Investing in solutions for big problems
As a novel technology, will cell-based meat provide good investment returns? What will be the impact of COVID-19 on the future of food? When will a cultured meat company make its IPO debut? Few experts are better positioned than Andrew D. Ive, the founder and managing general partner for Big Idea Ventures, to answer these questions.
It’s a chilly Wednesday morning in New York, and the coronavirus pandemic is in full swing. Since face-to-face meetings are still out of the question, I met up for a virtual walk with Andrew D. Ive, the founder and GP of Big Idea Ventures (BIV), which just kick-started their investment fund for plant- and cell-based protein start-ups.
Having grown up in both the UK and the US, Andrew spent most of his career building companies and teams. Now he wants to use his experience to make an even more positive impact. Or as he puts it, “I want my daughter to have a world which is better than the world I have lived in.”
Supertrends: BIV views both plant- and cell-based protein products as solutions for our future nutrition needs. Do you think plant- and cell-based protein companies are competitors in terms of being environmentally sustainable businesses?
Andrew D. Ive: We are all influenced by how we were brought up, our culture, and what kind of food we love. I think that over time, entrepreneurs and chefs will be able to create food that allows us to continue to have the same experiences, but in a healthier, more sustainable way.
I see plant- and cell-based companies as providing different ways of achieving some of the solutions we need. Plant-based meat allows us to have very similar experiences as the original products. You can get plant-based meat with the same taste, texture, and experience as animal protein, but with a lower eco-footprint. Plant-based and cell-based proteins are similar in that sense. The main difference is that cell-based meat is not yet approved by the regulatory bodies as food for human consumption. I also think cell-based meat can be created from a technology perspective, but it still has to be accepted by consumers. What will happen in the next decade with consumer demand will be that people will begin to trust the cell-based meat system as being safer and healthier than the traditional animal livestock system.
It may still take five years or more for cell-based meat to make a financial profit. As an investor, how do you view the return on investment for these companies?
Food production is just one of the many applications of cell-based technology. Another key area of application for cell-based protein is collagen and gelatin production. Gelatin can be used not only in food, but also in life science, photography, regenerative medicine, drug delivery and other areas. I think cell-based technology has the potential to be deployed across multiple markets above and beyond food. Let’s say the technology may take three to five years to be commercially viable in the food industry; it can also be commercially viable earlier than that in other applications to improve the quality of life.
As far as food production is concerned, it is potentially transformative for the entire meat industry, which is a multi-billion-dollar business. As an investor, I am prepared to wait five or six years to be able to be a transform of a multi-billion-dollar industry, reduce our impact on the planet and potentially capture some of that value for the investors who help to create this new industry. The financial returns will be there from a financial perspective.
Supertrends: What will be the impact of COVID-19 on the food industry?
COVID-19 made us look at the food industry in a different way. It made us realize how fragile our food system is, both domestically and internationally. For countries that rely on their neighbors to provide food and raw ingredients, the COVID-19 crisis has highlighted their concerns about food security. It has made us realize that life is not as predictable and controllable as we originally thought. In that sense, the only technology that can get you to self-sufficiency in protein during a border lockdown period is cell-based technology. It’s relevant to governments, it’s a matter of a country’s security. If I am a country that relies on my neighbors to supply me with food, I will want a backup. That backup will likely be cell-based protein.
Supertrends: When could we see the first IPO from a cultured meat company?
Usually, from an IPO perspective, companies need to achieve significant revenues; for instance, US$100 million in annual revenues. It will be a long time before a cell-based meat company hits that kind of revenue based on their current business model and the stage of the technology life cycle. What I think will happen is that the market will be excited about the long term potential for cell-based meat technology and will be prepared to respond to an IPO and invest in a cell-based meat company even though it hasn’t hit a revenue threshold such as a US$100 million in revenue.
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