[US] Venture Capitalists Are Making Bets on Meat Alternatives
The New York Times - April 29, 2013
Venture Capitalists Are Making Bigger Bets on Food Start-Ups
By JENNA WORTHAM
and CLAIRE CAIN MILLER
What if the next big thing in tech does not arrive on your smartphone or
in the cloud? What if it lands on your plate?
That idea is enticing a wide group of venture capitalists in Silicon
Valley into making big bets on food.
In some cases, the goal is to connect restaurants with food purveyors,
or to create on-demand delivery services from local farms, or
ready-to-cook dinner kits. In others, the goal is to invent new foods,
like creating cheese, meat and egg substitutes from plants. Since this
is Silicon Valley money, though, the ultimate goal is often nothing
short of grand: transforming the food industry.
"Part of the reason you're seeing all these V.C.'s get interested in
this is the food industry is not only is it massive, but like the energy
industry, it is terribly broken in terms of its impact on the
environment, health, animals," said Josh Tetrick, founder and chief
executive of Hampton Creek Foods, a start-up making egg alternatives.
Some investors say food-related start-ups fit into their sustainability
portfolios, alongside solar energy
or electric cars
because they aim to reduce the toll on the environment of producing
animal products. For others, they fit alongside health investments like
fitness devices and heart rate monitoring apps. Still others are eager
to tackle a real-world problem, instead of building virtual farming
games or figuring out ways to get people to click on ads.
"There are pretty significant environmental consequences and health
issues associated with sodium or high-fructose corn syrup or eating too
much red meat," said Samir Kaul, a partner at Khosla Ventures, which has
invested in a half-dozen food start-ups. "I wouldn't bet my money that
Cargill or ConAgra are going to innovate here. I think it's going to
take start-ups to do that."
In the last year, venture capital firms in the valley have funneled
about $350 million into food projects, and investment deals in the
sector were 37 percent higher than the previous year, according to a
<http://www.cbinsights.com/blog/venture-capital/food-technology> by CB
Insights, a venture capital database. In 2008, that figure was less than
That money is just a slice of the $30 billion that venture capitalists
invest annually, but it is enough to help finance an array of food
Venture capitalists have strayed from pure technology to food before.
Restaurant chains like Starbucks, P. F. Chang's, Jamba Juice and, more
recently, the Melt, were backed by venture capital. Recipe apps and
restaurant review sites like Yelp have long been popular.
But this newest wave of start-ups is seeking to use technology to change
the way people buy food, and in some cases to invent entirely new foods.
Investors are also eager to profit from the movement
toward eating fewer animal products and more organic food. They face a
contradiction, though, because that movement also shuns processed food
and is decidedly low-tech.
"It's not Franken-food," Mr. Kaul of Khosla Ventures said. "We're
careful not to make it sound like some science experiment, but there is
Hampton Creek Foods <http://hamptoncreekfoods.com/beyondeggs/>, based in
San Francisco, uses about a dozen plants, including peas, sorghum and a
type of bean, with properties similar to eggs, to make an egg substitute.
Mr. Tetrick, its founder, started the company after working on
alleviating poverty in sub-Saharan Africa. He hired a protein chemist, a
food scientist, a sales executive from Heinz and a contestant from the
television show "Top Chef." Two large food companies are using the egg
substitutes in cookies and mayonnaise, and he said he planned to sell
them to consumers next month.
Unreal <http://getunreal.com/>, based in Boston, makes candy that the
founders say has no artificial colors or flavors, preservatives,
hydrogenated fats or genetically modified ingredients, with at least 25
percent less sugar than similar candy on the market and added protein
and fiber. The candy is sold in stores including CVS and Target.
Lyrical Foods <http://lyricalfoods.com/> makes cheese from almond milk
and macadamia milk under the name Kite Hill, which is the first nondairy
cheese to be sold by Whole Foods. Nu-Tek Salt
<http://www.nu-teksalt.com/> uses potassium chloride instead of sodium
chloride to lower sodium. Beyond Meat <http://www.beyondmeat.com/> and
Sand Hill Foods <http://sandhillfoods.com/> are making veggie burgers
that their investors say taste and grill more like beef than others on
Join us for the Animal Rights 2013 National Conference
Washington DC, June 27-30, 2013 - www.ARConference.org
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