Investors want meat production more like the pharmaceutical industry than agriculture. Cultured meat, also known as cultured, cell-based, or lab-cultured proteins, is made by introducing stem cells from an animal’s fat or muscle into a culture medium to grow the cells. , allowing them to grow. This medium is then fed into a bioreactor to support cell growth, resulting in a final product that looks and tastes like traditional meat. Steak, lamb, bluefin tuna and Waygu beef have all been replicated using this technology, impressing investors with their taste, texture and long-term potential. Last year, venture capitalists invested $2 billion in crop protein, according to PitchBook data. Money doesn’t just flow in from Silicon Valley. Sovereign wealth funds and the world’s largest meat companies such as JBS and Tyson Foods are taking advantage of the opportunity in farmed meat. “I think cultured meat, or cell-based meat, is the black swan of the system,” said Sanjeev Krishnan, Chief Investment Officer of S2G Ventures, a venture capital firm focused on food and agriculture. food system. “It’s going to change Iowa corn farmers, Indiana soybean farmers. It’s going to have a big impact on protein security, if it works.” The burgeoning industry needs the excitement — and the dollar investment that comes with it — to become a reality in consumers’ everyday lives. Singapore is the only country that has approved the sale so far, and it has granted that license to just one company, Good Meat, a subsidiary of Eat Just. Other regulations are being sought. There are consumer barriers. The sky-high costs of the means of feeding the cells keep the price of farmed meat high. Startups are still trying to figure out how to make bioreactors large enough to scale and potentially reduce costs as volumes increase. And then there’s the challenge of convincing consumers to eat lab-grown meat. If farmed meat can solve these obstacles, it has the potential to change the global food system. By 2030, McKinsey predicts that farmed meat could provide up to half of 1% of the world’s meat supply, accounting for billions of pounds and $25 billion in revenue. Plant-based versus cultured Some investors see the cultured meat industry as a successor to the plant-based alternatives popularized by Beyond Meat and Impossible Foods. Like plant-based meat, crop protein is said to be more environmentally friendly and healthier than traditional meat and potentially more cost-effective in the long run. “A very common analogy you’ll hear is that if plant-based is Prius, farming would be Tesla, in terms of driving non-combustible adoption of products,” said McKinsey analyst Jordan Bar Am. with combustion media. Like the Toyota Prius, the glitz of plant-based protein seems to be gone, for both consumers and investors. Shares of Beyond Meat hit an all-time high of $239.71 in July 2019, just months after its initial public offering. That year, its annual sales more than tripled. The pandemic has spurred new consumers to buy Beyond’s beef and sausage substitutes at the grocery store, but it’s also hurt the company’s restaurant revenue. In 2021, Beyond’s annual revenue grew only 14.2%. Wall Street began to express concerns about the company’s long-term growth. Shares ended Friday’s trading session at $34.01 per share and are down nearly 50% this year. The waning investor interest in Beyond has also hurt Impossible Foods. The startup was slated to go public, but instead opted to raise money from private funding rounds as the mood changed. However, a purely plant-based game could soon hit the mass market. In June, Kellogg announced plans to spin off its factory-based business as part of a plan to split into three broader companies. The plant-based division includes legacy player Morningstar Farms, which is a leading seller of meat alternatives, based on IRI data. Kellogg is also exploring selling the division. One key difference between farm-raised meat and plant-based protein is the potential for intellectual property protection. That offers several key advantages to successful innovators. Anthony Chow, co-founder of Agronomics, a UK-based food technology investment firm, says that’s what attracted his company to bet on cultured proteins instead of plant-based options. . Before founding the company, Chow and co-founder Jim Mellon invested in biotechnology, which has a surprising overlap with farmed meat thanks to the fact that both industries use bioreactors. Agronomics is the third-largest investor in crop protein, behind SOSV and CPT Capital, according to PitchBook data. “There is less competition and more headroom, more opportunities to invest and gain market share in the cultivated protein space [than in plant based]”Other publicly traded investment firms that are betting on farmed meat include Eat Beyond Global Holdings and Cult Food Science. Traditional meat producers are also investing in meat-based startups,” said Chow. JBS, the world’s largest meat processor, acquired the Spanish hit meat startup BioTech Foods last year and has announced plans to set up a research and development center In Tyson’s 2019 press release announcing its investment in Upside Foods, Justin Whitmore, the company’s chief sustainability officer, said the company is still investing in the business. its traditional business but is exploring growth opportunities that give consumers more choice The financial terms of the deal were not disclosed Tyson declined to