New multi-million protein fund could shift investment away from plant-based firms

CommentaryPlant-Based FoodTech

Big Idea Ventures is a New York-based venture capital firm that seeks to invest in early and growth stage firms operating in plant-based foods, ingredients, food technologies and the alternative protein sectors.

The next incarnation of a multi-million dollar protein fund might shift away from investing in plant-based firms, as the fund’s founder says most of the interesting companies are currently not in this field, but in other areas like cell and fermentation-based fields.

Big Idea Ventures, founded in 2018, is a New York-based venture capital firm that seeks to invest in early and growth stage firms operating in plant-based foods, ingredients, food technologies and the alternative protein sectors.

Big Idea Ventures runs several funds investing in these firms, which are looking to address big global challenges like hunger, climate change and pollution.

For example, its $50m New Protein Fund 1 invests in early-stage plant-based and cell-based startups as well as the ingredients and technologies that support such businesses, which are looking to revolutionise the food industry.

It also runs the Generation Food Fund 1 which is raising $250 million and targets technologies and companies that will transform the global food system by reducing plastics, water, waste and carbon emissions throughout the supply chain.

Thirdly, it runs the Generation Food Rural Partners, which aims to commercialise university-developed intellectual property focused on food, protein and agricultural innovations.

The New Protein Fund 1, with backers including Buhler, Singapore state venture capital fund Temasek and Tyson Foods, has recently closed, achieving its $50m target.

Scores of firms have been invested in the New Protein Fund 1 including Shiok Meat, a Singapore startup specialising in cell-based foods; Blue Ridge Bantam, a US firm looking to commercialise cell-based technology and Grounded Foods, a US-based firm specialising in plant-based cheese.

As part of the fund’s accelerator programme, twice a year alternative protein startups undergo a five-month accelerator programme in New York City, Singapore or Paris. 

The New Protein Fund 1 is likely to be followed by a new iteration of the fund, New Protein Fund 11, which will start in around 18 months time.

But Big Idea Ventures founder Andrew Ive says there might be a de-emphasis on investing in plant-based firms in the new fund.

“We were focusing the New Protein Fund 1 in plant-based, cell-based and fermentation-based,” Ive said.

“I would say over the last six to 12 months one of the most interesting areas coming through is fermentation-based.

“Also mycelium and the fungi side of the equation. There are some really interesting companies coming through there.

“Still a lot of really interesting companies coming through on the cell-based side. As far as the plant-based side is concerned, we are looking for unique IP. 

“We are not really looking for plant-based burgers and sausages. We are not looking for recipe-based businesses because there’s less of a barrier to entry, less uniqueness.

"We may decide, for example, in New Protein Fund 11 to focus on those more innovative unique IP-driven businesses which may mean a de-emphasising of the plant-based [companies]."

But he added that the makeup of the New Protein Fund 11 will depend on which areas of the protein industry the excitement and innovation is in 18 months time.

Asked about the impact Covid has had on New Protein Fund 1, Ive said: “Our target was to raise $50m and we raised it predominately through Covid and we closed out the fund above $50m.

“It’s obviously impossible to say [that Covid had] no impact, because I don’t know if we’ve had done $100m instead of $50m.

“I do know that we’ve had zero failures from the companies in our portfolio.”

As an indicator of the success of the fund, Ive pointed to one of the firms in the investment portfolio, Belgium’s Peace of Meat, which produces animal fats from cells, which last year was acquired by Israeli 3D-printing food company MeaTech in a €15 million deal.

Furthermore, Ive points to firms in the portfolio managing to raise significant follow-up funding.

“A large percentage of the companies we have invested in have been able to raise follow on funding, have been able to move their business forward. Some of them have raised $5m," he says.

One of these firms, California-based Orbillion Bio, which is developing premium cell-based meat products, was valued at $4m when the New Protein Fund 1 invested in it, and has subsequently raised millions upping its valuation significantly, added Ive.

One of the biggest impacts from Covid has been on its Generation Food Fund 1, said Ive.

He said: “I think the biggest impact for Covid on that fund is that I think institutional investors are less willing to invest $20m or $50m in  a blank check fund,  in a fund which hasn’t specified where the money is going to go.”

To combat this, Big Idea Ventures specified specific deals within the fund which it thought would interest investors, as opposed to asking them to plough money into the funds without details of which companies they were investing in.