4 Investors Discuss the Next Big Wave of Alternative Seafood Companies • TechCrunch

Although investing in food Technology has slowed in line with the rest of the venture capital world, and the industry has recently hit some milestones that indicate the sector and government are moving toward alignment.

In fact, some investors feel that 2023 will be the year that seafood alternative companies and products make significant strides.

more than $178 million Pumped into alternative seafood in the first half of 2022, the market value is poised for that up to $1.6 billion over the next ten years. It was one of the sector’s largest investments wild typewhich raised $100 million in a second round for “sushi-grade” cultured salmon.

If this momentum of the past six months continues, funding in the sector will reach or exceed the $306 million invested in the full year of 2021, despite a slowdown last year.

“Investment is growing steadily, and we expect this to continue,” said Christian Lim, managing partner at Blue Ocean Coin Capital Partners. “We see the seafood alternative industry achieving key technical and economic milestones faster than the alternative meat space, which indicates the potential for continued acceleration,” he said.

Many companies say they’re in this for the sustainability factor, and even with the raw factor A blessing from the Food and Drug Administration to Upside Foods For the process of making farmed chicken, the focus is on bringing these alternative foods close to the scalability and cost of conventional meat.

“The farmed seafood industry doesn’t need a solution for the sake of technology — the technology is there and continues to improve with each iteration,” said Kate Danaher, managing director of S2G Ventures. “Now we need to think about building the brand, labeling, educating the consumer, scaling production, developing and improving the supply chain and inputs that will support a scalable industry.”

Every startup’s journey is very different, but one pattern we’ve seen work is an iterative approach to go-to-market strategy, product development, and organizational approach. Frederick Gross-Holz, Director, Blue Horizon

And like other vegan, cultured, and fermented food companies, alternative seafood companies must also figure out the best way to get people to not just try their products, but ask for seconds.

Going into 2023, investors say regulation will help alternative seafood go the extra mile, and they’re optimistic it can find traction. Read on to find out how activist investors think about alternative seafood, where they see growth, what they’re watching, and more.

We spoke with:

Kate Danaher, Managing Director, Oceans & Seafood, S2G Ventures

What would it take for the seafood alternative industry to get the first rhinoceros? Do you think 2023 is her year? Which companies do you think are close to achieving this milestone?

I don’t see the first seafood-alternative unicorn appearing in 2023. The number one goal we should all focus on is offering recurring production runs at viable price points.

The culture protein companies have made tremendous progress in developing their products, but the big hurdle is getting a product of consistent quality and consistent cost into the market.

So far, we’ve seen big dollars pour in to support the first wave of farmed protein products, including seafood. To achieve the increase in valuations that will ultimately create a unicorn, companies will have to demonstrate a quality product with profit margins commensurate with a broadly viable business model.

There have been some steps in the United States toward approval of a protein replacement process. How can founders work with regulators and investors to bring about more proof-of-concept projects?

There is a need to ‘win over’ several target groups to mitigate the headwinds cultured protein is likely to encounter as it heads to market, such as industry groups, consumer groups and regulators.

Startup founders can support industry growth, commercialization, and acceptance by building bridges with industry groups to show that farmed seafood can be a complement to wild and farmed seafood.

In addition, they must provide transparency in the production process to win over consumer groups and join an association, such as Ampere or Good Food Institutewho perform important regulatory work on behalf of the industry.

Depending on who you ask, mainstream production of alternative proteins, such as beef, chicken, and pork, is years away. How can the seafood alternative industry make this happen faster?

I feel confident that alternative protein products will be available for purchase in the united states within the next 12 months, whether farmed seafood or other animal proteins. But for the foreseeable future, this product will be relevant, premium, and in limited production. Once production capacity constraints are resolved and costs are reduced, I would expect these products to be as widely available as their animal protein counterparts.

One area where seafood may have an advantage in speed to market is related to regulation, since the FDA has exclusive jurisdiction over alternative proteins while the USDA and FDA share jurisdiction over animal protein.

In addition, seafood has a higher price point and its muscular structure is simpler compared to other animal proteins, making it very easy to grow a product that more easily copies wild/farmed species.

Many alternative seafood companies aim to solve the climate crisis as well, but the industry faces unique challenges such as cost and consumer appeal. What will be key to helping companies produce sustainable products at scale?

For farmed seafood, the technology is there and continues to improve with each iteration. Now we need to think about brand building, labeling, consumer education, scale production, development and improvement of the supply chain and inputs that will support a scalable industry.

If these products can be affordable and meet consumers’ expectations, they can achieve impact at scale – for the animal by reducing wild catch, for humans by offering a seafood product without toxins or microplastics, and for the environment by reducing waste.

Additionally, consumer education will be key. In part, this includes raising awareness about the true cost of our food beyond what we pay at the grocery store. Consumers are becoming more aware of external factors and taking them into account in their purchasing decisions, but there is a lot of work to be done in this regard.

What does the future look like for investing in this space? What areas do you highlight as indicators of future growth?

The good news is that cellular seafood products have reached a point where they are close to being ready to go to market from a regulatory perspective, and from a taste and performance perspective.

Cellular seafood companies are making impressive progress in bringing prices down and getting closer to the point where they are ready to raise capital to expand the business. I expect to see more innovation and investment in consumer experience development and 3D structures.

What is needed to attract more institutional investment for financing at a later stage to help expand the market?

I fully expect cellular seafood companies to be in a sell-out mode in the future, as there is demand from a large segment of consumers early on. The next wave of investments will be in infrastructure and companies building contiguous inputs to outsourcing parts of the supply chain.

We have strong indications that FDA clearance is coming, and that will tick a big box for institutional investors and later-stage investors. Once that is behind us, it will be about who is in the market showing traction and producing a product at a price point that makes a compelling business case.

Frederick Gross-Holz, Director, Blue Horizon

What would it take for the seafood alternative industry to get the first rhinoceros? Do you think 2023 is her year? Which companies do you think are close to achieving this milestone?

It will require a clean label and healthy nutritional composition equivalent to seafood, including protein and omega-3 fatty acids.

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