not surprising that UPSIDE would do the same.

“It’s also hard to know, without knowing all the details, if building a large second plant in Chicago previously made sense and no longer does, or did not make sense in the first place.”

For context, he added, “We have seen some very similar activities from large meat companies and large food companies generally. Tyson, the largest meat company, shut down eight plants in 2023.”
“So all in all the move by Upside doesn’t strike me as indicative of much other than that funding is significantly more constrained across all of VC, including cultivated meat, and so what makes sense in a capital-rich environment doesn’t make sense today.”

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