4 investors discuss the next big wave for alternative seafood startups • TechCrunch

Although investing in food Tech has slowed in line with the rest of the venture capital world, with the industry recently hitting milestones that show the sector and government are moving toward alignment.

In fact, some investors feel that 2023 will be the year that seafood alternative companies and products make significant strides.

More than $178 million was injected into alternative seafood in the first half of 2022, and the value of this market will reach $1.6 billion in the next 10 years. One of the sector’s biggest investments was Wildtype, which raised $100 million in a Series B round for its “sushi-grade” farmed salmon.

If this momentum is sustained over the past six months, investment in the sector will reach or exceed $306 million invested in the entire year of 2021, despite the slowdown last year.

“Investment has been growing steadily and we expect this trend to continue,” said Christian Lim, managing partner of SWEN Capital Partners Blue Ocean. “We are seeing the alternative seafood industry achieve key technical and economic milestones faster than the meat alternative space, indicating the potential for continued momentum,” he said.

Many companies say they’re in the business of sustainability, and even with Upside Foods’ initial FDA blessing for its cultured chicken production process, the focus is on bringing these alternative foods closer to the scalability and cost of traditional meat.

“The farmed seafood industry is beyond needing to solve this technology – the technology exists and continues to improve with each iteration,” said Keith Danaher, CEO of S2G Ventures. Now we need to think about branding, labeling, consumer education, scalable manufacturing, and developing and improving the supply chain and inputs that support a scalable industry.

Every startup journey is very different, but a working pattern we’ve seen is an iterative approach to market strategy, product development, and regulatory approach. Friederike Grosse-Holz, director, Blue Horizon

And like other plant-based, cultured, and fermented food companies, seafood alternative companies must figure out how best to get people to not only try their products, but want seconds.

Also Read :  Ex-Greylock GP Sarah Guo Announces Conviction Partners, Her New AI Fund

Starting in 2023, investors say the regulation will help alternative seafood take more steps, and they are optimistic that traction will be found. Read on to learn how activist investors think about alternative seafood, where it’s grown, what they’re looking for, and more.

We spoke with:

Keith Danaher, Managing Director, Ocean and Seafood, S2G Ventures

What will it take for the seafood alternative industry to have its first unicorn? Do you think 2023 is the year? Which companies do you think are close to this milestone?

I don’t expect the first alternative seafood unicorn to happen in 2023. The first goal we all need to focus on is showing repeat production runs at a reasonable price.

Cultured protein companies have made significant progress in developing their products, but the big hurdle is getting a quality product to market at a consistent cost.

To date, we’ve seen huge dollars pour in to support the first wave of cultured protein crops, including in seafood. To achieve the next step up in valuations that ultimately leads to a unicorn, companies must demonstrate a high-quality product with margins that fit into a viable business model at scale.

In the United States, steps have been taken to approve alternative protein production processes. How can founders work with regulators and investors to bring more proof-of-concept projects to fruition?

Many constituencies must be “won” to mitigate the headwinds cultured protein is likely to face as it gets to market, such as industry groups, consumer groups, and regulators.

Startup founders can support industry growth, commercialization and adoption by building bridges with industry groups to demonstrate that farmed seafood can complement wild and farmed seafood.

Also Read :  Disability is no more a road blocker

In addition, they need to make the production process transparent in order to appeal to consumer groups and join associations such as AMPS or Good Food, which carry out important regulatory work on behalf of the industry.

Depending on who you ask, mainstream production of alternative proteins such as beef, chicken and pork is still years away. How can the seafood alternative industry achieve this faster?

I am confident that alternative protein products will be available for purchase in the US within the next 12 months, both cultured seafood and other animal proteins. But for the foreseeable future, that particular product will be premium and limited in production. Once production capacity constraints are overcome and costs are reduced, I expect these products to be as widely available as our animal protein counterparts.

One area where seafood may have a speed-to-market advantage is regulatory, given that the FDA has exclusive jurisdiction over alternative proteins while both the USDA and FDA have jurisdiction over animal protein.

In addition, seafood has a higher price and a simpler muscle structure compared to other animal proteins, so it is easier to grow a product that more easily reproduces wild/farmed species.

Many alternative seafood startups also aim to solve the climate crisis, but the industry has unique challenges such as cost and appeal to consumers. What will be key to helping companies produce sustainable products at scale?

For farmed seafood, the technology exists and improves with each iteration. Now we need to think about branding, labeling, consumer education, scalable manufacturing, and developing and improving the supply chain and inputs that support a scalable industry.

If these products can be more affordable and meet consumer expectations, they can have an impact at scale – for animals through less wild fishing, for humans by providing a seafood product free of toxins or microplastics, and for the environment through less waste. .

Also Read :   AfDB Fashionomics Africa Online Incubator and Accelerator Program for African Fashion Entrepreneurs (20,000 USD grant)

Additionally, consumer education will be key. In part, this includes being aware of the true cost of our food beyond what we pay at the grocery store. Consumers are becoming more aware of external factors and factoring them into their purchasing decisions, but much more needs to be done.

What is the future of investment in this space? Which areas do you highlight as future growth indicators?

The good news is that cellular seafood products have reached a stage where they are approaching market readiness from a regulatory, taste and performance perspective.

Cellular seafood companies are making amazing progress in lowering prices and getting closer to the stage where they are ready to raise capital for business development. I expect to see more innovation and investment to advance the consumer experience and 3D structures.

What will it take to attract more institutional investment for later-stage financing to help expand the market?

I fully expect cellular seafood companies to be in a sold position going forward as there is demand from a large segment of primary consumers. The next wave of investments will be in infrastructure and companies that create adjacent inputs to outsource parts of the supply chain.

We have strong indications that FDA approval is on the way, and that’s a big box for institutional investors and next steps. Once that’s out of the way, it’s about who is going to be attractive in the market and produce a product at a price that makes a compelling business case.

Friederike Grosse-Holz, director, Blue Horizon

What will it take for the seafood alternative industry to have its first unicorn? Do you think 2023 is the year? Which companies do you think are close to this milestone?

It will have a clean label and a healthy nutritional composition equivalent to seafood, including protein and omega-3 fatty acids.


Leave a Reply

Your email address will not be published.