Leaner Times Persist For Alt Protein Funding

Lab-produced meat may be one of the weirder sectors for startup innovation. But in terms of funding and hype trajectory, it’s about as typical as it gets.

The investment heyday for the space roughly coincided with the peak of the bull market.  Cultivated meat companies pulled in over $1.6 billion in 2021 and 2022, per Crunchbase analysis. Leading names like Upside Foods, Believer Meats and Good Meat consumed over a billion between them.

That generous funding streak coincided with a period of heavy investment in plant-based meat and dairy substitutes. The heaviest private funding recipient, fake meat unicorn Impossible Foods, raised nearly $2 billion. And rival Beyond Meat had a roughly two-year run as a stock market darling following its 2019 IPO.

But like most startup sectors, the alt protein space isn’t attracting investors like it used to. While funding hasn’t dried up entirely, it has fallen considerably.

Big rounds decline

These days we’re no longer seeing rounds in the multiple hundreds of millions for the space.  More broadly, larger rounds have declined in both frequency and size for cellular meat and plant-based protein companies.

To illustrate, we charted financings of $20 million or more to companies in the alternative meat and dairy space from 2019 thru today:

This year, the biggest round by far went to Boulder, Colorado-based Meati, which creates cutlets and steaks from mycelium. It raised $100 million in a C-1 round led by Grosvenor Food & AgTech, bringing total funding since its inception in 2016 to nearly $375 million.

The next-largest financing went to Barcelona-based Heura Foods, a maker of plant-based meat and fish that picked up $40 million in a February Series B. Its product lineup includes vegan variants of popular items in Spanish cooking like ham and chorizo.

We also saw two good-sized rounds this past week. London-based This, a maker of plant-based chicken and pork substitutes, snapped up $25 million in Series C financing. And Somerville, Massachusetts-based Tender Food, which makes plant-based versions of meats like chicken cutlets and pulled pork, landed $11 million in a Series A round led by Rhapsody Venture Partners.

Notably, none of the largest funding rounds went to startups working on cultivated meat, or meat grown in a lab from animal cells. It’s tough to pinpoint a singular cause for a pullback, however, as startups in this space have faced a number of hurdles — including technical issues, questions around likely consumer adoption, and pushback from politicians and regulators.

Plus, it’s an expensive proposition to bring to market. One recent example that didn’t make it was San Francisco Bay Area-based SCiFi Foods, which closed shop after raising close to $40 million in known funding. The company had sought to combine plant-based and cultivated meat to make a more affordable burger alternative.

Option overload

Given the sheer number of funded alternative protein startups out there (yes, there are a lot of them), we can expect to see more struggle to secure follow-on funding and eventually shutter. Although this happens in most startup sectors, the excitement around alternative proteins means these failures will likely be higher profile than other industries.

Cultivated meat, in particular, appears to be bearing an outsized share of cutbacks. While it still may be a laudable goal, given the ethical and environmental issues around livestock farming, the economics won’t be easy.

Fortunately, even with a winnowing of the startup field, consumers in the mood for plant-based meats still have plentiful options to choose from, including mimicries of every major meat and seafood cuts, along with more processed favorites like lunch meat, bacon and sausage.

Further reading:

Illustration: Dom Guzman