Mapping the Cellular Agriculture / Clean Meat Venture Capital Landscape

Researched & Written by Ashlee Stojanovski

Market Overview

Alternative Protein has entered a new era

In recent years, it has become clear that the food industry is being disrupted by alternative protein innovations. Meat alternatives, such as plant-based Impossible’s burger patties & Beyond Meat’s veggie balls, are currently riding a wave of popularity in restaurants across the world & increasingly taking up space in shelves of retail supermarkets. However — quietly growing in the background — a new contender, “cell-based meat” (or “clean meat”) is fast approaching based on patent activity (Mintel, 2021). At large, we see the excitement in the alternative protein space being driven by the heightened awareness of the need to opt for more sustainable foods and food production methods.

Whilst the “clean meats” industry is still in its infancy, early regulatory wins foreshadow the momentum that is to follow. In December 2020, the Singapore Food Agency approved the world’s first cultivated meat product for sale. Shortly thereafter, the “1880 Restaurant” in Singapore marked the historic first commercial sale of the approved cultivated chicken.

This article aims to map the startups & VC landscape behind the emerging force of clean meat.

Figure 2, Source: Good Food Institute & Tellis Road

Historical Trends

From Figure 2, we observe two trends. Firstly, explosive wave of new competitors entering the market. From only 5 startups in 2014 (or earlier), we’ve seen year on year growth of 200%. As of 2019–2020, there are 68 Cell-Ag startups, compared to 35 startups in 2018.

From 2018–19 onwards, we see startups entering the market specializing in subsections of the cellag supply chain — e.g scaffolding, the cultured medium or specialized technologies, rather than the end product.

Funding the Cell-Ag Race

Based on Crunchbase data of 50 clean meat startups, we’ve seen over $1.3 Billion (USD) in total equity funding over the last 5 years.

Note (Figure 3): Regions with less than $1M (USD) in funding have not been represented in this graph

Figure 1, based on an analysis of 46 startups, the US clean meat market captures close to 70% of global funding, followed closely with Europe 10.76% and Israel 2.23% respectively. Although the startups are spread worldwide, there is a larger concentration of firms in the Northern Hemisphere. However, it is too early to predict whether this initial geographical configuration will remain when this industry matures, as this depends on an array of decisions by multiple players, which are not yet defined.

$2.6 Trillion Combined Market Capitalisation in clean meat (Fairr, 2019–2020)

Figure 4: Clean Meats Pie Chart as Per Protein, Source: Crunchbase

Leading the market in protein R&D, 23% of startups focusing on developing beef products (including mince, steak products and burger patties), while chicken and seafood represent 18% the market respectively. “Other” (20%) represents sections of the cell-ag supply chain; this can entail serum, plant-based media, structured scaffolding or exotic meats.

So who are the VC making a splash?

Figure 5: Venture Funding Per Stage & Number of Deals, Source: Crunchbase

Beyond fundraising figures, the sector is still yet to mature in terms of mega-rounds and the bulk of financing rounds remain clustered pre-seed & seed stage (46.42% of total startups). However, as we approach 2021, rounds are increasingly oversubscribed in series A & Series B. This indicates that investors are getting excited. Below, highlights a number of high profile Series A and B rounds in the sector from the past 24 months.

  • ShiokMeats September 2020 $12.6M Series A led by Aqua Spark
  • Mosa Meats September 2020 $55m Seed led by Blue Horizon Ventures
  • Vow March 2020 $7m Series A led by Blackbird Ventures
  • Redefine Meats February 2021 $29m Series A led by Happiness Capital apital and Hanaco Ventures
  • Memphis Meats January 2020 $161m Series B led by Temasek, SoftBank Group & Norwest Venture Partners
  • BlueNalu January 2021 $60m Series A led by Rage Capital

“Big Food” has it’s foot in the race

Figure 6: Meat companies with stakes in clean meats

The innovation potential has not gone unnoticed by leading food companies, which are now investing in and partnering with start-ups in this space. Early 2021, Tyson Foods invested in Future Meat Technologies, an Israeli start-up created cost-effective lab-grown chicken. Earlier this year, two leading global seafood companies entered into significant partnerships with alternative protein companies. Grupo Nutreco, animal nutrition, and aquafeed producer, and Pulmuone, a South Korean food company, have invested in and partnered with BlueNalu. Cargill, too, has dipped its toes into US-based, Memphis Meats & Israel-based, Aleph Farms.

