I asked some founders of alt protein startups across APAC to share their experiences with raising funds from investors.
Basically, all agree there has been a large spike in interest from investors last 6-12 months.
Definitely much more interest especially from Asian investors, which was not the case 2 years back.
Dan Riegler, co-founder of Karana
Since the launch of Impossible Foods in Asia and the Beyond Meat’s IPO it’s pretty rare to find an investor who is not curious about the space.
Karana’s other co-founder, Blair Crichton adds:
A lot of investors just wanting to talk to you to learn - they haven’t made a decision yet if they are going to have a thesis around the industry and invest in it.
George Peppou, co-founder of Australian cell-based startup Vow
sees additional acceleration from Covid-19:
Covid highlighted a few things to investors: 1. industrialised animal agriculture is a threat and will be increasingly scrutinised and 2. food sovereignty is a very real trend. Cultured meat is seen by a lot of them as a solution to both of these.
I was also curious how familiar with alt protein space and specific technologies are the investors in the founders’ eyes. Here are some of the observations.
Most of the investors are pretty sophisticated and are well across what is happening in the alternative protein space. They recognise the urgency and share our mission of solving the global food challenge.
Michael Fox from mushroom-based Australian startup Fable
I’ve found investors are very familiar with the sector. Before actually kicking Fable off I spent a lot of time speaking with various VCs and investors to get their thoughts on the space.
It seems to be a bit more tricky with more deep tech startups like precision fermentation and cell-based meat.
Most we’ve spoken with are somewhat familiar with the alternative protein space, however there is a large degree of variability when it comes to understanding of the various technologies. A common problem has also been a lack of resources or limited technical know-how within the firms to perform effective due diligence.
Sandhya from Shiok Meats:
[Some] do not understand cell-based meats in depth. Often equate it to plant-based meats which is very different. So a lot more education on the cell-based meat technology is required.
Fengru Lin, founder of cell-based milk startup TurtleTree Labs
on how she is addressing this technology understanding gap:
Having come from a business background and needing to grasp some of the more complex concepts from our scientific team has afforded us [non-scientific] founders the useful skill of explaining technical terms in more layman terms to investors because we know exactly how they feel.
Finally, what are some of the common challenges startups encounter in their fundraising process?
Nick Hazell from v2food
and Yuki Hanyu, founder of Japanese cell-based startup Integriculture
were sympathetic with early stage investors, who bet on the company at the stage where there is little to show yet and a long road ahead.
When we started fundraising [more than a year ago], we were asking investors to invest in a risky business, with only a limited track record of success, and massive growth ambition ahead of us.
We have to make a promise on something we have to start from basic research and explain the long timelines with large margin of uncertainties.
Blair Crichton (Karana), David Bucca (Change Foods) and Sandhya Sriram (Shiok Meats) each shared their perspective on approaches and attitudes of investors in various geographies.
A lot of South East Asian investors want to see more traction and invest at later stages. There seem to be not as many funds willing to take those bets on early stage companies. Lots of US investors that invest at the seed stage but they generally don’t invest out of their geographic proximity.
The biggest challenge in Australia/NZ is investor conservatism and higher risk aversion. This is further exacerbated for deep tech (such as cell ag and precision fermentation), and companies that are pre-revenue or pre-prototype. There is also an aversion to SAFE notes or convertible securities.
From my experience, Asian investors are generally more accepting of longer term payoffs, open to notes/convertibles, and have a higher appetite for risk in supporting deep tech and endeavours that are R&D intensive.
Asian investors are still slightly risk averse but things are changing for the better. Also, due to COVID and travel restrictions, fundraising in general is hard.
Tim Noakesmith, Vow co-founder mentioned Covid impact as well:
For us, it was not being able to meet with investors in person. Having a founder pitching is one thing. Feeling the energy, seeing our culture and people in action is way, way more impactful. It was impossible for us to recreate this experience, and the belief that comes with it remotely.