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The Spoon

Daily news and analysis about the food tech revolution

Industry Perspectives

2023 Restaurant Tech EcoSystem: Nourishing the Bottom Line

In collaboration between TechTable and Vita Vera Ventures, we are pleased to share an updated 2023 Restaurant Tech Ecosystem map.

We all saw that the pandemic brought a wave of experimentation in the restaurant tech space, but we also know that tech-driven change is not always linear. 

In early 2022, we made bold predictions about the restaurant tech environment in 2023, as we anticipated numerous acquihires ahead (acquisitions primarily driven by tech talent vs strategic tech value). This was due to the tight tech labor market (at the time) and the increasingly challenging funding and interest rate conditions. 

However, with the recent wave of macro tech layoffs, the tech labor market is no longer tight, and we believe more restaurant tech companies may be forced to shut down rather than finding a soft landing through acquisition. We’ve already seen a strong reset on requirements for capital efficiency and valuations of startups in the sector. This macro shift may create potential for rollup opportunities, but many early-stage assets across the sector are overfunded single-point solutions and still subscale.

This is ironic as the need for tech-driven solutions has never been stronger, but companies without the right growth metrics will likely struggle to survive. The inflationary environment is also forcing harder decisions for operators, which may further dampen their willingness to engage with new solutions.

With that in mind, we are pleased to share our 2023 Restaurant Tech Ecosystem, which serves as a current heat map of the broader ecosystem within the US (and is clearly not exhaustive). 

Click here to enlarge/download image of map. Click here for downloadable PDF.

The Journey from Point Solutions to Comprehensive Tech Stacks

While single-point solutions for things like online ordering, loyalty programs, and delivery were popular during the pandemic, we have reached a moment now with perhaps too many point solutions in the market. 

Tech stacks that require too many logins are now in fact creating a cognitive burden for employees, rather than the intended promise of efficiency and ease of use. As a result, operators are beginning to seek integrated systems and smaller tech stacks that can do more. (See commentary in the previous section about rollup opportunities!) 

Restaurant tech advisor David Drinan succinctly identifies the near-term priority for most operators: “The restaurant industry is thirsty for technology innovation that will deliver high margin, incremental revenue.”

On the operational side, managers are still struggling with certain areas such as scheduling and inventory management. These tasks can be time-consuming, especially for independent restaurant owners who have limited resources. As a result, we have seen a growth category of solutions that can automate these functions and provide real-time data to help operators make informed decisions.

Help *Still* Wanted   

The labor shortage in the restaurant industry has been a major challenge for operators in recent years, and labor optimization is still at the top of every operator’s mind. The pandemic caused many workers to permanently leave the hospitality industry, leaving restaurants short-staffed. 

According to the National Restaurant Association, almost two-thirds of US restaurant operators say they do not have enough employees to support existing demand. Instead of replacing this lost workforce, many operators are turning to tech to automate more functions and reduce the need for human labor. 

From digital menus and ordering kiosks to automated kitchen equipment, there are many ways that technology can help restaurants operate more efficiently with fewer employees. By automating basic tasks such as taking orders and processing payments, operators can free up their staff to focus on more complex tasks that require human expertise, such as customer service and food preparation.

Another trend the restaurant industry is grappling with is the changing expectations of younger workers when it comes to the employer/employee relationship. With more emphasis on work-life balance, career development, and job satisfaction, younger workers are looking for more than just a paycheck. 

To meet these expectations, operators are looking for workforce management solutions that can help to improve engagement, development, and rewards for their employees. This includes tools for tracking and managing schedules, as well as innovative solutions for tip outs and other compensation mechanisms. By investing in these solutions, operators can not only attract and retain top talent but also improve the overall efficiency and productivity of their workforce.

Finally, it is worth noting that basic scheduling and labor management tools can have a significant impact on profitability by reducing labor costs and improving operational efficiency. By automating scheduling and timekeeping, for example, restaurants can reduce the likelihood of overstaffing or understaffing, which can be costly in terms of wasted labor or lost sales opportunities. 

In the end, the ability to leverage technology to optimize labor is critical for restaurants to remain competitive in a challenging operating environment. While kiosks and text ordering have shown promise in the QSR space, there are many other opportunities for technology to make a positive impact on the industry as a whole.

Ghost Kitchens: It’s Even More Complicated

In our 2021 restaurant tech retrospective, we had a lot to say about this growing subsector, including the challenges for success (a.k.a. profitability) within the confines of a ghost kitchen business model.  

Now, as the concept of virtual and ghost kitchens continues to evolve even further, it’s important for operators to understand the complexities involved and navigate these challenges to build successful ghost kitchen operations.

One major obstacle has been the potential for tension between virtual brands and existing businesses, where adding virtual brands can lead to direct competition with their own existing businesses. Finding the right tech and operational partner to balance between these two is key.

Additionally, ensuring food safety and maintaining quality standards across multiple brands can be a challenge. Many of the generic virtual brands have lacked distinct value or clear taste standards, leading to underwhelming food quality issues and removal from the major third-party delivery platforms.

Last Mile Magic

Making the economics work for restaurant delivery is a growing priority for the industry. This includes better interoperability between POS/Kitchen systems and delivery providers, better routing and batching systems, localized kitchens, and of course even the mode of transportation for delivery.

We are tracking over 20 companies in the North American unattended last mile category, but it is still early days with most (all?) of the solutions operating in limited geographies and customer trials. So we have left this slice off the infographic for 2023, but don’t forget to keep your eyes on the sky, as we’ve seen recent growth of backyard drone delivery companies which are proving to be faster and better for the environment (if they can outweigh the noise and regulatory concerns).

GenAI on the Menu

Tech entrepreneurs have long dreamed of personalized food recommendations, but few have succeeded in creating true personalization beyond dietary concerns, allergens, or ingredient likes/dislikes. 

However, we have now reached a unique moment where new technologies like ChatGPT will be able to create meaningful and personalized interactions with guests. This has always been the premise of a variety of AI-driven restaurant tech startups, but the ability to leverage the underlying data to engage and interact with guests in a truly personal and conversational manner is game-changing. 

