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What does it take to get investment as an early-stage alternative protein company in the current fundraising environment?

April 26, 2023

If you’re reading this, you are probably very aware that providing food for everyone globally is a leading driver of climate change, deforestation, and habitat destruction. Despite the fact providing food for all of us causes tremendous costs to our planet, we don’t do it well enough as one in three people globally do not have access to adequate food; and around 660 million people are expected to face hunger in 2030.

We are both a destructive and constructive species as we continue to live beyond our means while finding innovative and creative ways to feed ourselves. But our creative spirit has prevailed because we can now create our protein needs using far more sustainable approaches, which as we all know are bundled under the term ‘alternative proteins.’

But what does it take to get investment in the current fundraising environment?

Here are some of the Big Idea Ventures criteria when considering an investment in an early-stage alternative protein company.

The Founding Team: The founding team is one of the most important considerations before investing in a company. We’re looking for people who won’t quit, who will work collaboratively, and drive to make a significant global difference. We look for independent creative thinkers and team players, and we also look for people who are collaborative, coachable and cannot only get it done, but do so by taking us and their team along with them. We have a ‘no-annoying person’ rule because, as investors, we could be supporting our teams and founders for up to 10 years. Life is too short to work with founders who will make you crazy as investors!

Traction: One of the biggest challenges startups face is scaling their business with limited resources. No matter how innovative the technology or product, you have to find a way to both scale production and grow your customer base. The current fundraising environment means investors prefer to see revenue as soon as possible. It is crucial to have achievable milestones for R&D, as well as commercial goals in a clear and thoughtful plan. Assume your costs will be at least twice as high and your revenues will be half of your initial estimates.

Also assume the time it takes to scale and get customers is longer than your initial plans.

If you factor all these constraints into your plans – and you can still make payroll – maybe you have a shot at creating a business. I’m not saying you can’t raise money, but onboard fundraising takes time and the sooner you can get to where your revenues can cover your costs, the better.

We have a ‘no-annoying person’ rule because, as investors, we could be supporting our teams and founders for up to 10 years

The Big Idea: Try not to follow the pack. Very few investors want to invest in one more company that looks like all the rest. After Beyond Meat began to get traction, I can’t tell you how many plant-based burger companies appeared and asked for investment. Many investors are looking for companies that can make a sizable difference in a large market. Find your special or unique offering that can make a global difference. For us, we call it the founding team’s ‘Big Idea’ – it’s why we are called what we are called. There isn’t time to be dabbling with small ideas that only make a difference in one town, city or even country. We are facing an environmental ticking clock, so Big ideas ASAP is our goal.

True innovation takes effort and the drive to make your vision a reality. At the end of the day, what investors in today’s landscape are looking for are fantastic ideas and brilliant teams. We want to back these ideas to help build a more sustainable food system that will feed you, your family, and all our kids to come if we get it right. But there is always a ticking clock, so let’s get on it, okay?

Last year, alternative protein companies raised US$2.9 billion globally, which was a 42% decrease from a record-breaking 2021. If we want food technology to help transform the world’s food systems, investment in innovative companies helping combat these challenges is the way forward. And supporting early-stage companies with novel technologies is the need of the hour.

We’re hearing a lot about ‘climate tech’ but the reality is food is probably the fastest and largest lever to positively impact climate change. If you care about the planet you sit, sleep and live on, food is arguably where you should start if you want to make a positive difference. Reach out to us and let’s talk about it.

Andrew D. Ive is the Founder/Managing General Partner, at Big Idea Ventures. He is an advisory board member for Tufts Nutrition Council, is a Friedman School Entrepreneurship advisor, Harvard Business School graduate, Procter & Gamble brand management trained, and has spent a number of years as an entrepreneur growing companies. This article is republished from the April/May 2023 edition of Protein Production Technology International, the industry's leading resource for alternative proteins. To subscribe to all future editions, please click here

If you have any questions or would like to get in touch with us, please email info@futureofproteinproduction.com

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