Singapore-based venture capital firm Good Startup has so far raised $26.5 million for its debut fund, exceeding its original target of $25 million ahead of its final close in August.
Good Protein Fund I, which invests in alternative protein companies worldwide, will continue to raise funds till the closing happens, Good Startup co-founder and managing partner Jayesh Parekh told DealStreetAsia.
The VC firm has so far built a portfolio of 10 startups. Of those, the four previously unannounced investments have been made in plant-based ingredients and flavourings producer Motif FoodWorks, which raised $226 million in June this year; plant-based healthy chicken maker Nowadays that secured $2 million in May; and Lypid, which makes vegan fat. It also clocked a secondary transaction in biotech firm Clara Foods.
These newer investments are focused on alternative protein companies that are increasingly developing healthier products, said Good Startup’s other co-founder and managing partner Gautam Godhwani.
The first phase of the alternative protein market saw investments channelled mainly towards plant-based milk and red meat substitutes, he said.
“As we move to this next phase. I think what we’ll see are companies that are getting much more advanced in supply chain areas, including functional ingredients,” he said. “Another key trend clearly is clean label products. Consumers want to see ingredients they can understand [and products that are] more nutritious.”
Godhwani thinks alternative protein investments in the future will also lean towards alt seafood makers, startups that produce whole meat cuts – as opposed to minced meat – and food that is created for specific cultures.
So far, most of the companies that Good Startup has invested in are located in the US but could enter Asia in the near future, said Godhwani. Once these companies are ready, the VC will help them to expand into the region.
“When we invested in these companies, one of the big attractions was that we are located in Asia. In fact, we’ve often been the only investor on the cap table that is in Asia,” he said.
Godhwani said the fact that some of the investment rounds in startups are now in hundreds of millions is a sign that investors are taking the alt protein space seriously. He pointed to cultivated meat startups Aleph Farms that raked in $105 million from a host of investors, and Eat Just, which raised $370 million in two tranches this year with Good Startup being one of the investors.
Good Startup’s other portfolio companies include Tree Labs, Avant Meats, Rebellyous Foods, Cultured Decadence, and Novel Farms.
Another signal that the industry is growing rapidly is the exit performance of bigger alt protein companies like Oatly and Beyond Meats which are trading at over 29 and 20 times their 2020 revenues, respectively.
“There’s investor interest in the space,” Godhwani said, adding that the rumoured Eat Just and Impossible Foods IPOs are further indications that the sector is maturing.
Good Startup, which started raising capital in January this year, had announced at its first close that the fund will invest in a total of 32 companies.
About 80% of the fund will be invested in early-stage startups, while the remaining 20% will be allocated to late-stage firms and secondaries. Check sizes for every investment will vary between $250,000 and $1 million.
Previously announced investors in the fund include Symphony Asia Holdings chairman Anil Thadani and Kim Seng Holdings chairman Tan Kim Seng.
Godhwani previously co-founded several tech companies – he is currently also a partner at early-stage technology investor Green Era Capital, while Parekh is a former managing partner of Jungle Ventures Fund I and II and the co-founder of Sony Entertainment Television, which he exited in 2013.
Earlier this week, Singapore state investor Temasek re-invested in plant-based chicken maker Next Gen, putting in an additional $10 million, and bringing its total stake in the company to nearly $16 million.
Deals in the alternative protein space have shot up in the past five years. PitchBook data showed that venture capital funding into alternative protein companies globally skyrocketed from $1 billion in 2018 to $2.8 billion last year. In Asia, it went from $3.5 million to $155 million in the same period.
The alternative meat market was valued at $5-10 billion in 2021, or less than 1% of the global meat industry, per an EY report. Its value could soar to between $77 billion and $153 billion by 2030, making up 5% to 10% of the global meat market, the report projected.