By using data from previous orders and interactions alone, ChatGPT can help to create a more tailored experience for guests, from recommending menu items to offering personalized promotions. ChatGPT can become a critical part of a restaurant’s marketing team by creating content, with the ability to easily translate to different languages as well. This could give operators a crucial competitive advantage as consumers demand more personalized experiences. We have only begun to see the capabilities of ChatGPT with free templates being offered to restaurant operators already.

Moreover, conversational AI like ChatGPT can also be a valuable tool for restaurant operators seeking to understand their own operating metrics. By integrating ChatGPT into their tech stack, operators can ask natural language questions and receive real-time responses, empowering them to make informed decisions about their operations.

Emerging Restaurant Tech Concepts to Watch

  • Chat/AI across marketing and operations
  • Tech-enabled employee support and training (for example, personalized perks, tip-out options, or language choices) 
  • AI for scheduling to free up managers
  • Dynamic pricing
  • Reusable containers + tech-driven circular economy for foodservice 

Looking ahead –  As always, we welcome your thoughts and reactions, and look forward to continuing to follow this sector together in the coming years. Reach out to us: Brita@vitavc.com and hello@techtablesummit.com. 

Fermentation May Be Centuries Old, But It’s Attracting a Whole Bunch of New Money ($1.69 Billion to Be Exact)

You know what they say: everything old is new brewed again.

At least that’s true when it comes to fermentation, that ancient food and beverage production process that is currently an overnight sensation. It is going well beyond the time-honored probiotic-rich staples of sauerkraut, kefir, pickles, miso, yogurt, and kombucha. The process of fermentation is being utilized in the creation of alternative, sustainable proteins to take the place of meat, eggs, seafood, and dairy. And it’s projected to get even more significant in its scope and revenue.

Data in The Good Food Institute’s 2021 State of Fermentation Industry Report points to the growth of fermentation as a traditional means to create probiotic-rich foods and plant-based products. According to the report, a total of $1.69 billion was invested in 54 fermentation-based startups in 2021.

Other data from GFI’s report:

  • Fifteen known startups dedicated to fermentation for alternative proteins were founded in 2021, along with new suppliers focused on fermentation-enabled alternative protein ingredients.
  • Eighty-eight known companies are now dedicated to fermentation-enabled alternative proteins, increasing 20 percent from the number of known companies in 2020.
  • 2021 saw the first growth-stage fundraising in the fermentation industry, including three deals >$200 million.

It’s important to understand that fermentation is not a single process but is three separate processes. Traditional fermentation (used to make pickles, kombucha, and sauerkraut) uses live organisms (such as the fungus Rhizopus to make tempeh or a SCOBY to brew kombucha) to modulate ingredients to create a product rich in flavor and texture. One established company, Miyoko’s Creamery, uses fermentation to make its line of alternative protein dairy products.

 A second process, biomass fermentation, takes advantage of the properties of certain microorganisms that quickly create large quantities of protein. The resulting protein can be used as a standalone product or an ingredient, which is the focus of most companies in this area. An example of a company employing biomass fermentation is SACCHA, a  German company using spent brewer’s yeast to create an alternative vitamin-rich protein that can be used to develop animal-free metal. Colorado-based Meati Foods uses mycelium (a mushroom root) to create a fibrous material that resembles meat.

 Precision fermentation, the third method, is perhaps the segment in this area with tremendous potential and is a focus of major investments. In precision fermentation, microbes create “cell factories” to build specific functional ingredients. Precision fermentation can produce enzymes, flavoring agents, proteins, vitamins, natural pigments, and fats. EVERY Company is an example of this process in which precision fermentation creates a substitute for traditional egg whites.

The GFI chart below shows the different types of fermentation as they relate to alternative proteins and highlights different possible products enabled by each.

One of the most significant stumbling blocks for the more advanced fermentation methods is the buildout of large-scale facilities to tackle production. A growing number of companies are in the process of recently completing or midst such construction, which points to 2023 as a timeframe in which production could begin to fulfill a growing market.

GFI’s report points to these as examples of completed projects and ones in the process of buildout:

  •               The Protein Brewery, Netherlands, completed 2021
  •               The Better Meat Co., California, completed in 2021
  •               Nature’s Fynd, Chicago, targeted for 2022-2023
  •               Mycorena. Sweden, expected to be completed in 2022
  •               Solar Foods, Finland, to be completed in 2022        

 With all the noise about the more advanced forms of fermentation, the value and growth of products in the “traditional fermentation” space have been overlooked. The kombucha market has skyrocketed with a focus on health, especially during the COVID-19 scare. According to Absolute Reports, the global Kombucha market size is estimated to be worth $2.1 billion in 2022 and is forecast to be $6.1 billion by 2028, with a CAGR of 19.7%.

 And an old fermented standby, sauerkraut, also brings in big dollars. According to Verified Market Research, the sauerkraut market was valued at $8.7 billion in 2019 and is projected to reach $14.1 billion by 2027, growing at a CAGR of 5.74% from 2020 to 2027.

Why “HOW” Is The Next Big Frontier In Food Marketing

The organic food movement was born way back in the early 1900s as a response to the shift towards synthetic fertilizers and pesticides in the early days of industrial agriculture. However, it wasn’t until 1972 when John Battendieri founded Santa Cruz Organics and marketed some of the first packaged organic products. And it wasn’t until 2002 when the USDA adopted national standards for organic products (National Organic Program). This new USDA designation served to usher organic into the mainstream and by the mid-2000s, organic food sales entered a rapid growth phase, increasing by roughly 17-20% per year (compared with 2-3% for conventional food sales). Today, the organic market is a massive 14 billion dollar-a-year industry that continues to grow. Even large corporations such as Wal-Mart are now offering organic choices to their customers.

Ultimately, people wanted to know what was in their food and, more to the point, they wanted to feel good about it. They wanted food to be natural and non-artificial, the way nature intended.

Having satisfied concerns about ‘what’ was in their food, the next question for many of these mainstream consumers became ‘where’ – and quickly, the local food movement exploded. We now see the “local” designation everywhere, from restaurants to grocery stores. Walk into any Sweetgreen, and you’ll see a list of the local farms which have produced all of your salad’s ingredients. And like organic, local is great, the food is fresher and more sustainable.

