| | DECEMBER 2022 8OPINIONIN MYBy Tom Mastrobuoni, Chief Investment Officer, Big Idea VenturesIt was 2018 and the plant-based protein world was on fire. Global meat companies were spinning up corporate venture capital divisions and ultra-high net worth investors were putting their money behind the latest technologies in creating meat analogues from vegetables, lupins, sunshine and even carbon dioxide. It was a glorious time. For better or worse, the US consumer is the bellwether for fast moving consumer goods, or FMCGs. But US consumers do not make purchasing decisions with the same considerations that consumers in Canada, Mexico, Europe, Asia, or Australia do. Sadly, we have not done any market research in Antarctica. I am a consumer in the US so I will provide my perspective. The current offerings of plant-based meat products do not perform well. They do not taste, smell or chew like meat. Now some of you will say well of course not Tom, they aren't meat, and I agree. However, the brands many of us invested in were built to be 1:1 replacements for animal protein. No offense to the vegan and vegetarian consumers out there but you are not a large enough piece of the consumer pie for venture capitalists to get excited about. VCs invest in massive total addressable markets. We invested in the plant-based space because we saw the potential to take a meaningful bite out of the animal meat market which stood at $1.3 trillion in 2021. To do that, the products must taste, smell and chew like meat.As with all new technologies, the products were not 100 percent there. That gap is where the value is. We expected technology to accelerate and those three critical KPIs to catch up to animal meat. They have not and there are three clear reasons. 1. Venture Capitalists ­ Yeah, I said it, it's my fault. VCs demand results with limited capital and in an unreasonable amount of time. We want your next product to be the final draft and ready for full scale production tomorrow because, for the most part, we do not understand what it takes to manufacture food safely, in full compliance with local and federal regulations and get that food in front of consumers. We are now faced with mounting piles of humble pie and will have to start digging in as companies begin to struggle.2. Brand Proliferation ­ You could probably lay this one at the feet of the VCs funding all these start-ups, but the founders need to share in the humble pie buffet. There is no reason for the market to "need" thirteen (I'm hyperbolizing) brands of plant-based chicken nuggets. I cannot think of thirteen ways to differentiate WHY PLANT-BASED COMPANIES ARE STRUGGLING AND WHAT WE CAN DO TO STOP ITTom Mastrobuoni
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