Alternative protein industry set a new funding record

Blog

Posted by Tomáš Kabeláč

More from Tomáš

The alternative protein sector is experiencing a huge boom in investments as consumers are looking for healthier and environmentally-friendly choices in their food habits. The investors are feeling the opportunities that the sector has to offer.

Breaking point of alternative proteins

In 2019, plant-based meat, eggs and dairy companies raised a $747 million funding – the highest number of investment in any single year in the sector’s history.

$457 million was in venture capital and $290 million in net new company stock. Beyond Meat’s successful IPO took a large part of that pie.

And that was only the beginning!

In Q1 of 2020 the industry set another record: $741 millions were invested in that period. Almost the entire funding of a single year of 2019 was squeezed into 3 months of 2020.

For now it seems that 2020 will be the next breaking year for the industry, setting the new record even when the world is in recovery after covid-19 pandemics.

The numbers behind the scene

In the past decade (Q2 2010 – Q1 2020) the U.S. plant-based meat, egg and dairy companies have funded $2.7 billion in VC investments, $1.2 billion or 45% of which were funded in 2019 and Q1 2020 alone.

The funding is very dynamic within the sectors that synergize with sustainability and dealing with climate change. Not only alternative proteins, but also renewables, EV or energy-efficient buildings and many more.

Big players want to also surf on the waves of alternative protein success and nine of the top 10 U.S. meat companies have profited on the plant-based switch, having bought, launched or cooperated on a plant-based meat project by the end of 2019.

Public interest is also set in the right direction for alternative proteins. The two largest financing events of 2019 were Beyond Meat’s another-record-setting IPO – don’t be surprised – the first ever from a plant-based meat company, and Impossible Foods’ $300 million Series E funding round.

Why alternative proteins will be on the table

Data suggest that meat production produces around 15% of global carbon emissions – almost as much as all of the world’s vehicles, the use of water by farm animals is around 8% of the world’s water supply and livestock land use is becoming unsustainable for our future.

The production of alternative proteins is more environmentally-friendly, doesn’t harm animals and many times offer a healthier product for consumers.

Since the coronavirus strike there is also higher attention about potential diseases coming from animal-based food. Also the transparency and resiliency of chain supply is a hot topic among consumers and investors.

The impacts of Covid-19 situation on the industry are for now in a positive direction. The investors are more careful with their financial movies, of course, but the public and particularly consumers are searching for alternative proteins rather than meat more than ever.

Many alternative futures for alternative proteins

According to Barclays analysts the market of alternative proteins can rise up to $140 billion over the next decade.

It means that the animal-free sector could take a 10% share of meat industry steak. That’s a big potential for investors as the industry is on it’s rise.

Right now there are many new technologies and innovations pioneered every day such as biofabrication, 3D bioprinting and shear cell technology, which will boost the growth of the sector in the future.

If the healthier, plant-based diet could be reached globally by 2050 it could prevent 5.1m deaths a year. Eating more alternative proteins reduces the prevalence of diseases associated with high body weight and unhealthy diets.

Many of the great products haven’t yet made it to market because they still cost too much money to produce. The representatives believe that with more investor funding, they can get pricing down. We agree with them and we will search and help those startups.

For the future development the funding will be necessary as the transition to an alternative protein-based diet will be one of the main sustainable goals by 2050 to tackle climate change.

Resources
https://www.gfi.org/record-investment-in-alternative-protein-in-2019-and-q1-2020-media-release
https://www.fastcompany.com/90530093/alternative-meat-and-dairy-companies-are-raking-in-investment-dollars
https://www.cnbc.com/2019/05/23/alternative-meat-to-become-140-billion-industry-barclays-says.html
https://www.fanext.com/2019-was-a-breakout-year-for-alternative-protein-startups-whats-in-store-for-2020/

Investment in alternative protein reaches record $930m in 2020


https://www.globenewswire.com/news-release/2020/02/03/1978845/0/en/Alternative-Protein-Market-is-Expected-to-Grow-at-a-CAGR-of-9-5-to-Reach-17-9-Billion-by-2025-Meticulous-Research.html
https://www.globenewswire.com/news-release/2020/02/03/1978845/0/en/Alternative-Protein-Market-is-Expected-to-Grow-at-a-CAGR-of-9-5-to-Reach-17-9-Billion-by-2025-Meticulous-Research.html