However, with the ‘what’ and the ‘where’ boxes checked, it’s fair to wonder what the next big question for the more conscious food consumer is going to be. I’m betting it’s ‘how’ — and ‘how’ is about to go mainstream in a very big way.

One of my “aha” moments came during the most recent Super Bowl. Alongside your standard advertisements for new products (GM EV car batteries, 3D Doritos) and tried and true services (Rocket Mortgage, Uber Eats), there was a somewhat unusual yet fascinating ad from Chipotle Mexican Grill. The spot, titled “Can a Burrito Change the World”, featured no new product, and in fact, it barely featured Chipotle at all. In the ad, a young boy asks the question, “What if this [his burrito] could change the world?” The commercial then rapidly tracks the burrito back through the food supply chain, through the planting, watering, growing, shipping stages, and touching on related topics of healthy soil and carbon emissions. The ad ends with the words (notice the “how’s”), “How we grow our food is how we grow our future” — and if that sounds serious, that’s because, well, it is!

The world population is increasing — rapidly. There were 5.4 billion people in 1991, there’s 7.9 billion people currently, and we’re projected to reach 9.9 billion people by 2051. In other words, we’re well on our way to doubling the global population in a period of just 60 years. That’s a lot of mouths to feed, and with the FAO estimating that 1/3 of all food produced globally is lost or goes to waste, it also comes at a huge cost to the planet.

How huge? Roughly 8-10% of the world’s greenhouse gas emissions (GHGs) comes from food waste. In fact, if food waste were a country, it would be the 3rd largest emitter of GHGs behind only the US and China.

Therefore, reducing food waste and maximizing efficiencies within the food supply chain is not only critical to feeding our expanding global population, but it’s also a key factor in fighting climate change and saving the planet. Which brings us back to the conversation of ‘how’. Or again, as Chipotle posited, “How we grow our food is how we grow our future”.

Thankfully, the ‘how’ conversation now carries some hope thanks to some incredible change and innovation happening across the food world. From modern vertical farming to booming urban agriculture industries, we’re learning how to grow food locally, more efficiently, and more sustainably. The startup company I helped co-found, Hazel Technologies, has developed solutions to safely and effectively extend the shelf life of produce by controlling the atmosphere around the produce during its shipping process. The result? Shoppers get to buy fresher, longer-lasting produce, food growers net bigger profits, and the environment sees less food waste. This year alone Hazel is projected to save over 500 million pounds of wasted produce — and we’re just getting started.

Fresher, longer-lasting produce that also benefits the environment would seemingly be a hit with the same customer base that buys organic and local, and in fact, that’s exactly what we’re starting to see on the marketing front. Some of the largest farming companies in the world like Mission Produce (the world’s largest avocado distributor) and Oppy (Canada’s largest fresh produce distributor) are now promoting the use of Hazel’s technology in their supply chain. These market leaders see Hazel’s benefits as a major selling point for environmentally conscious consumers — or even just for those who want longer-lasting produce.

From grocery store shelves to Super Bowl ads, it’s clear that ‘how’ is emerging as the next big frontier in food marketing. Case in point, this year’s CES conference, the most influential tech event in the world, will offer Food Tech as a featured part of the conference for the first time ever. Conference attendees can expect to see an incredible showcase of innovation with much of it dedicated to ‘how’ topics like growing, production, and sustainability.

Producing enough food to feed a growing population without over-taxing the planet is going to be one of the world’s biggest challenges in the coming years, but through innovation it can be done. It all boils down to ‘how’.

This industry perspective was written by Pat Flynn. Flynn is CMO and cofounder of Hazel Technologies, a food tech startup that develops products that extend the shelf life of produce.

Perdue Is Putting Birds Out to Pasture With Solar-Powered Mobile Chicken Coops

With more than $7 billion in annual sales, it would be easy for Salisbury, MD-based Perdue Farms, a top 10 domestic poultry producer, to focus on business as usual. Instead, the company looks to the future and understands its vision must go beyond simply putting broilers, wings, and chicken breasts in supermarkets and then on consumers’ dinner plates.

In launching its expanded pasture-raised program, Perdue is putting into play a clever piece of technology that benefits consumers, the environment, and, of course, its birds. At its 6th Annual Perdue Farms Animal Care Summit, the company unveiled its solar-powered mobile chicken coops, which it believes will play a key role in its future.

Ryan Perdue, VP, and GM of Perdue’s pasture business explained how the solar-powered mobile chicken coops operate and how they will lead to more sustainable farmland and a healthier product for consumers. Perdue’s commitment to the pasture-raised part of the business was further fueled by its December 2019 purchase of California-based Pasturebird, a firm whose mobile chicken coop took the pasture-raised process to a new level. The acquisition made Perdue the largest producer of pasture-raised chickens in the United States.

While a seemingly subtle distinction, the change in location yields significant benefits. As Perdue explained in an interview with The Spoon in advance of the announcement, a mobile, solar-powered chicken coop houses 6,000 birds which is 75% less than a typical bird house. It is a floorless building, 150 feet by 50 feet in size, and via a solar-powered engine, it moves 50 feet per day.

Perdue says the chickens are offered a new, fresh bounty of grass, insects, flowers, and grains at each new pasture location. While the chickens are not labeled organic, there is a significant increase in the organic matter they eat when presented in a new feeding area each day.

Perdue says that rotating the pasture areas creates a “virtuous cycle” where there is less erosion from rain, and by having the land rest, grass and flowers grow back even more bountiful than before.

While much of the process is automated, farmers will be hands-on overseeing the movement of the mobile coops.

“There are major benefits to the consumer,” Perdue adds. “A pasture-raised bird has less saturated fat, is more nutrient-dense, and higher in Omega-3.”

Perdue Farms is not disclosing how many solar-powered mobile coops it currently deploys or a schedule as to when its poultry-raised product will be widely available on supermarket shelves. Because it is a premium product, pasture-raised chicken commands a higher price; however, Perdue reports, “as the company finalizes price points, Perdue will not sell its pasture-raised chicken at a profit.”

