Venture Capital Firms Are Investing in Vegan Brands That Disrupt the Food Industry

Food and beverage startups are increasingly attracting investments from venture capital firms, according to a recent article from Food Business News. Though the food start-up space is not entirely dominated by vegan brands, the trend also holds true for plant-based food companies, as more firms seek to invest in companies that create products that disrupt well-established categories like meat and dairy.

“We’ve seen a real explosion in new venture capital firms focused specifically on the food space as well as more traditional tech and venture capital investors making some of their first investments into food,” said Zoe Leavitt, senior intelligence analyst at data firm CB Insights. “As of last year, the sheer number of unique investors participating in the food and beverage space had more than doubled since 2013. There is definitely a lot of excitement there.”

Leavitt highlights that growing consumer demand for healthy, sustainable, unique food options have largely played a role in the recent “surge in venture capital firms, incubators, and accelerators focused on food and beverage.”

Indeed, many emerging food and beverage brands that have attracted investors do not use animal products and are focused on developing new, innovative methods of reinventing categories. California-based brand Beyond Meat obtained capital from high-profile individuals such as Bill Gates, environmental activist and actor Leonardo Dicaprio, international food company General Mills, and Tyson Foods, the world’s second-largest producer of beef, pork, and chicken products. Vegan venture capital funds PowerPlant Ventures, New Crop Capital and Stray Dog Capital have also financially supported Beyond Meat’s rapid expansion.

In the nondairy category, Dicaprio, along with Jared Leto, Karlie Kloss, and other celebrities have invested in vegan milk brand Califia Farms. In February, family-friendly nondairy banana milk brand Mooala secured a $5 million investment from firms M3 Ventures and Sweat Equities in order to increase production. The Singapore-based investment company, Temasek, has invested in the vegan-friendly cellular agriculture milk brand, Perfect Day.

Keen on providing revenue to brands that are better for the environment, Dicaprio is also an investor in the vegan chickpea-based snack, Hippeas. The “better-for-you” snack brand has also secured a $10 million round of funding from CAVU Venture Partners.

“There has been a ton of capital that has come into this space, and it’s really fueled by the continued increased disruption that’s happening from the shift in consumers’ eating and drinking habits,” said Clayton Christopher, co-founder and partner of CAVU. “Consumers aren’t eating and drinking and consuming the same brands that our parents used to. Most of the brands in our pantries and refrigerators weren’t around 15 years ago… There has been a ton of disruption in the trend toward better-for-you, more transparency, and higher quality.”

As Leavitt highlighted, incubator programs, some of which are funded by large corporations, are also taking notice of “disruptive” brands. Last March, American food company Kraft Heinz launched Springboard Brands, an incubator program that will help plant-based brands grow. Emerging incubator Outermost shares a similar mission, with an emphasis on plant-based and clean meat. Even popular American Greek yogurt brand Chobani has launched its own incubator program with a mission of “taking on broken food systems.”  The Chobani Incubator program has given birth to vegan brands such as the nondairy superfood ice cream, Snow Monkey.

Aided by capital, some brands have already begun to disrupt the market. Beyond Meat, which took a bold step towards changing the way people see protein by selling the vegan Beyond Burger next to meat in supermarkets, has already influenced other brands and retailers to take similar measures.

Image Credit: Hippeas