Cell-cultured meat is far from dead, but it’s time for a trillion-dollar Biden moonshot

You know things are hot when celebrities are signing term sheets. While helpful, it’s not their money that’s propping up the food-tech ecosystem. So the question here is this: Do VCs have the fortitude to continue supporting the more than 150 startups seeking to design a cell-cultured analogue to cheap meat? Perhaps the better question is: Should they?

“Gone are the days of big rounds,” says Anthony Chow, cofounder of Agronomics, a publicly listed sustainability fund, which has invested in several cultivated meat startups, including Blue Nalu, Mosa Meat, Meatable, and China-based CellX. For example, Blue Nalu is pursuing what some call “the Holy Grail” of animal flesh—bluefin tuna. The San Diego-based startup closed a series B funding of $33.5 million this October. Chow says that surely would have been bigger in a better market.

Venture capital is not moving like it was in the last decade. “I expect we’ll see more down rounds and some of that is a natural readjustment to valuations, which have gotten quite steep,” says Ryan Shadrick of Boardwalk Collective. Shadrick is an adviser to Upside Foods, which makes cell-cultured chicken that’s approved for sale by U.S. regulatory agencies, but she is not an investor.

What the industry needs is a success story. 

Don’t get me wrong, it’s come far. The FDA and USDA have approved two cell-cultured companies, with more certainly to follow. Folks are breaking ground on pilot facilities, bioreactors are on order, and new startups continue to enter the ranks. Things are good. Except, also, they’re not. Maybe this is where I blame Beyond Meat and its ilk? Either way there’s a sensitivity when the word ‘plant-based’ comes up, and some investors fear that consumers are becoming less than enthralled by the alt-protein category. However, none of this matters if we get to where we can’t feed ourselves, or the planet overheats, or drowns, or insert other existential dread. On the risk spectrum, investors are willing to take the brunt, but is it time to spread the burden of creating an alternative, less carbon-intensive food supply?

Why cultivated meat is having an existential crisis

Cooper Rinzler, a partner at the Bill Gates-backed Breakthrough Energy Ventures, says cultivated meat has transitioned from being a fantasy (thanks to those FDA approvals) to what he calls a “four-miracle problem.” The quartet of phenomenal challenges that must be solved for cultivated meat to live up to its potential are: pricey inputs, yield potential, bioreactor design and expense, and getting to products beyond burgers and meatballs. To make a dent in the meat market, we’ll need a pragmatic path towards steak, ribeye, and other form factors that make up the larger part of a cow. Ground beef won’t save us.

“Personally, I’ve been a cultured meat skeptic,” says Rinzler, adding, “not as a category of interest but as a category that could displace meat in developing nations.”

While cultivated meat does need a lot of capital to confront some—or all—of those problems, the companies that have raised big money haven’t always spent the money wisely. “It’s almost a curse,” says Agronomics’ Chow.

Let’s talk about that curse.

In September, Eat Just closed a small round of funding from the Ahimsa Foundation, which is supported by VegInvest. The Alameda startup, the first to have cell-cultured meat approved in Singapore, also laid off 18% of its employees in March. CEO Josh Tetrick says these moves will bring the company closer to “operational profitability.”

Upside Foods, after a surprisingly massive funding round in 2022, had layoffs according to users on Glassdoor, plus the notable exits of David Kay and Eric Schulze—employees two and seven. In 2023, Upside announced it was building a large-scale commercial production plant outside of Chicago despite its pilot plant in Emeryville, California, reportedly sitting mostly unused according to Wired.

Meet cultivated meat’s next big hope

BEV didn’t invest in cultured meat until 2022 when the firm’s partners met Prolific Machines, which was part of the biotech accelerator IndieBio. “We placed our bet where we saw the highest potential,” says Rinzler. What he saw during BEV’s “extensive diligence” was an orthogonal ability to manage biology. “It’s a tool kit that is truly novel that can do wild things,” he says. So even when the investor ecosystem was on the downtrend, BEV led Prolific’s series A, which came in at more than $50 million.

Deniz Kent, Prolific’s cofounder and CEO and a former stem-cell biologist, has been watching the industry since 2015. He read every paper on cultured meat and talked to many in the industry but couldn’t find a company he felt compelled to join. “The first generation of cultured meat companies showed it’s possible to make cultured meat, and that it can taste good. These are massive contributions to the field. But nobody has shown that they can make cultured meat without losing money.”

The solution he devised eliminates the need for growth factors (and other expensive inputs) for growing animal cells while simultaneously increasing yields. The remainder of the shopping list is cheap: amino acids, sugar, and water.

“There must be a really strong business case to be embarking on this because it requires a big team, it requires tens of millions of dollars, likely hundreds of millions of dollars of R&D,” says Kent. “We figured it out. But it was extremely difficult. I’ve aged a decade in the last three years.”

What’s kept Kent going is the Techno-Economic Analysis (TEA) that he confidentially shared with me over email. “Our TEA results show for the first time that a credible path to sub $7 per kg on beef production at the first commercial factory,” he writes, “and can reach sub $5/kg beef at the second commercial scale facility,” which would be five times larger. These are attractive numbers, albeit ones that have yet to be proven.

Not only does cultured meat need bigger investors, it needs new ideas, which Prolific brings to the table. Maybe that’s why after its oversubscribed series A, additional investors came in to help the startup fund its pilot production plant in Emeryville, California. These included Robert Downey Jr.’s FootPrint Coalition, Twitter cofounder Biz Stone, and  Carlyle Group cofounder David Rubenstein. Hammers and dust are already flying. 

Meat is a multi trillion-dollar moonshot

“Trillions of dollars will need to come into this sector before we make a significant dent in animal husbandry,” says Chow.

What cultivated meat needs are institutional investors, but they won’t come in until the unit economics make sense for a single full-scale facility, which is the only way to get the cost curve down. “Once we can prove one factory exists, then you can get the institutions to build 10 at a time and 100 at a time. That’s when capital will flow.”

Government support to foster the industry has begun. The USDA awarded $10 million to Tufts University to build an institute on cellular agriculture, though that is a tiny investment that’s spread over five years. A recent California budget included a line item of $5 million for cell-cultured research in the University of California system. And last year, President Biden issued an executive order asking for a report on how biotechnology and biomanufacturing could be used for food.

But a report isn’t money. In a world where everyone is on high alert, let’s be proactive when we consider highly ambitious innovations—on the scale of solar power once upon a time and microprocessors once upon a time before that. “We’re not big enough to fund [startups] through to large-scale factories,” says Agronomics’ Chow. “Government support is a must,” adds Steve Molino of Clear Current Capital (another Blue Nalu investor), “both from a funding and policy standpoint.”

With a decade down and at least another decade to go before becoming mainstream (if even), cultivated meat investors are losing sleep. The narrative that the bubble has burst is not helping. “I would implore folks to reserve judgment,” says Boardwalk Collective’s Shadrick, who worries about the current story, “and applaud those that are giving a damn. They are devoting their lives to find ways to feed our nation.”