Corporations are quickly waking up to the market potential of alternative proteins with the nation’s biggest consumer brands continuing to make investments and create partnerships with startup companies helping consumers transition to healthier and more environmentally sustainable diets.
As Earth Week draws to a close (thankfully) new partnerships announced over the past week show the potential for new technologies to transform old businesses.
Yesterday the New York-based ZX Ventures, the investment and innovation arm of AB InBev, said that it would be partnering with Clara Foods, a developer of protein production technologies including (but not limited to), brewing egg substitutes. That’s right, the makers of Budweiser are hatching a scheme to make other kinds of liquids that are less potable and more poachable.
In that case, the yolk would definitely be on you, future consumer.
“Since day one, Clara has been on a mission to accelerate the world’s transition to animal-free protein, starting with the egg. More than one trillion eggs are consumed globally every year and corporate commitments for cage-free aren’t enough,” said Arturo Elizondo, the chief executive and co-founder of Clara Foods. “We’re thrilled to be partnering with the world’s largest fermentation company to work together to enable a kinder, greener, and more delicious future. This partnership is a major step towards realizing our vision.”
Graph showing the increasing size of investments into alternative proteins in 2020. From 2019 to 2020 investments in alternative proteins soared from just over $1 billion to $3 billion led by investments in plant protein products. Image Credit: Good Food Institute
There are market-driven reasons for the partnership. Demand for high quality proteins is expected to jump up to 98% by 2050, according to research cited by the two companies.
“Meeting the increased demand for food requires breakthrough solutions built on collaboration and innovation that spans several industry domains – both old and new. The ancient and natural process of fermentation can be further harnessed to help meet future demands in our global food system,” said Patrick O’Riordan, founder & CEO at BioBrew, ZX Ventures’ new business line trying to apply large-scale fermentation and downstream processing expertise beyond beer. “We look forward to exploring the development of highly-functional, animal-free egg proteins with Clara Foods in a scalable, sustainable and economically viable manner.”
Formed from the same Seventh Day Adventist focus on plant-based diet and health as a core of spirituality that launched the Kellogg’s cereal empire, Post has long been a rival to the corn flake king with its grape nuts cereal and other grain-based breakfast offerings.
Now the company has led a $25 million investment in Hungry Planet, which aims to provide meat-based replacements for crab cakes, lamb burgers, chicken, pork, and beef. Additional investors included the Singapore-based environmentally sustainable holding company, Trirec.
Alternative proteins are a big business. Last year, companies developing technologies and businesses to commercialize alternative sources of protein raised over $3 billion, according to the industry tracker, the Good Food Institute.
“Over the past year, the alternative protein industry has demonstrated not only resilience but acceleration, raising significantly more investment capital in 2020 than in prior years,” said GFI director of corporate engagement Caroline Bushnell, in a statement. “These capital infusions and the funding still to come will facilitate much-needed R&D and capacity building to enable these companies to scale and reach more consumers with delicious, affordable, and accessible alternative protein products.”
It’s all part of a push to provide more plant-based alternatives to animal proteins in a bid to halt planetary deforestation and reduce the greenhouse gas emissions associated with animal husbandry.
“Humanity needs solutions that match the scale and urgency of our problems,” said Elizondo. “
The $9 trillion financial management firm Blackrock is collaborating with the $313 billion Singapore investment firm Temasek to back companies developing technologies and services to help create a zero emission economy by 2050.
The two mega-investment firms will invest an initial $600 million to launch Decarbonization Partners, and look to raise money from investors committing to achieving a net zero world and long-term sustainable finacnial returns. The two partners have set themselves a goal to raise $1 billion for their first fund, including capital from Temasek and BlackRock.
The partnership, coming during Earth month, is one of several big multi-billion dollar initiatives that are underway to prevent global climate change caused by greenhouse gas emissions.
Indeed, BlackRock is somewhat tardy to the party. Temasek, for its part, has already made a number of high-profile bets in the alternative meat market — namely in companies like Impossible Foods — and in alternative energy technology developers including Eavor, a geothermal company, and a $500 million bet on a renewable power developer in India.
Meanwhile, a coalition of billionaires led by Bill Gates are already on their second billion dollar investment vehicle through Breakthrough Energy, a multi-stage, multi-strategy initiative that includes a venture capital arm as well as other types of financing on the way.
