Why Farmed Meat Is So Close (And Yet So Far) to Disrupting Animal Ag
Last week, two separate stories that paint very different pictures emerged of the farmed meat industry.
The first highlighted the news that GOOD Meat, the cultured meat division of Eat Just, had received a “no-questions-asked” letter from the US Food and Drug Administration for its cultured meat product. This makes the company the second to receive FDA approval after UPSIDE Foods, indicating that the industry is close to finally bringing meat produced without animals to consumers.
More news came from New Age Eats founder Brian Spears, who announced the company’s closure on LinkedIn. According to Spears, the company was far from profitable, and due to recent layoffs from the investors, it was unable to get the necessary capital to continue.
From his post:
In our regulated industry, we cannot and will not be able to sell for a while. Apart from income, we rely on other sources of income. Investors have proven to be the most effective way to ensure that farmed meat will be commercially viable. Unfortunately, due to recent financial market turmoil, we have not been able to attract investors.
Although the stories each tell are very different, together they underscore the critical nature of this nascent industry. On the other hand, the farmed meat industry is very close to a business venture that has great potential to help end the cruel and environmentally damaging animal industry. On the other hand, it shows that creating meat in bioreactors involves a long, challenging, and expensive journey that may see many early pioneers fail or be acquired by competitors before they can sell the product.
When I spoke with Po Bronson, the managing director of IndieBio, back in November, he predicted that this year will see many companies struggling to raise their next round of funding and find buyers.
“What I think we’re going to see here is that the markets are strong,” Bronson said on the Spoon Podcast. “They’re already pushing right now. And you’re going to see a lot of companies not being able to raise their next round.”
Of course, the difficulty of raising money is not limited to meat companies. Almost every startup sector is starting to feel the pressure these days, a pressure no doubt made worse by the recent demise of SVB. But unlike many startups, farmed meat has a more difficult problem because the industry has a much longer road to revenue than most of these industries.
In fact, although many companies such as GOOD Meat and UPSIDE are already very far down the road to commercializing this business, the amount of production capacity available to even the most well-grown and commercially mature meat startups is still a small fraction of what it will take to eventually produce meat to make even a small dent in animal agriculture. To achieve the scale of mass production, additional billions will be needed to increase production capacity, develop cost-effective business processes and technology, and educate consumers about this new type of meat.
That’s why organizations like the Good Food Institute and start-ups themselves have begun to advocate for government funding to help with the late fees. In its latest opinion on the investment space for alternative proteins, GFI cited investment in the electric vehicle market as a potential model for the alt protein sector:
While global public investment in alternative proteins is growing, it is a drop in the bucket compared to other public climate investments. For example, world governments have committed $500 billion to the development of renewable energy by 2022. The United States alone contributed $7.5 billion last year to build a national network of electric vehicle charging stations. In order to achieve a stable, secure, and equitable protein production system, governments must increase their commitment to other proteins, and the current market provides an opportunity to do so.
I think this is the right thing to do, but I’m not sure how soon we’ll see similar dollar amounts from the US government, especially given how entrenched traditional animal agriculture is as a political force. While billions in government funding is possible, it’s not a foregone conclusion, and it’s probably not something we’ll see in the next few years.
Where does this leave the farmed meat industry? In the near term, we will see accelerated consolidation of the industry. The first promising technology to create a form of cultured meat will be discovered, as some of the largest companies begin to integrate the technology to accelerate their efforts. We will also see other “full-stack” companies with different pieces of the puzzle – multiple cell lines, enabling infrastructure, stable and FBS-free growth media technology – as they get products to market at prices well below what they cost to make.
We will see a small number of early-stage startups with the goal of building their own funded meat plants, and whatever investment dollars are left in this space will go to those who enable technology to help speed up the process. In the past year, we have already seen many companies developing selective and shovel technologies such as bioreactors, scaffolding, and growth media becoming a priority for investors.
In the long term, the industry will need a combination of sufficient industry proof points and success stories to convince investors that they will get a return on their investment and possibly convince the government to allocate significant resources. Unlike the electric car industry, which saw mass-produced EVs start rolling off production lines before President Obama pledged $2.4 billion in subsidies to the industry, the farm-raised meat industry is nearly a decade away from mass production.
However, hope should not be lost. The common goal of these companies is too important to ignore, and while the era of easy money is over, I think we will see some companies come out of these difficult times with products that will affect millions of consumers.
But the ride will certainly be tough.