At the time of Perdue’s purchase of Pasturebird, several smaller producers of pasture-raised poultry, primarily sold at farmers’ markets and specialty grocery stores, feared that the deal would put pasture-raised poultry out of the hands of independent farms. Based on Perdue’s acquisition of Coleman Natural Meats in 2011 and Niman Ranch in 2015, the company has grown more than in revenue and product lines.

In an interview with The Counter.org, Lauri Torgerson-White, senior animal welfare specialist with Mercy for Animals, suggests Perdue has learned a lot from companies like Niman Ranch, a pioneer in progressive farming. “Most companies, like Tyson, blow us off. We’ve done multiple investigations of their farms, and they refuse to talk to us,” she says. “But when Perdue learned what was going on, they reached out to talk to us, and since then, we’ve had a really positive relationship with them. Every year they’re doing more to improve the welfare standards on their farms. It’s been a very, very good, cooperative, productive relationship.

Let Us Introduce You to Lemna, an Excerpt “Technically Food: Inside Silicon Valley’s Mission to Change What We Eat”

The following is a excerpt from the new book, Technically Food: Inside Silicon Valley’s Mission to Change What We Eat by Larissa Zimberoff, out June 1, from Abrams Press.

The Promise of Tiny Things

“Look for the leaning white mailbox,” Tony Martens wrote over email. I turned onto a dirt road with potholes, coming to a stop near a mobile office trailer. In the distance were the hills of northern San Diego. Behind the offices I could see several tattered-looking, plastic-covered hoop houses. Martens walked out with an open and inviting grin, and welcomed me to their new digs: “We just rented these.” The founder towered over me as he pulled up his jeans with his wrists. His excitement was palpable. Maurits van de Ven, his co-founder, walked out of a door with a wet head, holding a plate of broccoli and fake meat. I tried to determine who was the science guy and who was the business guy, but I couldn’t tell. While Martens talked about how they got from Amsterdam to a dirt road in northern San Diego, California, van de Ven ate his lunch.

Lemna

Plantible Foods grows lemna—a tiny, floating aquatic plant—not quite an alga, but a bountiful source of RuBisCO. In photosynthetic plants, RuBisCO is the enzyme responsible for the first step in carbon fixation, whereby carbon from the atmosphere is taken in by plants and converted into other forms of energy like glucose and protein. Lemna, which is used in Detroit-based Nonbar, is 40 to 45 percent protein. RuBisCO is the most commonly found protein source in the world. Despite being eaten by birds and aquatic animals, in some places wild-growing lemna is considered a noxious weed—like kudzu—because it can completely cover a body of water and hinder the growth of other plants. But growing it for its protein, and for humans, has potential, according to these founders.

“The cool thing about RuBisCO is that it behaves like an egg white, whey, or casein,” Martens said. “You can create cheese, dairy, or meat-like textures more efficiently, and at a much lower concentration than soy, pea, wheat, rice—you name it.” The problem was that in the more common sources, “green leaves that we can chew,” growers don’t want to isolate molecules from foods that are already an easy sell—such as kale, spinach, lettuce. I was beginning to see the challenge. Waste streams from farms, like broccoli leaves or carrot tops, were another good source for RuBisCO—but getting a consistent, clean supply is an obstacle that would shift seasonally.

It says a lot about the level of excitement in an industry that two thirty-year-old entrepreneurs left Amsterdam (where they were surrounded by water), and moved to northern San Diego (mostly sand) to launch a business growing tiny aquatic plants (that need water), and which will somehow replace eggs in baking or milk in yogurt. The buzz in the food world—a mix of Gold Rush enthusiasm and activist sweat equity—is due to a mix of two things: investor wealth coming primarily from Silicon Valley hunting for the next unicorn, and earnest zeal for saving the planet. While our established food system had the brain- power, labs, and financials, big corporations had little motivation to look for alternatives. To believers in conventional or industrial agriculture, Earth’s resources are endless. According to then-President Trump, climate change doesn’t exist. Thankfully, there are many who do believe in climate change and are paying attention to the near constant wildfires, melting icebergs, and warming oceans that have inspired a whole swath of food companies with different goals. It’s worth noting that Big Food is watching, and buying up New Food, which may either squash all this ingenuity and do-goodism or allow it to prosper.

Apple Green

Lemna is green like a perfectly polished Granny Smith apple. In the hoop house at Plantible, it floated quietly atop an oval-shaped pond as paddle wheels circulated the water and air breezed by. Plastic wall coverings kept the temperature warm and humid inside. A drip-drop sound somewhere added to the meditative feeling I had gazing down at tens of thousands of wall-to-wall, double-leafed plants. “It’s hypnotic,” I told the pair. They laughed. I wasn’t the first to make this observation. “Can I taste it?” “Sure,” they said. I dipped my forefinger in and brought it back up coated in watery green fragments. It looked like broken-up edamame. I put it in my mouth. It tasted like iceberg lettuce or the stem of a tulip, which I’ll admit I’ve also tasted—watery and crisp.

“We’ve looked at basically every green leaf there is,” said van de Ven. “From alfalfa to chlorophyll containing algae that all have RuBisCO. Then we looked into the duckweed space,” he said. I took a moment to consider the “duckweed space.” Once propagated, the organism keeps growing itself, giving Plantible a self-perpetuating supply chain with no downtime. We walked through a few hoop houses, which the pair inherited from a company that went belly-up after trying to make a go at growing algae commercially. (See: believers!) Then Martens led me over to the protein processing area—another room on wheels.