“The world cannot meet its net zero ambitions without transformational innovation,” said Larry Fink, Chairman and CEO of BlackRock, in a statement. “For decarbonization solutions and technologies to transform our economy, they need to be scaled. To do that, they need patient, well-managed capital to support their vital goals. This partnership will help define climate solutions as a standalone asset class that is both essential to our collective mission and a historic investment opportunity created by the net zero transition.”
To get a sense of what Decarbonization Partners might back, companies should probably look to the Breakthrough Energy portfolio — the firms share similar interests in new sources of energy, technologies to distribute that energy, building and manufacturing technologies, and material science and process innovations.
It’s a big swing that the firms are taking, but the flood of capital coming into the sustainability sector is commensurate with both the size of the problem, and the potential opportunity in returns generated by solving it.
A report from Morgan Stanley estimated that solving climate change would be a $50 trillion problem, according to a 2019 report from Forbes.
“Bold, aggressive actions are needed to make the global net zero ambition a reality. Decarbonization Partners represents one of several steps we are taking to follow through on our commitment to halve the emissions from our portfolio by 2030, and ultimately move to net zero emissions by 2050,” said Dilhan Pillay, Chief Executive Officer of Temasek International. “Through collective efforts with like-minded partners, we will be able to create sustainable value for all of our stakeholders over the long term, and investors will have the opportunity to help deliver innovative solutions at scale to address climate challenges.”
LIVEKINDLY Collective, the shouty parent company behind a family of plant-based food brands, has snagged cash from the global impact investing arm of $103 billion investment firm TPG to close its latest round of funding at $335 million.
The company’s fundraising shows that investors still have high hopes for plant-based food brands and that despite the money that’s flowed to companies like Beyond Meat and Impossible Foods — and the resurgence of older brands in the category like Quorn or Kelloggs’ Morningstar Farms — there’s still a healthy appetite among investors for more brands.
LIVEKINDLY was founded by some heavy hitters from the food industry, including Kees Kruythoff, the former president of Unilever North America; Roger Lienhard, the founder of Blue Horizon; and Jodi Monelle, the chief executive and founder of LIVEKINDLY Media. Food industry veterans like Mick Van Ettinger, a former Unilever employee, and Aldo Uva, a former Nestlé employee, round out the team.
Founded as a rollup for a number of different vegetarian and alternative protein food brands, the LIVEKINDLY Collective is now one of the largest plant-based food companies, by funding.
The company said it would use the money to expand into the U.S. and China and to power additional acquisitions, partnerships and investments in plant-based foods.
The company raised money previously from S2G Ventures and Rabo Corporate Investments, the investment arm of the giant Dutch financial services firm, Rabobank.
Fundamentally, the founding investors behind LIVEKINDLY believe that the technology has a long way to go before it matures. And it’s likely that this latest round will be LIVEKINDLY’s last before an initial public offering of its own.
“We are building a global pureplay in plant-based alternatives — which we believe is the future of food,” said Roger Lienhard, founder and executive chairman of Blue Horizon and founder of LIVEKINDLY Collective. “In just one year, we have raised a significant amount of capital, which testifies to the urgency of our mission and the enormous investment opportunity it represents. We believe the momentum behind plant-based living will continue to grow in both the private and public markets.”
As a result of its investment, Steve Ellis, co-managing partner of The Rise Fund, has joined the LIVEKINDLY Collective board of directors, effective March 1, 2021.
“We are excited to work with LIVEKINDLY Collective and its ecosystem of innovative companies and world-class leaders to meet the growing global demand for healthy, plant-based, clean-label options,” said Ellis. “The company’s unique, mission-driven model operates across the entire value chain, from seed to fork, to drive worldwide adoption of plant-based alternatives and create a healthier planet for all.”
Plant-based meat replacements have commanded a huge amount of investor and consumer attention in the decade or more since new entrants like Beyond Meat first burst onto the scene.
These companies have raised billions of dollars and the industry is now worth at least $20 billion as companies try to bring all the meaty taste of… um… meat… without all of the nasty environmental damage… to supermarket aisles and restaurants around the world.
Switching to a plant-based diet is probably the single most meaningful contribution a person can make to reducing their personal greenhouse gas emissions (without buying an electric vehicle or throwing solar panels on their roof).
The problem that continues to bedevil the industry is that there remains a pretty big chasm between the taste of these meat replacements and actual meat, no matter how many advancements startups notch in making better proteins or new additives like Impossible Foods’ heme. Today, meat replacement companies depend on palm oil and coconut oil for their fats — both inputs that come with their own set of environmental issues.
