The alternative protein space is hot, hot, hot as evidenced by both the number of companies developing products and the venture capital going into the space.
Investment into alternative proteins, for example, plant-based meats and dairy substitutes was $5 billion in 2021, according to both the Good Food Institute and Crunchbase data.
The latest company to attract venture capital is Nowadays, a company founded in San Francisco in 2020 as a Public Benefit Corporation by Max Elder and Dominik Grabinski.
Elder told TechCrunch that the company raised $7 million in a seed round, touting it as “one of the highest seed-stage valuations in its category” — he declined to divulge the number — to give the company nearly $10 million in total funding to date. This includes a $2 million pre-seed round from 2021.
The round was led by Stray Dog Capital, with additional strategic support from Standard Meat Co., a privately-owned meat processing and packaging company. Additional participants in the round include returning investors VegInvest Trust, Tenacious Ventures, Cornucopian Capital and Good Protein Fund. New investors include Selva Ventures, Vanterra Accelerator Fund, FoodHack, Gaingels, Beyond Impact and Unpopular Ventures, and a group of angel investors, including Rachel Mansfield, Varsha Rao and Brandon Shainfeld.
Elder and Grabinski started Nowadays to focus on the health side of plant-based meats and its first product is a crispy, plant-based riff on chicken nuggets that is made with seven ingredients, including pea protein, wheat flour, sunflower oil and yeast and mushroom extracts.
Unlike other alternative protein companies that are developing new technology, the company is tapping into existing technology used to make foods like pasta and cereal to make whole cuts of its product that is then formed into nuggets for now, and in the future, tenders and cutlets.
It uses a low moisture extrusion process that takes the proteins and fibers and adds heat, steam and pressure that aligns it into a fibrous matrix. Elder likens this to the same process used to push dough through a die into different pasta shapes.
“Using a mechanical process, we can mimic the animal muscle in different shapes and sizes,” he added. “That is key to our differentiation because some other companies are limited by their technology to only be able to do one format.”
Scale is always a factor when it comes to making foods like this, and Elder confirms what we have also tried to ascertain with our reporting — that many companies have not achieved scale yet. In fact, he notes that consumers see less than 2% of alternative meat products that are currently being developed.
This is due to both supply and demand: On the demand side, some companies are providing solutions for something consumers are not actively looking for, while on the supply side, companies have figured out the most effective manufacturing process, which is complex and expensive, Elder explained.
He believes Nowadays has not only cracked the code on food that consumers want and like, but also on the supply side by partnering with Standard Meat. This enables Nowadays to create its plant-based meat product and easily plug into Standard Meat’s existing finishing lines to scale manufacturing both quickly and more cost effectively.
“We are coming up with novel proteins, but instead of reimagining the entire process, we are recreating the wheels of an industry where a 75-year-old company has already created efficiencies in what they do,” Elder added. “We have to compete with cheap commodities, so we are thinking differently about product development and scaling and figuring out how to repurpose that to build a different future.”
Meanwhile, chicken is one of the most popular meat groups, which is why a lot of plant-based protein startups began here. Over the past year we’ve seen news from Beyond Meat, whose nuggets went into KFC restaurants, its pieces into Panda Express and its tenders into grocery stores. Funding news came out of Next Gen Foods, which raised $20 million, Daring Foods went into Walmart and raised $65 million and Simulate grabbed $50 million for its Nuggs.
Nowadays will focus its new funding on the commercialization of new plant-based “chicken” products, including cutlets, which will launch this summer as a direct-to-consumer product and in select restaurants. The company is also expanding its distribution in foodservice and scored a spot on the retail shelves in certain Whole Foods Market stores beginning later this year.
Once its manufacturing facility is up and running, the company will be able to produce anywhere from six metric tons of meat per day up to 60 metric tons if it is running 100% everyday, Elder said. That’s only the meat part, but then it will go over to partners, like Standard Meat, for the finishing, which is the batter, breading, fried and frozen part. The company is also working on a gluten-free breading that will launch this year as well.
Though he would not divulge revenue figures, Elder did say that Nowadays is seeing a repeat purchase rate of over 20% from its early direct-to-consumer business, and products are in restaurants in New York and Los Angeles.
“For me, the great validation is what we have seen across early restaurant partners, our loyal fanbase on direct-to-consumer and feedback from the only retailer we’ve reached out to, and they are launching with us,” he added. “That suggests to us, and hence the raise, it is time to scale and launch new products to continue to service channels in a more robust way.”