Lemna protein powder

Plantible’s frugality was the antithesis of the startup I worked for in the late nineties during the Internet bubble where we played Foosball and sat in overpriced Herman Miller Aeron chairs. In addition to scoring property with eighteen hoop houses on it, and leasing cheap pre-fab offices, Plantible has economized. Instead of fancy microfluidizers that cost the equivalent of a new car, they use a blender. “It’s hard to compete with the Vitamix,” said Martens fondly, slapping the gadget on its side. Once whipped up, the green slurry went into what looked like a swimsuit dryer, the kind that eats your drawstring in ten seconds flat. Inside the spinner, protein and fiber were separated. Then, with the use of heat, the chlorophyll (the green pigment) was removed; finally, the polyphenols (the flavor) were removed using activated charcoal. The end product is a white, flavorless protein powder that Plantible can sell to food manufacturers. As for the polyphenols and chlorophyll, the startup is attempting to find ways to sell them off—possibly to nutraceutical companies. For now, the extraneous flavor and color found in lemna remain unrealized waste streams.

This economy, however, means that Plantible is stuck shipping small amounts it can produce in its own lab to eager companies that want to test its protein. Many New Food companies struggle with whether to supply ingredients commercially or make their own consumer-friendly products. For now, Plantible is focused on scaling up its protein production. “Every day I get, like, twenty emails asking for samples,” said Martens. “And we’re like, OK, we need to keep the samples for ourselves so that we can develop our own products.” Yogurt was high on the list, but that’s a competitive area of the supermarket. As an egg replacer it may have more luck.

Six months later I checked back in with Martens. It was July and the coronavirus was raging across the United States. Despite the pandemic, Plantible had closed a $4.6 million round of funding in April. The founders had rented RVs and were living in them on the property. The team had grown and was testing different species of lemna for growth rate and protein content. While Martens had finally swapped out his beloved Vitamix and swimsuit dryer for a colloid mill and centrifuge, Plantible was still producing less than one kilo a week. In 2021, they hope to have a pilot plant that can produce ten kilos a week.

When Pat Brown, the founder of Impossible Foods, first began making his now famous burger patties, he used RuBisCO as one of his ingredients. “It worked functionally better than any other protein, making a juicy burger,” Brown said. The problem, Brown told The New Yorker, was that no one was making it at scale. The eager Dutchmen from Plantible are betting they can prove Brown wrong, and the R&D team at Impossible even has a small amount of Plantible protein powder to test.

To get to the point of creating protein for just one customer, for instance Impossible Foods, Plantible would need more of everything. “Let’s say [Impossible] needed one thousand tons of RuBisCO protein per year. That will mean that we need to operate two hundred forty acres,* which represents 0.0003 percent of the soybean acreage in the US.” These were all estimates, but for now Plantible is operating on a two-acre farm with only one acre covered in soothing, hypnotic lemna.

If lemna can succeed where algae so far haven’t, perhaps the business model will help propel the entire industry? Whether it’s as a protein source, or a new food colorant, algae is both promising and vexing, which brings me back to its complicated status for entrepreneurs. It gets investment dollars, but not nearly the same levels of the other food-tech in my book. Investors say they want to fight climate change, but the money rarely funnels down to floating green bits. In November 2020, Jeff Bezos announced the winners of a $10 billion climate fund. None of the winners are looking at the food supply. Nonetheless, like the passionate founders I met, I am hopeful for the future of algae. In a vote of confidence in algae as a climate-friendly solution, the US Senate added the organism to its 2018 farm bill. Upgraded from a supplement to a crop, algae was granted a range of support aimed at promoting its use as an agricultural product—from crop insurance for algae farmers to the establishment of a new USDA Algae Agriculture Research Program.

While our own protein sources languish in the familiar, cows’ diets are proving far more adventurous. UC Davis is running pilots expressly looking at ways to introduce seaweed to cows’ diets to reduce the amount of methane they produce. It has run trials with both dairy and beef cows, and the results are compelling. Preliminary results have been shown that adding a small amount of Asparagopsis armata (red seaweed) lowered enteric fermentation, aka cow burps, which is what releases methane into the atmosphere. Even a tiny amount works. A diet of just 0.5 percent seaweed led to a 26 percent decrease in methane, and a one-percent seaweed diet produced 67 percent less methane.

Albert Straus, founder of Straus Family Creamery, and owner of an organic dairy farm in Marin County, California, received a USDA National Organic Program waiver to run a six-week experiment feeding his dairy cows a seaweed supplement from Blue Ocean Barns. Straus thinks that cows are essential to reversing climate change, and hopes to prove that by getting his farm and dairy to carbon neutral by the end of 2021. Whether an umami-rich diet changes the taste of steak or milk remains to be seen, but at some point in the future, one that isn’t just in science fiction fantasy, the seaweed won’t feed people but will feed livestock instead.

Update: Since reporting my book, Plantible Foods says it’s increased production capacity at its two-acre pilot facility by 150x. Currently, it is working with a small group of commercial partners to launch its lemna-based protein, and preparing for commercial scale up so that it can fulfill several commercial contracts.


*Two hundred forty acres is equal to just under 182 football fields, or 3,722 tennis courts.

Larissa Zimberoff is a freelance journalist who covers the intersection of food, technology, and business. Her work has appeared in the New York Times, the Wall Street Journal, Bloomberg Businessweek, Wired, Time, and more. She lives in the San Francisco Bay Area.

Excerpt from the new book TECHNICALLY FOOD: Inside Silicon Valley’s Mission to Change What We Eat by Larissa Zimberoff published by Abrams Press.

Photos courtesy Plantible Foods.

© 2021 Larissa Zimberoff

The Mars Farm: a Not-Too-Distant Reality?

The following is a guest post written by Jonathan Hua of Scrum Ventures.

The disruptive impacts of the COVID-19 pandemic on the world’s agricultural systems have been broad and varied. And they follow several years of challenging production and market conditions such as disruptive weather events and poor planting conditions. Although the pandemic exposed weaknesses in current food production processes, the food industry had a banner year in 2020. 

In the first few weeks of 2021, we’ve also seen several major VCs, entrepreneurs, philanthropists and even major corporations take an interest in new ways to produce food. They’ve been launching climate and sustainability funds focused on areas such as regenerative agriculture, sustainable food, renewable energy, healthcare and innovations in new materials, infrastructure, and water. At the same time, the past few years have brought significant progress in space travel, space tourism and exploration missions to the moon and Mars. 

