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Mar 6, 2023Liked by Janette Barnard

I live what you describe as a “vast animal ag tech emptiness of capital” everyday.

My company, Top Protein, grows meat in milk. We are far more advanced technologically than all plant-based companies, make products that nutritionally crush all alt meats (as well as animal meats), have consumer price points that make dairy based meat on par with ground beef and chicken, and have process engineered the entire manufacturing to scale and not produce waste.

I should be spending all my time advancing the business but a great deal goes toward trying to find investors to join in our offerings. But as you point out, there are no VCs in the space, only privates and they are very difficult to find. We would welcome family offices with open arms but they must be behind castle walls.

Milk is an industry that has had zero technology advancement for nearly a century. Sure membrane tech popped in in 1973 but so what. Plant milks are gaining huge market share. Recombinant proteins are gunning for a piece of that. And the younger consumers are believing all the “cows are bad” propaganda. So in my view, milk is or has been written off.

Until now that is. The Top Protein technology, business model, nutrimimicry and economics shows that milk can be the bridge to the future. But the lack of professional money does not help.

Animal agtech is critically important for endless reasons. Far more so than funding cell culture meats that rely on immortalized cells and yield products no one can afford. Or climate “tech” that only the Davos crowd cares about.

I hope there are those like me appreciating every word you write but are bucking all of them at the same time.

Chip Marsland

Top Protein

Orlando, Florida

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Wait, that quote above you attribute to me is not at all a quote from me.

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Mar 6, 2023Liked by Janette Barnard

You referring to the "vast animal tech emptiness of capital"?

Didn't mean for it to be received as a verbatim quote. Apologies.

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Jul 23, 2023Liked by Janette Barnard

Janette,

Really enjoyed your article. We are a VC funded traceability in Livestock company. As your article and the comments cover, we are more in the Supply/Value chain space. We are a U.S. company that piloted in Africa. Chris

https://youtu.be/ft9P3k6q5h8

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Thanks for another great "learning out-loud" post. I agree strategics, private funds and customer funded ventures will be crucial for animal agtech. It seems some VCs, even those in agtech, are not as comfortable with the complexity and sometimes slower adoption cycle of animal agtech.

However, I also see opportunities for integrating tech into a single platform (or some kind of umbrella) to simplify the user experience. Producers, large and small, need fewer more integrated tools to manage their business (and the inherent risks that are part of their day to day). Bringing several agtech tools together is a VC investable opportunity in my view.

In either case, I see lots of need and great business opportunities in the animal protein space. An exciting and "learning-out-loud" kind of time for sure.

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Great read Janette. I was asked to talk on a panel about alternative funding strategies for Agtech startups in Australia. The by line was “when the VC door is closed where do you turn”. I argued that its not always about the VC door being closed but sometimes you may choose to close the door on VC (particularly in early rounds). I agree with your points that VC may not be appropriate (from a fund and a founder view) does that just leave strategics?

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Yes excellent point!!! To your question, I think that’s where family offices and HNWI can play a critical role, particularly those whose capital comes from the industry so they “get it”.

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Hi Janette, excellent. I think another factor that prevents VC investing in animal protein is all the buzz, media coverage and investments in plant-based and lab-grown animal protein. One VC once told me that "it was too late" for animal protein to give the answers society demands (an overstatement to my knowledge). For sure we will need more protein and calories, but some doubt that this growth will be accomplished by traditional animal proteins.

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It's an interesting point because if true, could mean that venture backable companies in animal agtech are undervalued since the broader market is underestimating the category. Though it feels like it still comes back to the chicken or the egg challenge of is there less capital available or are there less investable companies available? I think investable companies tend to find capital, which makes me think that is the bottleneck. Thanks for raising this point!

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I think this perception certainly helps to underestimate the category (less focus and interest on it). But I also think there are not too many investable companies if we consider the way investment funds work (one single company should have the potential to return the full size of the fund). But I think this aspect is not a particularity of animal agtechs, but agtechs in general. There is not one agriculture market, but different crops, farm sizes, regions, etc, which makes it difficult to really scale in the time frame expected.

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The animal protein market operates in a "Refinery" model where every part of the animal is used somewhere in industry, just like every part of a barrel of oil is used. Fiddle with market demand of one part and it disrupts the other. Too much impossible burgers reducing demand for chuck, animal ag will adapt, lower price, and win with lower margins. It constantly rebalances, but there will be limits.

The opportunities to drive more efficiency in livestock are likely not venture opportunities. The opportunities to remove the arbitrage in the supply chain may be. Perhaps using meat to offset human health costs taking share from other areas (Not sure what that would look like). Integrating animal cells into synthetic biology. Using pig parts for humans. Tailoring animal genetics. Reducing processing costs (Less fat, more consistent cuts, more automation).

How much capital is locked up in the bullwhip effect of trading through the supply chain?

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THIS * 10000000:

"The opportunities to drive more efficiency in livestock are likely not venture opportunities. The opportunities to remove the arbitrage in the supply chain may be."

Completely agree with this.

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Was PLA acquisition by Zoetis an outlier then, in your opinion? Do you think an efficiency-focused app can't build double/triple-sided business models starting with SaaS?

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