Venture capital funds cool on plant-based meat start-ups

Receive free Food & Beverage updates

Venture capital funding for plant-based meat start-ups has slumped to its lowest level since 2018, as a weaker economic outlook and rising interest rates curb enthusiasm for the once high-flying industry.

Start-ups focused on plant-based meat secured $75.2mn from venture capital firms in the first quarter across just 22 deals, down from $703mn in the same period last year, according to data provider PitchBook.

The slowdown comes on top of a steep drop last year, when backing from venture capital funds — a critical source of funding for start-ups — tumbled to $1.5bn, half the total in 2021.

Investors raced to back the plant-based meat industry in the final years of a stock market boom powered by record-low interest rates. Shares in industry leader Beyond Meat surged after its initial public offering in 2019, with the company’s market capitalisation hitting nearly $12bn.

However, as big central banks have lifted interest rates in a bid to choke off higher inflation, consumers have cut back and investors have become more cautious.

The plant-based meat industry is exposed to the combination of inflation and rising interest rates, said Carlotte Lucas, senior corporate engagement manager at the plant-based advocacy group Good Food Institute Europe. 

“This fast-moving sector is just getting started and will need to continue weathering the difficult market environment,” she said.

The pullback by consumers and investors has already inflicted damage on the sector. California-based Tattooed Chef said on Friday that it will file for bankruptcy protection, while meat alternatives supplier Plant & Bean filed for administration in June amid soaring costs.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

UK-based Meatless Farm laid off its staff in June and appointed administrators after its big shareholder SK Inc, the investment arm of South Korean conglomerate SK Group, pulled funding. It was rescued a week later by plant-based chicken maker VFC.

After slumping to a $366mn loss last year, Beyond Meat in May announced plans to raise as much as $200mn selling new shares. There are also signs that established companies are pulling back.

In March, Nestlé withdrew its Garden Gourmet line from UK supermarket shelves, saying it needed to focus on its core product range. Brazilian meat group JBS has shut down its US plant-based food unit, Planterra Foods. 

However, venture capital firms have not given up the sector altogether. While funding for plant-based alternatives has fallen, investors have backed start-ups developing lab-grown and fermented protein alternatives.

Companies developing such products secured $356.6mn across 30 deals in the first quarter, according to PitchBook. 

Andrew Ive, founder of food tech investment firm Big Idea Ventures said that despite the more difficult environment investors were looking for technologies that created “bio identical” products — those that were indistinguishable from real meat. 

“We can get there today using cultivated and fermentation, but we are unable to get there with plant-based,” said Ive. 

Read the full article Here

Leave a Reply

Your email address will not be published. Required fields are marked *

DON’T MISS OUT!
Subscribe To Newsletter
Be the first to get latest updates and exclusive content straight to your email inbox.
Stay Updated
Give it a try, you can unsubscribe anytime.
close-link