Venture Investors Double Their Bets on Faux Meat Startups

Early stage investors back over 20 alternative protein startups with hopes of finding the next Beyond Meat.

 

By Emily Chasan, Bloomberg

July 27, 2020

 

Hoping to find the next Beyond Meat, venture investors have more than doubled their bets on alternative protein makers this year, raising more than $1 billion for startups that focus on everything from lab-grown meat to protein derived from volcanic microbes.

 

More than 20 faux meat startups raised about $1.4 billion from venture investors in the first seven months of 2020, according to a report on Monday from London-based investor network Farm Animal Investment Risk & Return, known as Fairr. Venture investments in plant-based meat and dairy alternatives soared to $1.1 billion this year, up from $457 million in all of 2019, while investments in companies that grow cell-based meat more than tripled to $290 million from $75 million last year.

 

The venture investors backing this space range from companies like Cargill Inc. and General Mills Inc. to pension funds, traditional venture capital firms  and celebrities like Bill Gates and Oprah Winfrey. As a group, they are betting that faux meat and dairy can scale up production quickly to meet a new generation of climate-conscious eaters that want to reduce the impact of livestock on the planet, according to Marisa Drew, head of the impact advisory and finance group at Credit Suisse Group AG.  Plant-based and cell-based meat require a fraction of the water and energy used to manage livestock, but companies also have to invest heavily in marketing and technology to help replicate the look of a hamburger or the texture of seafood.

 

“At the end of the day to reach scale in this space, you have to deliver something that is as tasty as meat to get consumers to switch,” Drew said.

 

Venture investors are hoping to echo the performance of Beyond Meat Inc., whose shares are up about 400% since its initial public offering in May 2019, so they’re backing a wide variety of startups as it’s unclear which protein will catch on most with consumers, Drew said.

 

This year’s biggest funding deals included Beyond Meat rival Impossible Foods Inc., which raised $500 million to support expansion of its vegan burgers, and Swedish oat-milk maker Oatly AB, which raised $200 million this month in a deal backed by Blackstone Group Inc. that values the company at $2 billion.

 

Investors also are providing financial support to alternative protein makers that aren’t as widely available to consumers, including $161 million for Memphis Meats, which grows cultured meat from cells in a lab, and $80 million to back Nature’s Fynd, an alternative protein developed from a volcanic microbe discovered in Yellowstone Park...

 

more, including links, table 

https://www.bloomberg.com/news/articles/2020-07-27/venture-investors-double-their-bets-on-faux-meat-startups