Reverse Engineering a More Sustainable Food System
Using market forces, food technology, and consumer behavior to fix our broken food system.
Chris Kerr is the Investment Manager for New Crop Capital, the first venture capital fund focused exclusively on disrupting the trillion-dollar global market for animal products. NCC invests in early-stage startups that are using plant-based ingredients and cellular agriculture to create animal products without animals. This is how and why Chris invests, told in collaboration with future-food writer Emily Byrd.
Humanity exceeded Earth’s carrying capacity in 1972. Sustainability in its truest sense is unachievable without a time machine.
But the fact remains that we must find a way to feed 9.7 billion people without triggering catastrophic results. It is clear that we cannot do this with a system as fundamentally flawed and resource-intensive as factory farming.
The industrial farming of animals is archaic, devastating to planetary and public health, and presents egregious material risks to investors.
Various groups are working to encourage a mass shift of consumer dietary behavior away from animal products by expounding on the dizzying global harms of factory farming and extolling the virtues of nitrogen-fixing, climate-friendly, and health promoting crops like pulses.
But what if we could meet consumers where they are, shifting the food supply instead of consumer preferences?
A handful of companies worldwide are doing just that, reverse engineering the products of factory farming with more sustainable ingredients and improved production processes. Take Memphis Meats, the Bay Area startup harnessing advances in regenerative medicine to create clean meat by growing meat directly from cells, eliminating the need to grow an entire animal (and the hooves, hair, and sentience that come along with said animal).
Or take Beyond Meat, which is recreating the component parts of meat — muscle, fat, and so on — from plant sources, recreating the sensory experience and nutrition of beef and chicken without the negative externalities.
New Crop Capital, the fund I manage, was an early investor in both Memphis Meats and Beyond Meat. Both companies have since attracted funding from Bill Gates and Tyson Foods.
The innovations of these two companies represent the core of our investment thesis: We’re not waiting for international climate commitments, the next Farm Bill, or a vegan world to save our planet and improve our food supply. We’re investing in direct replacements for meat, dairy, eggs, and seafood — and the distribution thereof.
We’re investing in the next agricultural revolution.
Our PACT with food
We believe private-sector innovation will succeed where consumer education has stagnated. Curious findings from a recent consumer study conducted by research firm Ipsos Group illuminate our reasoning:
- 69% of respondents (U.S.) identified animal agriculture as one of the most important social issues in the world today
- 49% supported a ban on factory farming
While consumers claim to be critically concerned about factory farming and its impacts, per capita meat consumption in the U.S. is at an all-time high. And as incomes rise in the developing world, so does the adoption of a meat-heavy, Western diet.
The difficult-to-admit but obvious answer is that our more noble values aren’t the primary determinants of our food-purchasing behavior.
We have a different “PACT” with our food: Our choices are steered by Price, Awareness, Convenience, and Taste — not a desire to save the world.
While we may aspire to eat healthier, exercise more, and be better stewards of our land, our actions don’t tend to perfectly align with these aspirations.
Until new products can directly compete with factory-farmed foods on the four PACT factors, eating in a way that’s best for ourselves, the planet, and animals will be out of reach for all but the most dedicated eaters.
The Ipsos study also nods to this: The majority of survey respondents said they would prefer to eat clean meat instead of meat from conventionally farmed animals if the price was right.
Making the best choice the easiest choice: Lessons from the dairy aisle
We see the power of PACT as a feature, not a bug. To enable a profound and permanent shift in the food supply, New Crop Capital funds startups that leverage food technology to check every one of these four boxes.
Food innovation can create a healthier, more humane, and more sustainable status quo.
Plant-based milks provide an interesting study in the efficacy of this approach.
Not long ago, plant-based milks were but a blip on the market. These were products almost exclusively purchased by consumers with dairy allergies or other dietary restrictions. Today, plant-based milks comprise nearly 10% of the liquid milk market and are a staple at coffee shops and in home refrigerators.
There was perhaps no moment more pivotal for this shift than the introduction of plant-based milks into the dairy aisle. For the first time, the average consumer could — without going out of his or her way physically or financially — compare these two products on a level playing field.
Unsurprisingly, the leading reason consumers report for choosing plant-based milk over cows’ milk isn’t sustainability, health, or animal welfare. It is, simply, taste. The increased awareness and convenience made possible by marketing campaigns and the acquisitions of plant-based brands by the traditional milk industry represent hidden but equally powerful drivers.
In the liquid milk market, differentiation was minimal and opportunities were limited. Then plant-based options broke the market sector wide open. With this new-found differentiation, consumers were finally given novel choices.
We see the same opportunity for plant-based and clean meat.
When multi-billion-dollar food conglomerate Pinnacle Foods purchased plant-based meat company Gardein for more than $150 million in 2014, its CEO echoed this sentiment, saying that plant-based meats were in the early stages of a macro-trend, similar to the way plant-based milks changed the dairy category.
While plant-based milk may not need New Crop Capital’s investment at this stage, similar but less mature markets — like plant-based seafood — present a high-impact opportunity.
When plant-based and clean meat achieve the same market share within the conventional meat industry as plant-based milk has within the dairy industry, that will spare the planet from the burden of 1 billion farm animals — and spare 1 billion animals from unconscionable suffering.
That day cannot come soon enough.
If you are seeking funding and your business plan aligns with New Crop Capital’s investment thesis, we welcome you to reach out.
We are not currently accepting funding applications for time machines.