The Rise of Thematic “Alternative Protein” Venture Capital Firms

Figure 7: VC firms in Alternative Proteins

We’re also seeing an influx of venture capital firms taking a thematic investment approach to alternative protein. See Figure 7.

COVID tailwinds will continue to accelerate clean meats adoption

The Covid-19 pandemic has brought to light two critical problems with conventional food systems which have accelerated the Clean Meats discussion. Firstly, the intense human-animal interface of traditional farming methods have overexposed risks whereby zoonotic agent can be transmitted to humans. As culturing animal cells bypass the human-animal interface this can reduce the risk of another pandemic rising. Secondly, COVID-19 brought to light the fragility of our food systems. As cellular agriculture has the potential to greatly reduce the long and complex supply chains of conventional meat, this may be an avenue to reduce future shocks and food insecurity. Subsequently, COVID 19 pandemic has given a new vigour of support for innovative & preventative technologies that will ensure future populations can avoid enduring another crisis. Investors & regulators are beginning to see cellular agriculture as a tangible and pragmatic solution to the shortcomings of our current food production system.

Positive regulatory outlook

Post-pandemic, we’re seeing a new wave of positive regulatory outlook for clean meats as many governments are looking towards innovation to secure current productions systems. This includes Singapore with its 30-by-2030 commitment, the EU and its recent Farm to Fork Strategy, and most recently, Canada, which announced a $100 million investment in plant-based foods.The regulatory approval process in the EU requires foods and/ or ingredients not previously sold and consumed to obtain certain pre-market authorisations. According to the EU Novel Foods Legislation (Regulation EU 2015/2283), the European Foods Safety Authority (EFSA) is responsible for carrying out the relevant assessments on a case-by- case basis. Cell-culture is included in its mandate. In the US, novel foods can be subject to regulatory oversight by multiple federal and state agencies. For cell-culture, the US Department of Agriculture (USDA) and the Food and Drug Administration (FDA) have announced that they will share joint oversight and are currently working to establish a clear regulatory pathway for cell-cultured products.

In Singapore, as part of the government’s ambition to produce 30% of its nutritional needs in Singapore by 2030, it is investing in innovation and creating a supportive environment to enable the expansion of technologies like cell-culture. The Singapore Food Agency (SFA) has been developing a new novel foods regulatory framework that will require cell-culture and other alternative protein companies to seek pre-market approval including a safety assessment which is estimated to take between three to six months.

The Awakening of Asian Foodtech Companies?

Three of the five biggest investors in this space globally (by amount invested) are Asian: Temasek, Horizons, and Softbank. Asian food corporates with deep pockets are now getting interested (CP, UniPresident, Tolaram). Whilst in the long-term, investment dollars into Asian companies are lower than their American counterparts, it is worth noting, this space is still in its infancy. Only 5 years back, there was little investor interest in the US, and the scene since evolved rapidly. Asia now is facing the same early point as America which in my view makes, it the perfect time to do early-stage investing in Asia.

For investors, the biggest problem for Asia is the shortage of investable companies: in the current landscape, we see mediocre to low-quality food products, average (not excellent) teams, and unduly high valuations. But for very good startups in Asia, conditions are very favorable: pent-up and increasing investor interest for good deals, opportunity to become the market leader in their category, broad public familiarity with and openness to alt protein products, and supportive views on the sector from regulators in China and Singapore. And for investors, it is the perfect time to be investing the (admittedly modest) number of very good startups in the region.

Conclusion

While we may still be a few years away from having freshly lab-grown Rib-eye steak on our dining plates, it’s abundantly clear that we are on the forefront of a food revolution. Through the investor’s mindset, we’ve identified long-term growth and provided exposure to macro shifts such as the one we now face within the food industry. It is apparent that this technology is poised to disrupt the food value chain as the market evolves into its future state.

If you have any comments or feedback, feel free to contact me via stojanovskiashlee@gmail.com

championing young founders, sustainability geek & politics aficionado

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