These advancements and focus areas have many putting two and two together and asking: is it possible to produce food in space? If, as expected, one day humanity exhausts its natural resources on Earth and has to consider surviving elsewhere, we’ll have to answer many questions including how to grow food on space stations, in spaceships, and even on a completely different planet. 

Six-figure salads?

It isn’t too far-fetched to imagine space as the final farming frontier. There’s already a space garden, the Vegetable Production System, Veggie, on the International Space Station (ISS). Although Veggie is only about the size of a carry-on bag, it helps NASA study plant growth in microgravity and provides astronauts with nutrients. The problem? At roughly 16 pounds, Business Insider estimates Veggie costs $145,600 to $690,900 to transport onto the ISS—that’s an expensive salad. 

Veggie is just one example. The price of eating in space is prohibitively costly. This Columbia Tribune article estimates that it could cost as much as $18,000 just to send one 16-oz bottle of water weighing about one pound into space. Assuming some economies of scale and the unit economics of sending many months’ worth of food in a single trip, it’s probably safe to assume that it would cost anywhere between $5,000 to $10,000 per astronaut per meal.

Costs aren’t the only issue. There are also space-related constraints such as microgravity and lack of refrigeration and water. Food choices are limited as well. Most items have to be calorie-dense and have extraordinary shelf lives. 

The potential of vertical farming

Despite the challenges, finding a more sustainable food production system locally in space would be an endeavor with both immediate and long-term benefits. Vertical farming offers a viable solution to this food production problem. Controlled-environment agriculture promotes growth of veggies, herbs, and some fruits in limited spaces. In addition, vertical farms are optimized for year-round production and are less susceptible to extreme environmental conditions. 

Next, because vertical farms are closed systems, water supplies can be filtered and recycled to maximize efficiency. Sensors and software within the vertical farms can also regulate water usage. And, AI can optimize water usage to prevent over or underwatering. Finally, because vertical farms are highly automated, there is the potential for high productivity. 

This all sounds too good to be true, so what’s the catch? As with many things space-related, vertical farms are cost-intensive and limited in scope. Unless progress is made on both fronts, it will be challenging to even start to consider building them at any kind of scale in space. The long-term decline in cost of technology, as well as improved yields, will drive the success of a vertical farming operation in any location. If we can successfully pull this off, vertical farms will provide additional benefits that are unrelated to food consumption. For instance, plants produce oxygen that we will need to breathe in extraterrestrial climates. 

Drilling down: vertical farming by the numbers

If we’re going to start farming in space, we’ll need to understand the numbers in depth. Here’s what we’re seeing from some of our latest research. 

  • Facility costs: Building a vertical farm could cost upwards of $40M for each facility. According to this AgFunder article, AeroFarms’ facilities cover 70,000 square feet of space and will be able to grow 2 million pounds of greens annually. Vertical farms built in shipping containers cost quite a bit less. Usually, containers cost somewhere in the ballpark of $75,000 to $100,000, but are much smaller and will produce less food, so multiple containers would be required to scale up this kind of vertical farming system that could quickly increase costs. Location of real estate will also affect these costs.
  • Labor costs: Larger-scale vertical farms employ anywhere between 25-50 employees for each facility. Assuming most of these employees are being paid somewhere between $40,000 to $50,000 per year, that’s $1M to $1.25M in additional costs for labor to maintain these farms. The number of employees would need to be scaled down quite a bit in space, but the salaries would probably be higher as well.
  • Resource costs: The cost of water can be justified by recycling the water that isn’t used for the crops or lost via evaporation, but energy costs are currently one of the highest expenditures for vertical farms. Lots of LED lights are required to grow food in a vertical farm. Some estimates put it at around 3,500 kWh of energy a year to produce just 1 square meter of lettuce. 
  • Last-mile costs: Depending on size of loads, locations, and other factors, transportation and delivery costs can be quite significant. In space, vehicles would be in limited supply, and would need to be modified to handle different gravity effects and refrigeration, not to mention likely very high electricity or fuel costs to run. This cost could be quite difficult to justify.
  • Limited variety: Vertical farms are optimized for growing microgreens, herbs and a few types of fruits.

How to Make Vertical Farming More Feasible and Cost-Effective

Here are some of the strategies we need to consider to make vertical farming in space feasible.

  • Make real estate space available: We’ll need to make real estate space more readily available or subsidize prices for larger-scale vertical farm development.
  • Develop more tax incentives for vertical farming companies: Tax incentives will encourage companies to build, and decrease risks for investors who want to support the space. Right now, it’s primarily huge funds like SoftBank’s Vision Fund that have the capital and risk appetite to support the vertical farming space. Much more investment is required to bring vertical farming to a more commercial scale and to encourage other entrepreneurs to develop the complementary technologies needed to make it more cost-effective long-term.
  • Innovate LED technologies: Lighting accounts for the most significant energy use in a vertical farming system. It also has significant impacts on crop yield and time to maturity. Like the computer chip industry, innovations in LED technology will need to focus on stronger outputs in smaller and more energy-efficient form factors. Lights that can customize intensity for each plant and improvements in energy efficiency will be necessary.
  • Adopt renewable energy sources: Vertical farms should use more renewable energy sources like wind to help decrease energy unit cost, if the option is available on another planet. If there’s a way to harvest the sun’s energy more effectively on Mars, that would help as well. If sun exposure is weak on Mars, figuring out how to concentrate the sun’s rays and transmit them to use as energy on a vertical farm could be a worthy undertaking. 
  • Decrease the cost of hydroponics or aeroponics: There is no soil on the moon or on Mars, meaning that vertical farms in space will require the use of hydroponics or aeroponics, both of which can grow crops without soil by substituting soil with a mineral nutrient solution. Decreasing the cost of this growth medium, enhancing it to optimize yields and nutrition, or otherwise making it easier to produce at scale will help make vertical farming more feasible. Relying more on an aeroponic strategy that focuses on using nutrient-saturated water and mists rather than a more concentrated solution is likely the best strategy. 
  • Improve AI/IoT for greenhouses and vertical farms: Continuous monitoring and control of both environmental variables and crop growth are essential to the success of vertical farms. There are already many technologies for this, but more data and better algorithms will lead to better sensors and devices and more efficiencies that can cut down costs. Improvements in automation due to better AI/IoT can also decrease labor costs.
  • Choose crops wisely to begin with: At least initially, we’ll need to focus on crops with shorter production cycles and higher yields to cut down on resource requirements and use. Crops with year-round consumer demand should also be prioritized over more seasonal items to improve cost efficiencies.
  • Locate smartly: Make sure the vertical farms in space are built as close as possible to the densest population colonies to minimize transportation and logistics costs.
  • Build to withstand harsh environments: In space, there are other considerations that could make or break any attempts to implement vertical farms. For one, the facilities have to be able to withstand the harsh environmental conditions of the local terrain and climate. Next, it is unclear how differences in gravity, adverse environment and radiation exposure will affect crop yields, nutrition or even taste. Also, there’s the issue of food safety. New environments bring new microbes, bacteria and other organisms that could make food unsafe or toxic for human consumption. These are just a few of the many additional variables that will need to be considered. 

