INTERVIEW

Venture capital fund seeks start-ups: Must be sustainable, innovative & ready to make money

Consumers know plant-based alternatives are healthy and better for the planet, says Friedrich, but there’s much more to do in terms of taste, price and convenience. © iStock

New Crop Capital is a venture capital fund that only invests in sustainable start-ups developing cultured and plant-based meat, dairy and egg products. But it's not just about saving the planet: “There are billions to be made annually in this space,” it says.

The global meat substitutes market is forecast to be worth more than €3.5bn next year, according to market analysts Vision Gain, with a CAGR of 6.4% in the next five years – but figures like that are “probably conservative”, according to the managing trustee at New Crop Capital.

“This is a market poised for exponential growth,” said Bruce Friedrich who suggested that meat alternatives could be worth $16bn (€14bn) if they replicate what’s happened in the dairy-free marketplace.

NCC has its roots in animal welfare – it’s solely focused on companies that will create a market for plant-based alternatives to meat, eggs and dairy. But this is as much about making money as it is saving the planet.

Speaking to Friedrich leaves you in no doubt that the $25m (€22m) available to invest over the next five years ($5m per year) will be money very well spent. He says there are billions to be made annually in this space, and NCC is on the hunt for more food science hotshots.

"We invest in talented, focused entrepreneurs whose products or services replace foods derived from conventional animal agriculture, which we view as an antiquated and inefficient food production system with serious vulnerabilities."

- New Crop Capital

Cheaper, tastier and more convenient

Indeed, the market won’t change overnight – or without vast improvements to the products available and more backing for research and development from governments.

For Friedrich, plant-based alternatives have already won the environment and health battles with conventional livestock products in the minds of consumers, but there’s much more to do in terms of taste, price and convenience.

Those three things “consistently top” the surveys on why people make the food choices they do. “There’s a tremendous opportunity here to make alternatives to meat, dairy and eggs that are cheaper, tastier and more convenient. If we do that, consumers will shift over,” Friedrich said.

Convenience in particular is key. The availability of alternatives needs to increase and, ideally, they need to make their way to the meat aisles of the supermarkets and sit side by side with animal proteins. Dairy alternatives have already taken that road and it’s rocket-fuelled sales.

Soy milk, almond milk and the like now form 8% of the 'milk' market, which is about 30 times that commanded by alternatives to meat, according to Friedrich. Achieving parity with what’s been achieved by their dairy-free cousins would mean a $16bn (€14bn) market for meat alternatives, he said.

New EU investments?

This isn’t just about providing competition at the centre of the plate with meat, dairy and eggs. In fact, that’s just the first step. Friedrich wants to see companies in livestock alternatives competing with one another. “We’re a long way from that.”

So far NCC has made eight investments, with all bar one being in the US (it’s also backed New Zealand-based Sunfed Meats). However, Friedrich is in discussions with multiple companies in the Netherlands. “We have more companies than we do money – and that’s a blessing,” he said.

Government’s also need to shift cash in the direction of R&D for the meat-free market too, he claimed. Reports have suggested there’s zero chance of meeting the carbon emissions cuts within the Paris Agreement unless meat consumption falls significantly, but it’s an area that politicians are reticent to tackle.

Friedrich disagrees with the idea that consumers need to be educated on the issues in order to change their behaviour. “We’ll be far more successful if we create products that are well-priced, tastier and more convenient,” he said.

He and his team look for companies that will be “maximally transformational” – and that includes tech platforms. The fund has already backed Purple Carrot, a website to help people create plant-based meals at home.

The hunt for hot shots, or David versus Goliath

What makes NCC different is that they will help companies past the 'angel and seed' stage. Friedrich is also executive director at the Good Food Institute, which has a similar agenda.

“We’re reaching out aggressively to the synthetic biology, entrepreneurship and food science communities to educate them about the opportunities to make a lot of money and do a lot of good by putting their talents to work, creating and promoting plant-based and cultured alternatives to meat, dairy, and eggs,” he explained. 

For example, “where some hot shot serial entrepreneur might have been planning to start a tech company focused on some area where she or he sees opportunity, we’ll be educating and encouraging her or him to start a plant-based or cultured meat company”, he added.

This isn’t just about the Davids of the plant-based world challenging the Goliaths of the livestock industry, though. “I think we will see other meat companies like Tyson [Foods] and Smithfield [Foods] jumping in because that’s where the profitability lies,” Friedrich said.

Some already have.

The director at German meat company Rügenwalder Mühle provoked the ire of his industry compatriots when he said that he wanted 30% of the German meat giant’s sales to come from it vegetarian range by the end of the decade. But the fact is that meat sales are in decline whilst alternatives are enjoying double-digit growth. 

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