Enter Nourish Ingredients, which is focusing not on the proteins, but the fats that make tasty meats tasty. Consumers can’t have delicious, delicious bacon without fat, and they can’t have a marvelously marbled steak replacements without it either.
The Canberra, Australia-based company has raised $11 million from Horizons Ventures, the firm backed by Hong Kong billionaire Li Ka-shing (also a backer of Impossible Foods), and Main Sequence Ventures, an investment firm founded by Australia’s national science agency, the Commonwealth Scientific and Industrial Research Organisation.
That organization is actually where the company’s two co-founders James Petrie and Ben Leita met back in 2013 while working as scientists. Petrie, a specialist in crop development, was spearheading the development of omega-3 canola oil, while Leita had a background in chemistry and bioplastics.
The two had previously worked on a company that was trying to increase oil production in plants, something that the CSRO had been particularly interested in circa 2017. As the market for alternative meats really began to take off, the two entrepreneurs turned their attention to trying to make corollaries for animal fats.
“When we were talking to people we realized that these alternative food space was going to need these animal fat like plants,” said Leita. “We could use that skillset for fish oil and out of canola oil.”
Nourish’s innovation was in moving from plants to bacteria. “With the iteration speeds, it feels kind of like we’re cheating,” said Petrie. “You can get the cost of goods pretty damn low.”
Nourish Ingredients uses bacteria or organisms that make significant amounts of triglycerides and lipids. “Examples include Yarrowia. There are examples of that being used for production of tailored oils,” said Petrie. “We can tune these oleaginous organisms to make these animal fats that give us that great taste and experience.”
As both men noted, fats are really important for flavor. They’re a key differentiator in what makes different meats taste different, they said.
“The cow makes cow fat because that’s what the cow does, but that doesn’t necessarily mean it’s the best fat for a plant protein,” said Petrie. “We start out with a mimetic. No reason for us to be locked by the original organism. We’re trying to create new experiences. There are new experiences out there to be had.”
The company already counts several customers in both the plant and recombinant protein production space. Now, with 18 employees, the company is producing both genetically modified and non-CRISPR cultivated optimized fats.
Other startups and established businesses also have technologies that could allow them to enter this new market. Those would be businesses like Geltor, which is currently focused on collagen, or Solazyme, which makes a range of bio-based specialty oils and chemicals.
“As active investors in the alternative protein space, we realize that animal-free fats that replicate the taste of traditional meat, poultry and seafood products are the next breakthrough in the industry,” said Phil Morle, partner at Main Sequence Ventures. “Nourish have discovered how to do just that in a way that’s sustainable and incredibly tasty, and we couldn’t be happier to join them at this early stage.”
The Israeli startup Redefine Meat, which has developed a manufacturing process to make plant-based proteins that more closely resemble choice cuts of beef than the current crop of hamburger-adjacent offerings, has gotten a big vote of confidence from the investment arm of one of Asia’s premier food brands.
The company has raised $29 million in financing from Happiness Capital, the investment arm backed by the family fortunes of Hong Kong’s Lee Kum Kee condiment dynasty, and Hanaco Ventures, an investment firm backing startups in New York and Israel.
Investors have stampeded into the plant-based food industry, spurred by the rising fortunes of companies like Beyond Meat, which has inked partnerships with everyone from Pepsico to McDonald’s, and Impossible Foods, which counts Burger King among the brands boosting its plant-based faux meat.
While these companies have perfected plant patties that can delight the taste buds, the prospect of carving up a big honkin cut of pea protein in the form of a ribeye, sirloin or rump steak, has been a technical hurdle these companies have yet to overcome in a commercial offering.
Redefine Meat thinks its manufacturing processes have cracked the code on the formulation of plant-based steak.
They’re not the only ones. In Barcelona, a startup called Novameat raised roughly $300,000 earlier this year for its own take on plant-based steak. That company raised its money from the NEOTEC Program of the Spanish Center for Industrial Technological Development.
Both companies are using 3-D printing technologies to make meat substitutes that mimic the taste and texture of steaks, rather than trying to approximate the patties, meatballs, and ground meat that companies like Beyond Meat and Impossible have taken to market.
Backing Redefine’s path to market are a host of other investors including Losa Group, Sake Bosch, and K3 Ventures.
The company said it would use the new funding to expand its portfolio and support the commercial launch of its products. Redefine aims to have a large-scale production facility for its 3-D printers online before the end of the year, the company said in a statement.