comment for this story. PitchBook’s Alex Frederick says that meat producers have learned from They are slow to respond to the plant-based meat craze and don’t want to be left out of a potential farm-raised meat boom. Tyson was an early investor in Beyond but sold off his stake before the startup’s initial public offering. It launched its own plant-based meat line in 2019. A year later, JBS entered the US plant-based meat market through its subsidiary Planterra Foods, and Cargill launched its own line of labels. None of their efforts have succeeded in capturing significant market share. “I can say that many very large food companies have learned their lesson to some extent and are very happy to have partnered with small venture capital in these companies and have a stake,” he said. in this emerging technology. A $280,000 hamburger In 2013, Dutch startup Mosa Meat announced the first cell-based hamburger, made for $280,000, kicking off the race to create farm-raised meat products are tasty, cheap and approved for sale by regulatory agencies. Chow estimates that since he co-founded Agronomics in 2014, the number of farm-raised meat startups has grown from about 20 to more than 200. At least one cell-based meat company has gone public. Israeli startup MeaTech went public over a year ago, raising around $25 million through its initial public offering. The company’s shares ended Friday’s trading session at $3.55 per person. A few months after MeaTech’s IPO, over Thanksgiving, rival Eat Just became the first crop protein company to gain regulatory approval to sell its product after the Food and Drug Administration (FDA) announced that it would not be able to sell its products. Singapore products allow the production of their farmed chickens. Perhaps coincidentally, Eat Just has raised the most venture capital funding in the cultivated meat industry, bringing in $833.53 million as of June 28, according to PitchBook data. In addition to making chicken raised as Good Meat, it also produces a plant-based egg substitute sold in grocery stores and restaurants. The company did not immediately respond to CNBC’s request to disclose the status of its cash. Fundraising has become increasingly difficult as rising interest rates and volatile markets make companies wary of initial public offerings. “We believe in farm-raised meat as a more permanent variety than plant-based meat,” Eat Just CEO Josh Tetrick said in an interview in May. Tetrick said sales in Singapore have not yet generated much cash for the company due to high production costs. However, Eat Just did learn more about consumer behavior. For example, younger consumers are much more willing to try their farm-raised chicken, but those over 55 are less interested in eating meat made in a giant steel bioreactor. In the hope that other countries would approve its product, Eat Just announced an agreement for 10 250,000 liter bioreactors with ABEC, a biotechnology supplier. The bioreactors will give Good Meat the ability to produce up to 30 million pounds of cell-based protein. Other well-known meat startups are looking to follow the Eat Just example and sell their products in Singapore. For example, Israeli startup Aleph Farms hopes it will be able to sell its farm-raised steaks in the city-state by 2023. It has also applied for approval in the US and Israel. Aleph’s investors include actor Leonardo DiCaprio and DisruptAD, the venture arm of Abu Dhabi’s sovereign wealth fund. “Our first product will be a thin piece of beef that is high in protein and low in saturated fat,” said Didier Toubia, co-founder and CEO of Aleph Farms. As Aleph expands its portfolio, they plan to stick to higher quality, premium meat and achieve prices on par with their traditional meat counterparts by 2028. equal prices for steak rather than processed chicken, just because of the price Toubia says, he envisions that farmed meat and traditional meat will have a similar relationship to red and white wine, existing present in the same category but appealing to different consumers on different occasions. Now, even trying meat raised outside of Singapore can be difficult.In March, the Dutch Parliament passed through legislation legalizing the sampling of cultured proteins Cell-based meat originated in the Netherlands in 2013, when Dutch startup Mosa Meat created the first cultured hamburger. With regulatory, scale and consumer challenges ahead, it is difficult to predict the future of the farmed meat industry in the United States. Meanwhile, the Food and Drug Administration and the United States Department of Agriculture oversee the approval of the sale of meat from livestock and poultry, the result of an agreement between the two agencies made in 2019. “We are very confident that within 12 Chow said. Others doubt it will happen quickly. “The story of meat being farmed more widely is going to be done in the next three to five years. And I think it’s going to be a global story. It may not be in the US, it may be in Israel and it may be in the US,” he said. Singapore, possibly in China,” said Krisnan of S2G Ventures.In the near future, he hopes that hybrid proteins that combine cultured fat or muscle with plant-based proteins will develop. His company has investments in both Beyond Meat and Future Meat. Krishnan says: “A textured, plant-based protein, combined with a cultured fat system, gets you close to the umami of meat and achieves great results. to that price,” Krishnan said.