Cell-based prices forecast to drop ‘significantly below conventional foods’ in five years as alt proteins attract record $3.1bn in 2020

18-Mar-2021 - Last updated on 18-Mar-2021 at 17:36 GMT

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Global investment in alternative proteins was the highest ever in 2020 and three times the capital invested in 2019 – signalling growing momentum for sustainable alternatives.

Last year was a record period of investment in companies creating sustainable alternatives to conventional animal-based foods, including global plant-based meat, egg, and dairy companies; cultivated meat companies; and fermentation companies devoted to alternative proteins, according to new data released by the Good Food Institute (GFI).

GFI’s analysis of investment activity within these industries was conducted using the PitchBook Data platform and shows that global alternative protein companies received $3.1bn in disclosed investments in 2020, which is more than three times as much as the $1bn raised in 2019 and four and a half times as much as the $694m raised in 2018.

Alternative protein companies have raised almost $6bn in invested capital in the past decade (2010–2020), over half of which was raised in 2020 alone:

Plant-based meat, egg, and dairy companies received $2.1bn in investments in 2020 — the most capital raised in any single year in the industry’s history and more than three times the $667m raised in 2019. Plant-based meat, egg, and dairy companies have raised $4.4bn in investments in the past decade (2010–2020). Nearly half, or $2.1bn, was raised in 2020 alone. This included Impossible Foods’ record $700m funding haul, which comprised a $500m Series F in March and a $200m Series G in August; LIVEKINDLY’s $335m venture capital financing; Oatly’s $200m private equity and $78m debt financing; and Califia Farms’ $172m private equity financing.
Cultivated meat companies received more than $360m in investments in 2020, which is six times the amount raised in 2019 and 72% of the amount raised in the industry’s history (2016–2020). This included the first two series B raises in the segment: Memphis Meats’ landmark $186m round and Mosa Meat’s $75m round.
Fermentation companies devoted to alternative proteins received $590m in investments in 2020, which is more than double the amount raised in 2019. This included Perfect Day’s $300m Series C funding round and Nature’s Fynd’s $45m debt round—the first disclosed venture debt capital raise by a fermentation company. Fermentation companies have raised more than $1bn in investments since the first GFI-tracked investment in 2013, 57% of which was raised in 2020 alone.

While investor confidence in alternative protein companies is driven by multiple market factors, GFI noted there is growing appetite for climate-friendly investments with returns beyond the bottom line. “With more and more investors acknowledging that climate risk is investment risk, alternative proteins offer a scalable solution that gets the world closer to a more secure, carbon-neutral food system,” the organisation said.

It added the social, environmental, and economic issues laid bare in 2020 have illuminated the risks associated with business-as-usual portfolios and practices.

GFI’s senior investor engagement specialist Sharyn Murray, said: “The investor community is waking up to the massive social and economic potential of food technology to radically remake our food system. Early trend setters like Impossible Foods, Beyond Meat, Memphis Meats, and Mosa Meat continue to perform well, and there are more and more entrepreneurs who see the potential of alternative proteins to succeed in the marketplace while having a positive global impact on food sustainability and global health.”

GFI’s director of corporate engagement, Caroline Bushnell, added: “2020 was a breakout year for alternative proteins, with record investment flowing into all segments of the industry. This is yet another signal of the significant potential the private sector sees in this rapidly growing global industry. While the amount is record-breaking, more investment is needed—from both the public and the private sectors—to meet the urgency of this moment. A large-scale shift toward alternative proteins will be critical to mitigating the environmental impact of food production, meeting the Paris Climate Agreement, and sustainably feeding a growing global population.”

Alternative proteins: the newest 'meta-theme' of our times

Amid rising investor concern over sustainability impact -- and a rise in the number of consumers seeking to cut meat and dairy consumption for environmental, health and animal welfare issues -- the food industry is currently seeking solutions that promise to improve the taste, texture, sustainability and affordability of plant-based meat and dairy alternatives.

Jim Mellon, author of Moos Law, is one investor betting that alternative proteins including cultivated meat and seafood will change the global food industry entirely. Mellon is the largest shareholder and founder of Agronomics, a UK-listed investment vehicle that targets innovative companies in alternative proteins with a focus on cellular agriculture. He has identified alternative proteins as the newest 'meta-theme' of our times.

He told a recent webinar event held by Master Investor he expects price parity between plant-based protein and standard meat products within 18 months.

Meat alternatives 'will definitely improve in terms of health and they will improve in terms of distribution', he said.

He forecast prices of lab-grown diary and meat products, including cultivated beef and chicken and cell-based seafood, to drop 'signifyingly below the price of conventional foods' in five years.

"We're going to have phenomenal increases in production and phenomenal falls in prices as a result of the efforts of scientists and industrialists in the cell-ag space," he said. "Once these products get to scale, they will sell very well."