After the alt–protein hype: a venture capitalist’s perspective

If you mean raising huge amounts of money based on exorbitant three-digit million valuations, then yes: the hype is over.

What does that mean for the industry?

We’re excited because that means the market is maturing. That means more predictability in terms of performance. In German, there’s a saying that ‘everybody cooks with water.’ In the end, every investor — whether it’s venture capitalists or private equity — looks at the cold hard numbers. We look at revenue. We look at the potential for revenue generation. We look at profitability, and then we look at how realistic the chance is to achieve gains at the time of projected exit.

EU legislation is infamously slow. So how does this influence the industry, compared to, for example, the US?

The legislation most relevant for us is European novel food regulation, and indeed the pathway for approval for companies to commercialise their product still takes about two years, which has proven surprisingly stubborn. In the United States, the process is faster, but there a founder is completely liable if something turns out to be toxic, which is not the case in Europe. It’s a different way of thinking.

How could the EU do better in the financing space for alt-foods?

Greater access to grants so founders can build their companies without giving up control. That or free access to infrastructure. Anything that takes the weight off of having to raise €10m-€30m just to build a pilot plan for something that may or may not be successful. That would also make my job easier because founders have less incentive to inflate the value of their company to raise money and still keep control of their company.

You’re an ‘Article Nine’ fund. Explain what that means?

That means we are a very ‘dark green’ fund under the EU’s sustainable finance disclosure rules, which quantifies how green and sustainable you are as a financial service. There is a whole rainbow of venture capital funds out there. We only invest in technologies that reduce emissions and social and environmental impact.

Let’s get stuck in the alt-protein stuff: what are you focusing on?

We prioritise investments in biobased technologies. Nature has a wonderful way of recycling carbon. Specifically, we focus on novel proteins and novel materials. If you break down food and taste to the molecular level, it becomes the science of what people like eating. How does it taste? What’s the chewiness? How does it perform under heat? Does it gel?

What is the stuff that excites you?

We invested in lupine proteins, a new upcoming raw material, and marine proteins like algae. I’m excited about precision fermentation, which means producing specific cells from mycelium [the root system of mushrooms] or novel bacteria. Fungi are one of the most diverse kingdoms where each type — whether it’s shitake, morel mushrooms or just ordinary mushrooms — has wildly different properties. Some are crunchy; others are jelly-like. So you can imagine that leads to enormous variability of what you can do on the molecular level.

How does this improve the food system that we have?

What’s cool with precision fermentation is that it can be localised. So instead of contributing to deforestation in Brazil to build soy fields, it becomes possible to produce protein locally in a region that would not typically be a protein producer.

Plus, mushroom cells are cool, right? You don’t have to say: hey, what you’re eating now is made from bacteria or bugs, essential for something to become acceptable for people. I don’t want to eat insects. No way!