I called 2013 “the year the Valley embraced sustainable food innovation,” as a wave of plant-based alternative meat and dairy startups emerged: Hampton Creek Foods (plant-based egg products), Sand Hill Foods (cheese made from nuts), Beyond Meat (veggie chicken and beef), and Modern Meadow (printed beef and leather). These companies are backed by some of Silicon Valley’s most well known names, including Khosla Ventures, Bill Gates, Kleiner Perkins, and Obvious Corp, the company behind Twitter.
But it turns out there was one startup — which had raised even more money than the rest and has been in stealth — that I missed. On Tuesday night the Wall Street Journal profiled Impossible Foods, a three-year-old startup based in Redwood City, California and founded by Patrick Brown, a first-time entrepreneur and Stanford University biochemist and physician.
Impossible Foods is making meats and cheeses from plants, and tells the Wall Street Journal that its secret sauce is a substance it calls “plant blood,” which is a bioengineered product from a molecule (heme) found in hemoglobin (what makes blood red and gives it that metallic taste). According to the Wall Street Journal, Impossible Foods is backed by $75 million in funding from Google Ventures, Khosla Ventures, Hong Kong billionaire Li Ka-shing and his Horizons Ventures and Bill Gates’s Gates Ventures.
Whether these sustainable food startups will turn out to be good investments for venture capitalists remains to be seen. The plant-food investing trend emerged in the last few years with funding coming from some firms that had previously invested heavily in cleantech companies, but had begun to move away from that sector after quick returns proved difficult. Some of these investors are also moved by something more akin to impact investing — putting money into important, possibly world-changing causes that can hopefully also make them money.
No doubt some of these startups won’t succeed, but I for one applaud the needed innovation in the area. There are many veggie meat companies out there — Kellogg’s owns MorningStar Farms, Kraft has its Boca brand, and ConAgra has Lightlife — but these newer startups are building core technology that can create products that are far bettethan the current ones on the market.
The thesis for why an investor would want to back a plant-based meat product is actually quite similar to why they would want to invest in a cleantech firm. The population will hit 9 billion by 2050, and this growing population will need more efficiently created protein products. There will be more people, less space per person and fewer resources per person. And as Impossible Food’s founder Brown told the Wall Street Journal, “Livestock is an antiquated technology.”
Impossible Foods is still in the early stages. The company plans to start selling its veggie meat patties at the end of 2015. Currently it costs it $20 to produce one patty. Obviously that price will have to come down substantially as the company scales up and tries to compete with the hamburger industry.