As we move toward developing vertical farms in space, the opportunities for budding founders and entrepreneurs to build successful space-focused food businesses are galactic. My hope is that we proceed with care and make sure our presence there does not defile the most pristine areas of the universe. We’ve already polluted it with space debris that we need to clean up. When it comes to space farming, humanity will need to work together to protect the environment that we will likely one day travel to and inhabit.

About Jonathan Hua

Jonathan is an investor with Scrum Ventures where he also helps run Scrum’s Food Tech Studio – Bites! a global program for startups of all stages who share a common vision of solving key challenges plaguing our food supply chain today, such as safety, waste reduction, and health.

Connecting Demand to Supply: 2021 Food Supply Chain Tech Outlook

This is a guest post written by Seana Day and Brita Rosenheim, Partners at Culterra Capital, an advisory firm focused exclusively on tech-driven innovation across the food system. You can also find their 2020 Farm Tech and Food Tech Industry Landscapes and analysis at Culterra Capital.

We have been covering the Food Tech and AgTech sectors for the past decade, yet COVID-19 thrust the food supply chain into the spotlight as we could have never anticipated. Against the backdrop of the current pandemic, as well as nearly $500 billion in annual food waste occurring from food harvest to distribution and retail globally, it was time for a dive deep into the technology that will shape the food supply chain in 2021 and beyond. 

For those also following the tech-driven food sector it is no surprise that, to-date, most investment and innovation fanfare have been focused on the food system end-points of AgTech and Food Tech. However after our recent odyssey into the Food Supply Chain Tech category, it is quite clear to us that there is a tremendous, untapped opportunity for vertical-specific technology companies which are focused on serving the unique needs of the food supply chain.

It is with this sense of urgency and optimism about new frontiers of innovation, agility and investment that we launch Culterra Capital’s inaugural 2021 Food Supply Chain Tech Landscape:

Click image to enlarge.

For the purposes of this analysis we have highlighted a handful of predictions for the year to come, as well as emerging themes and key innovation trends that we believe will continue to impact the four supply chain pillars (Supply, Production, Logistics/Distribution, Demand).

While we cover a number of digitalization-driven opportunities for food system participants to strengthen their resilience, profitability and agility, we will reserve deeper dives into the sector-specific drivers and practical adoption obstacles in later reports. But first, a brief primer on navigating the landscape before we dig into our key takeaways below:

How to Navigate the 2021 Food Supply Chain Tech Landscape

  • “Food Supply Chain Tech” here generally refers to the technology enabling the processes and movement that occur between the farm gate and the loading dock/back door of the grocery retailer/food service provider. 
  • This is a heatmap, not a comprehensive catalog: While clearly not exhaustive, this map is meant to illustrate the layers and variety of technology solutions, early stage to mature, and primarily enterprise or B2B-focused. We have generally filtered the companies based on their food and ag customer base, and while mainly US-focused, have included a handful of global companies. Our FarmTech (inside the farm gate) and Food Tech (retail/food service/D2C) landscapes cover the other end points of the food system.  
  • IT-Driven Focus: The landscape focuses predominantly on digital technology-related companies, and although hardware is (mostly) unplugged from this landscape, there is a strong recognition that hardware is an essential part of the technology landscape, especially as it relates to key trends around Industry 4.0 and networked equipment.

In order for us to drive down and understand the many, extraordinarily complex functions involved in the food supply chain, we have organized the market around four key pillars of activity: 

  1. First Mile (Supply)
  2. Production / Food Processing (primary and secondary)
  3. Distribution and Logistics
  4. Retail / Food Service / D2C (Demand)

Across the bottom of the landscape, we included value chain players which integrate across multiple pillars.  

Is Data Automation Bringing Sexy Back?

The overall food and ag industries are among the lowest penetration of digitalization relative to every other sector of the global economy. And while it is well understood across the food industry that modernization and investment in data infrastructure represent a necessary and essential first step, the challenge of “going paperless” is still a real hurdle.

Yes, we understand that “going paperless” is less sexy than, perhaps, micro-fulfillment robotics. But increased workflow and data automation solutions in the food supply chain holds significant power to help the food supply chain leapfrog into digitalization.

Data automation leverages ML/AI to digitize and automate document processing and manual back office processes like managing vendors, suppliers, contracts, key communications, appointments, and so on. Because of the highly fragmented nature and sprawling ecosystems, data automation brings critical resource management, accuracy and most importantly, an underlying digital foundation to the food supply chain. 

Examples of workflow and data automation solutions focused on the food sector include Proagrica, Big Wheelbarrow, and Wholesail. 

A digital foundation is also a key enabler of business innovation for participants up and down the Food and Ag system, like data-driven demand prediction. For example, today our food system is fundamentally supply-driven. Crops or livestock are harvested at a point in the season, and the producer is a price taker. Producers have long sought to overcome this risk / reward imbalance by vertically integrating, and we continue to see that from all sides whether it is Kroger or Walmart integrating their dairy supply chain, or Driscoll and Naturipe branded berries.

Those players who have access to demand data from the retailers, consumers and foodservice outlets, and can control several steps in the supply chain, can better understand when and where to sell, as well as how to maximize their profit through demand insights. 

