ADM Ventures, the venture capital arm of Archer Daniels Midland, one of the world’s largest food commodities and processing companies, is purposeful about the types of companies it considers investing in.
“We focus on the core of what ADM does, which is essentially providing nutritional ingredients to human and animal food companies,” says Victoria De La Huerga, vice president of ADM Ventures.
So at first glance, the VC’s recent investment in Sustainable Bioproducts, a company commercializing research into extremophile organisms that live in Yellowstone National Park’s volcanic springs, might seem out of scope conjuring images of lava and natural gas more than food.
However, Sustainable Bioproducts intends to produce edible proteins “with great nutritional value” from these organisms using innovative fermentation technology. It feeds the common components of food such as starches or glycerin to these already high-protein microbes, which then multiply rapidly.
Like existing high protein foods such as meat and soy, the resulting protein will contain the nine amino acids considered essential to human health but could come in various formats, according to Sustainable Bioproducts.
As a major processor and vendors of food ingredients, the relevance to ADM instantly becomes clearer, particularly as consumer interest in new and alternative sources of protein increases. (It’s set to reach $5.2 billion by 2020 and according to some estimates could make up one-third of the market by 2050.)
“ADM has long been involved in plant-based protein – many types of proteins from soy to pea to nuts and pulses, so we are always looking for alternative protein sources,” De La Huerga tells AgFunderNews. “Sustainable Bioproducts isn’t a plant-protein per se, but as a venture group, we’re always looking into things in adjacent spaces to what ADM currently does.”
ADM Ventures’ model involves making startup investments, but also interacting with startups on a deeper level such as conducting pilot trials of technologies and products and helping with business development. ADM could offer Sustainable Bioproducts broad support from fermentation expertise to food application to product development. ADM could also ultimately become a customer of Sustainable Bioproducts, which is currently working on its first product.
Founder and CEO Thomas Jonas kept his cards close to his chest about what an initial product would be. “It could be some things that are more meat-like. It can be savory; it can be sweet; it can be liquid; it can be dairy-like.”
ADM wasn’t the only food company interested in Sustainable Bioproducts offering: Danone Manifesto Ventures, the venture arm of French food and beverage company Danone also invested in the $33 million Series A round. Silicon Valley venture firm focused on developing country issues 1955 Capital led by the round with$1 billion investor-led fund created to help stop climate change Breakthrough Energy Ventures, the family office of Estee Lauder’s chairman Lauder Partners, and the Liebelson family office all participating.
Its sweet spot is Series A stage deals but it can invest later, and it needs to be past proof of concept stage, says De La Huerga.
“The proof is in the pudding; can you actually make it and is it scalable? Because that’s where we can play a great role outside of a laboratory where it gets really challenging, particularly when it comes to costs. Ultimately it needs to be more cost-effective than the ingredients or products it’s going to be replacing.”