Bay Area-based companies are at the forefront of the plant-based meat revolution and investors are taking notice. In 2020, a slew of foodtech companies in the Golden State raised massive amounts of funding in response to increased interest from health-conscious consumers during the pandemic.
Impossible Foods led the pack, as the San Francisco-based foodtech giant raised a combined total of $700 million across its Series F and Series G rounds.
The fresh financing reflects a year of dramatic growth for the company. Prior to the pandemic, Impossible products could be found in 150 grocery stores across the United States. Today that number has skyrocketed to nearly 20,000.
“That’s been the biggest shift for our company is going from being a restaurant dominant business to one that is now largely driven by grocery store sales,” Rachel Konrad, chief communications officer of Impossible Foods, said in an interview with Built In. “A lot of that was ... the timeline was really influenced by COVID.”
Many meat producers across the U.S. shut down in April of 2020 due to viral outbreaks at processing facilities. This gave plant-based meat companies like Impossible Foods an extra boost, according to Konrad.
“It was actually really unusual timing, at exactly the moment when we were starting to populate store shelves, there was no ground beef from cows, because, ultimately, the supply chain for ground beef from animals is very, very fragile,” Konrad continued. “And ours is simple and robust. It’s just plants.”
‘It All Starts Here’
Impossible Foods isn’t the only California-based alt-meat company to have raked in serious amounts of cash last year, as plenty of others across the state made bank as well.
Just across the Bay, Berkeley-based foodtech companies Perfect Day and Memphis Meats each brought in more than $150 million for their animal-free dairy and meat products. Another Berkeley-based startup, Climax Foods, raised $7.5 million to get its plant-based cheese alternatives off the lab shelves and into stomachs.
Meanwhile, down south, LA-based foodtech companies like Beyond Meat and Tattooed Chef have both made successful debuts on Wall Street over the last two years.
For Konrad, it’s no surprise that California acts as the central hub for so much plant-based meat and dairy innovation.
“California, for more than 50 years, has actually set pretty much every major food trend in America. It starts here,” Konrad said. “I’m talking, you know, salsa replacing ketchup as America’s number one condiment. That started in LA. Farm-to-table, seasonal eating, most of that started in Northern California.”
Really our industry was only birthed into existence six or seven years ago.”
Fertile Ground for Growth
Although the plant-based food industry is still a relatively new one, it’s rapidly expanding, according to Amy Huang, university innovation specialist at the Good Food Institute.
“Really our industry was only birthed into existence six or seven years ago and it’s remarkable to watch exponential growth happening in the private sector in terms of the number of companies that exist,” Huang said in an interview with Built In.
Huang expects 2021 to be a year chock full of large infrastructure investments for the alternative protein industry.
“We have seen tremendous growth in demand for alternative protein products and we expect that, beyond just more consumer facing companies and brands starting up, we expect there to be a lot of growth in ingredients and equipment manufacturing and production and processing capacity,” Huang continued.
While Huang recognizes that plant-based foods are often great for one’s personal health, she’s quick to point out the value they offer in terms of public health as well. It’s possible that the pandemic has helped to highlight some of the biosecurity risks associated with industrial animal culture.
“I think, to some degree, [we’ve witnessed] the discourse around how industrial animal agriculture escalates pandemic risk because animals are just diseased-carrying vectors,” Huang continued. “By removing animals from our foods, we are really increasing the resilience of our global and public-health systems. I think that dialogue is starting to be elevated.”
Investing in Our Planet
Plant-based foods and meat alternatives have already made their way to the mainstream; many have become a staple on menus for several fast food chains. Despite this newfound visibility, the percentage of vegetarians in the U.S. has remained stable over the past two decades.
Konrad expects that number to grow. A survey commissioned by Impossible Foods found that most consumers are motivated to buy meat-alternative products based on what they offer taste- and nutrition-wise. The next top motivator? Sustainability.
“People are increasingly aware of the huge land footprint, the methane and the greenhouse gas emissions of the cattle industry,” Konrad said. “They are specifically looking for products, if they taste good, and if they deliver the nutrition, that are lower land footprint, lower water, lower energy, that kind of thing. That has been a big change.”
As Huang looks ahead, she remains optimistic about the potential for the plant-based food industry at large. But she’s also careful to note that it will take a community-led effort to increase access and visibility.
“We have so many challenges that we’re up against and we’re certainly optimistic that we can overcome them. It will take really close coordination between our academic institutions, the private sector, and our government,” Huang said. “I think it will take the acknowledgement that shifting our society toward alternative proteins is at the center of ensuring that we have a habitable planet for centuries to come.”
Huang hopes investors will take note of that fact as well.
“I’m really excited for 2021 to be the year where climate-forward investors recognize that food system transformation is right there at the center of some of the most pressing environmental issues such as energy transformation,” Huang said.
