Designing the Future of Food

Recent tech innovations make it possible to create lab-grown foods that are “bio-identical” to farm-raised foods at a lower cost. This has the $12T global food and grocery retail market primed for disruption in the next 10 to 15 years.

That’s the investment thesis of Sustainable Food Ventures (SFV), a Rolling Fund that’s raised $8M and counting since the start of Q420 to invest in “future of food” companies.

This includes companies that use a process called “precision fermentation” (PF) to create food grown from animal cells (“cultured” foods). Precision fermentation allows scientists to produce any complex organic molecule (proteins, fats, vitamins) to precise specifications in greater abundance than farm-raised molecules, because they don’t need to be extracted from macro-organisms (i.e. plants and animals).

PF is a threat to farm-raised foods because tech advancements have driven down the cost of precision biology. Cultured foods are expected to be 5x cheaper to produce than traditional animal proteins by 2030. This approach will be scaled through a “food-as-software” model, in which scientists upload molecular blueprints into databases that are accessible worldwide. By making molecular blueprints “open source,” food designers anywhere can replicate—and improve on—product designs.

Plant-based alternatives are already driving down demand for farm-raised foods. Meanwhile, urbanization and climate change are reducing the supply of available agricultural land, leading to flattened output, higher production costs, and increased bankruptcies. In 2021, farm debt is expected to reach an all-time high of $287B. Meanwhile, plant-based production costs are reaching an all-time low.

Decreased demand + increased fixed costs = Increased debt

“The economics make those businesses no longer viable,” said Bethencourt, who is also the CEO of plant-based dog food company Wild Earth. “Scientists are predicting the total collapse of the animal agriculture industry by 2035. Plant-based has unlocked half the market, and cultured foods will overtake the rest once they hit economies of scale.”

More than 20 cultured meat startups raised a combined $1.4B in the first seven months of 2020, up from $457M in 2019. The plant-based food market is expected to grow by $3.2B by 2024.

SFV has made 19 investments of $50k to $100k into early stage foodtech companies. For investors—and consumers— who are skeptical of lab-grown foods, Bethencourt offered a message:

“Once we engineer food that’s identical in taste, authenticity won’t matter,” said Bethencourt, who was an early investor in Not Company (valuation: $300M), Geltor ($394M), and Memphis Meats ($550M). “The moment someone goes to McDonald’s and has a delicious cultured meat burger without realizing it’s lab-grown, it’s game over.”