Alternative protein-focused VC Unovis Asset Management has closed a second oversubscribed fund of €146 million, or approximately $166 million, with commitments from institutions, impact funds and investors around the world, including Invest-NL, Unigestion, Credit Suisse, Fuji Oil and Griffith Foods.

Having recently onboarded co-founder of General Mills 301 Inc.’s venture capital arm, Pete Speranza, as an operating partner, Unovis Asset Management aims to continue to expand its sustainability-focused portfolio and strengthen R&D across invested brands.

According to founding partner and chief investment officer Chris Kerr, Unovis Asset Management’s Fund II is more than three times larger than its first fund, New Crop Capital Trust, which deployed $45 million from 2015 to 2020. notable exits including Oatly and Beyond Meat, and an average deal size of $14.95 million, the venture capital firm has invested in 63 companies to date, PitchBook Data showed.

Wouter Bos, CEO of Invest-NL, notes in a statement how participation in Unovis Asset Management’s latest raise aligns with their goal of creating a carbon-neutral economy. “Since the meat and dairy industry causes a lot of CO2 emissions and other greenhouse gases,” Bos said, “the transition from animal protein sources to alternative protein sources is an important step.”

When closing Fund II, Kerr mentioned that Unovis Asset Management’s investment thesis and process will remain the same, which begins with “evaluating and benchmarking impact” rather than immediately focusing on transactions. “These two outcomes are not mutually exclusive,” Kerr said, “but impact is our primary driver.”

Food companies need more time to establish themselves

As health and environmental concerns exacerbated by the ongoing pandemic continue to draw new startups to the alternative protein space estimated to be worth $27.5 billion by 2027, according to Meticulous Research, Unovis Asset Management warns that ego-driven valuations and the mentality of rushing to the exits could ultimately hurt the well-meaning impact of entrepreneurs.

Indeed, mission-driven food companies that reinvent the food system take much longer to establish themselves than the lifespan of an average VC — typically between seven and 10 years, Kerr explained, noting how Beyond Meat and Oatly developed over a decade and two decades, respectively, before going public.

“The idea that the short-term expected exit of food startups is an IPO is a new concept…and mergers and acquisitions was where a good company focused its compass,” Kerr pointed out. “Food companies rarely deserve to be unicorns unless they’ve actually spent the time to establish themselves deeply in the food system.”

Armed with 20 years of insight into investing in the alternative protein space, Kerr said Unovis Asset Management can see through the scum and hype, and target companies that will improve people’s well-being. the company while performing financially.

To better generate results by investing in alternative protein companies, Kerr said: “[We’ll] pay close attention to the actual cash transactions and ultimate exit prices of these materializing IPOs, and start using those metrics to set expectations, and design each funding round accordingly.

Two-step consolidation

With product innovations underway between the invested brands, Unovis Asset Management believes that consolidation in the broader plant sector is the “appropriate next step” and will likely go through two distinct stages.

“Those with less than $50 million in income will fall into a cluster and likely find homes in a dozen roll-ups,” Kerr noted. “These roll-ups will likely go IPO or SPAC, but there’s also good reason to explore a consolidation of these roll-ups.”

The second stage involves the entry of a large CPG into the protein alternatives market through mergers and acquisitions, as already evidenced by Unilever’s acquisition of The Vegetarian Butcher and Nestlé’s purchase of Terrafertil in Ecuador. in 2018.

“While a neo-Nestlé or a reimagined Unilever might materialize,” Kerr added, “there is also a strong case for these global conglomerates with their internal ESG mandates to acquire a well-curated portfolio of [plant-based] offerings. »