In January, Redefine Meat announced a strategic agreement with the Israeli distributor Best Meister and the company has been expanding its staff with a current headcount of roughly 40 employees.
“We want to change the belief that delicious meat can only come from animals, and we have all the building blocks in place to make this a reality: high-quality meat products, strategic partnerships with stakeholders across the world, a large-scale pilot line under construction, and the first-ever industrial 3D Alt-Meat printers set to be deployed within meat distributors later this year,” said Eschar Ben-Shitrit, the company’s chief executive, in a statement.
Late last year, Solugen, a startup using synthetic biology to take hydrocarbons out of the chemicals industry, decided against pursuing a new round of funding that would have valued the company at over $1 billion, TechCrunch has learned.
Instead, the Houston-based bio-manufacturing company raised an internal round of roughly $30 million from existing investors and continued working on its latest project — a new bio-based manufacturing process for a high-value specialty chemical that can act as an anti-corrosive agent.
That work represents a potentially lucrative new product line for the company and charts a course for a host of other businesses that are refashioning the basic building blocks of life in an attempt to supplant chemistry with biology for manufacturing and production.
If Solugen can get its high-value chemical into commercial production, the company can follow the path that sustainable tech companies like Tesla have mastered — moving from a pricy specialty product into the mass market. And rather than over-promise and underdeliver, Solugen wanted to get the product line right first before raising big bucks, according to people familiar with the company’s thinking.
As the world looks to move away from oil and its byproducts to reduce greenhouse gas emissions and slow down or reverse global climate change, the chemicals industry is in the crosshairs as a huge target for disruption. Vehicle electrification solves only one part of the oil problem. The extractive industry doesn’t just produce fuel, but also the chemicals that make up most of the products that defined consumer goods in the twentieth century.
Chemicals are everywhere and they’re a huge business.
Companies like Zymergen raised hundreds of millions of dollars last year to develop industrial applications for synthetic biology, and they’re not alone. Startups including Geltor, Impossible Foods, Ginkgo Bioworks, Lygos, Novomer and Perfect Day have all raised significant amounts of capital to reduce the environmental footprint of food, chemicals, ingredients and plastics through synthetic biology.
Some of these companies are seeing early success in food replacements and ingredients, but the promise of biologically based chemicals have been elusive — until now.
Solugen’s new product will produce glucaric acid, a tough-to-make chemical that can be used in water treatment facilities and as an anti-corrosive agent — and the company can make it with a zero carbon (or potentially carbon negative) manufacturing process, according to Solugen co-founder and chief technology officer, Sean Hunt.
The glucaric acid from Solugen is cheaper to produce and more environmentally friendly than existing phosphonates that are used for water treatment — and the company has the benefit of competing against chemicals manufacturers in China.
Given the continuing tensions between the two countries, the U.S. is looking to make more high-value products — including chemicals — domestically, and Solugen’s technology is a good way forward to have home-grown supplies of critical materials.
Solugen still intends to raise more capital, the company just wanted to wait until its latest production plant for the acid came online, according to Hunt.
It’s also the fruit of years of planning. The two co-founders, Hunt and Gaurab Chakrabarti, first realized they could potentially use the technology they’d developed to make specialty chemicals back in 2017, according to Hunt. But first the company had to make the hydrogen peroxide as a precursor chemical, Hunt said.
“It’s advantageous for us to focus on this,” said Hunt. “As we scale, we can enter more commodity-type markets down the road.”
It’s all part of the notable strides the entire industry is making, said Hunt. “Synthetic biology has really made significant strides,” he said. “We have our commercial plant coming online this summer [and it proves] synthetic biology has gotten to the point where we can compete on price and performance.”
So the capital infusion will come as the company gets closer to the completion of these commercial scale facilities.
“It’s not like we were sitting on a term sheet and we said no,” Hunt said. “We want to make sure that we are hitting the milestones and the goals at a commensurate pace which is this year. I’m extremely bullish and optimistic of 2021.”
Solugen’s co-founder sees the path that his company is on as one that other startups working in the synthetic biology space will pursue to bring profitable products to market at the higher end before competing with more sustainable versions of commodity chemicals.
“How do you start a company that has this level of capital intensity?” Hunt asked. “You can start in the fine chemicals space where everything sells for tens to hundreds of dollars per pound. For us, glucaric acid is that specialty chemical and then we will do commodity.”