Alex Crisp of the Future of Foods podcast here interviews Laine Clark, Innovation and Corporate Engagement Manager at the Good Food Institute about trends in investments across the different sectors of alt protein including precision fermentation, plant-based, and cultivated meat.
Laine sees a positive future for the sector, believing that for the sake of the future, “it has to succeed”. She stresses that alternative proteins are a nascent industry, and when asked if this is a bubble, Laine stresses, “No, this is definitely not a blip or a bubble. And the reason it’s not is that we have to shift the food system. It’s just not sustainable.
“And the hype around the burst bubble, I think is just that – it’s hype – it makes for good headlines. We are just seeing a normal growth of an industry,” she insists.
This is a link to the full interview on YouTube: https://youtu.be/8xZGfWZrU1g
This is a link to the audio interview: RSS link https://rss.com/podcasts/alexcrisp-futureoffood/1303526/
Alex: I have been very interested in the work of GFI. It has quite a few functions and one of those functions now is to encourage investments into the alternative proteins space. Are you seeing investment increasing?
Laine: I want to first start by saying this industry is nascent. It is still brand new. And what happened was a few years ago, I think a lot of people latched onto it with a probably bit of irrational exuberance for how far it had advanced at that point. So we saw really crazy valuations. We saw investors kind of just pouring into the space and there was so much deal flow and there was fear of missing out. And I think that what’s happened now has been affected greatly by the macroeconomic situation. And I think if you look globally, venture funding has declined about 42% compared to the same timeframe in 2022. So our industry has been impacted as well.
“We’re having a correction of a sector that was probably overblown before for how far it had come”
Food tech in general has been impacted. I will say that year to date we’ve raised about $682 million for the sector. That’s a meaningful decline from last year, which was $2.9 billion. So when you hear it put that way, it sounds like, oh my gosh, the sky is falling, but that’s not what’s happening.
We’re having a correction of a sector that was probably overblown before for how far it had come. And now I think we’re riding the ship. This is good news to us. We of course want to see much more money in the sector in the coming years, but I like to see a rationalisation of a sector because it goes along with the Gartner hype curve. And we’ve seen this many, many times in different industries. I think electric vehicles are an interesting comparison. In 2011, there was a declaration that it was the year of the electric vehicle. We know that wasn’t true, but flash forward 12 years and you have Norway, where 80% of new car sales are electric vehicles. We’re expecting that same kind of curve to happen for all proteins.
Alex: So you’re not expecting there to be a bursting bubble – like with the dot-com boom?
Laine: No, this is definitely not a blip or a bubble. And the reason it’s not is that we have to shift the food system. It’s just not sustainable. If we continue down this path, we would need many, many more planets than we have. And that’s just not going to happen. So we’re going to have to find the answers. And there is a very healthy, thriving ecosystem out there working on all kinds of aspects of all proteins up and down the value chain. And the hype around the burst bubble, I think is just that – it’s hype – it makes for good headlines. We are just seeing a normal growth of an industry. And during times of geopolitical distress and macroeconomic decline, I think we’re holding up pretty well. In fact, our deal sizes in our sector were a little larger quarter over quarter this year than in food tech as a whole.
Alex: There are probably some companies that are overpriced, wouldn’t you say? Those that have had a bit too much money pumped into them and are not really producing.
“Some investors jumped on the bandwagon a little soon.”
Laine: I think just like with any new sector, again, you see a lot of companies rush in and only a few stand out. So one of the things that happened, which I think was unfortunate, is that there was a priority placed on rushing to the shelves. So for CPG companies, it was ‘who can get the product out fastest’ and when that happens, sometimes taste goes by the wayside. So we acknowledge that plant-based food in the past five years or so, the innovation around it may not have come up to where it needed to be with taste parity – and that matters. Some investors jumped on the bandwagon a little soon. And now what we’re seeing is a big shift where investors are saying, hold on a minute, I need to do a lot of due diligence. I want to de-risk this investment. And maybe they’re asking for a techno-economic analysis, or maybe they’re asking for a life cycle assessment. But they’re definitely not just saying, I want to get into this space because everybody else is there. They’re asking a lot more questions now.