Similarly, with better demand data flowing into the distribution, logistics and production pillars, companies can better manage over / underproduction and reduce waste, while also improving the utilization of their own assets (equipment, labor, utilities, storage, etc.). 

MOM Knows Best?

Mostly overlooked by venture capital investors, there has been a dearth of significant outside investment in food production and manufacturing business tools, like Manufacturing Operations Management (MOM) software, which represents a collection of systems for managing end-to-end manufacturing processes and automation. The core MOM subsystems include: 

  • MRP (Material Requirements Planning):  packaging, raw material planning, procurement scheduling, etc.;
  • MES (Manufacturing Execution Systems): used to track and document the transformation of raw materials to finished goods; and
  • Other categories of Enterprise Asset Management which fall into this broader manufacturing tech category. 

Largely the domain of established and legacy software companies, vertical, food-focused MOM and Enterprise Resource Planning (ERP) systems are becoming increasingly recognized for their potential to supply foundational, batch-level data for AI/ML-driven analytics, more nimble food production processes, greater workflow automation, optimization of procurement, and so on.  

At the same time, the broader technology landscape is shifting from a traditional manufacturing automation stack (ERP/MOM) to a IIoT stack (Industrial Internet of Things) which leverages a combination of app development, platform cloud, connectivity, and hardware. This intelligent manufacturing stack will be central to unlocking the promise of a more agile, visible and collaborative food supply chain.  

In looking ahead, it is important for tech innovators to understand both the complexity and opportunity stemming from ERP/MOM/IIoT stacks, as the critical data captured in these subsystems has multiple beneficiaries and is also poised to enable business model innovation across the value chain, from ag producers, to manufacturers, distributors and beyond. 

As an example, it is generally a challenge for ag producers to track and trace raw materials once they hit the processor (both primary and secondary). In food value streams like protein (animal) processing, automation and batch processing are hard to achieve given the nature of tracking disassembly (“primary” – one carcass that turns in hundreds of cuts or many SKUs) vs. assembly (“secondary” – a dozen ingredients combined into one product or SKU). 

However, increasingly sophisticated and connected MOM systems are beginning to deliver batch-level tracking which makes verification of farming practices (regenerative, non-GMO, organic, etc), genetics / genealogy or origin claims easier to authenticate.  

This is one of many examples that reinforces our belief that domain-specific manufacturing software and systems for the food and beverage sector are essential. The level of tracking complexity and data integration can be dizzying, but there are a handful of innovative companies that are building solid, scalable businesses such as Dairy.com, ParityFactory, Wherefour, and Food ID, among others in the space. 

The Cold Chain is Heating Up

As noted in The Spoon’s coverage, the pandemic shifted a large number of people to online grocery shopping, and many of those new online shoppers will continue to shop online. Notably, this surge in digital grocery orders also included more online fresh / perishables purchases, both in retail environments as well as direct to consumer (D2C). This growth is expected to continue even as grocery shoppers migrate back to in-store shopping. For context, e-commerce grocery is now expected to account for at least 21.5% of US grocery sales by 2025, (up from a pre-Covid prediction of 13.5%). 

We believe this increased demand will catalyze cold chain suppliers and 3PLs to meaningfully bolster their digital infrastructure and investment in tech solutions, as we have seen with high flyers like Lineage Logistics. They will feel greater pressure to adapt to the dynamic demands of buyers, such as faster speed of delivery, decreased waste, real-time inventory visibility and traceability of products. 

These objectives are not possible without integration and interoperability solutions which create the linkages necessary to overcome the massive amounts of existing siloed data. These solutions layer on top of existing supply chain planning, execution and equipment control systems, integrating them to further optimize for analysis and real time planning / visibility across various parts of the supply chain. 

Without harmonized data, the cold chain can’t truly unlock efficiency or capacity, nor adequately respond to supply-demand volatility. Tightly linked systems to share this data can have a significant impact on the shelf life of perishable products (reducing waste), the assurance of quality (product, producer or marketplace differentiation), and support agility in demand-driven forecasting. Examples of startups focused on providing innovative solutions in this sector include AgroFresh’s Fresh Cloud, Backbone AI, and Afresh.

Looking Ahead to 2021 

The food supply chain differs in some respects from our traditional understanding of Food Tech and AgTech because it encompasses industries with relatively well-established players and technologies, many of which are horizontal software (with a multi-industry offering) and logistics companies. Due to this, as well as the highly-regulated and labor intensive nature of the supply chain, historically it has been a more difficult industry for nimble start-ups to penetrate. 

Today, we see the majority of participants across the food supply chain setting the table with foundational data and digitizing basic workflows. This is the essential first step. Basic digitalization, strengthening collaboration tools, automating some data sharing, and looking for ways to streamline labor will be key themes in 2021.

To be sure, COVID-19 revealed accelerating demand for tech ready to scale (vs. new innovation). Yet that is not the end of the story. We see most of the exciting food supply tech innovation springing up around the perimeters of the landscape, particularly from analytics and strategy plays within First Mile (Supply) and Retail / Food Service / D2C (Demand).

For start-ups, those that can differentiate themselves with proprietary, unique data cleansing tools have an important edge. As we know from AgTech and Food Tech, this is one of the principal activities that many innovative companies spend vast amounts of time working on. The same holds here in the Food Supply Chain.

———-

Seana Day and Brita Rosenheim are Partners at Culterra Capital, and Venture Partners at Better Food Ventures, each with 20+ years of investment, M&A, and strategy experience within the food, ag and tech verticals. Their analysis on the Agtech and Food Tech sectors are regularly used by participants in the space to understand the quickly evolving landscape.

cow eating hay beside a farmer

Hybrid Farmers: Could Livestock Producers Expand Cultured Meat?

Cultured meat and alternative protein are out to disrupt the meat industry. But Future Meat‘s Chief Science Officer Yaakov Nahmias says the quickest way to achieve that goal is through the infrastructure that’s already in place, including farmers. Nahmias sees poultry, pork and beef producers as a critical partnership for cultured meat start-ups and the meat industry’s transition.

During an interview two weeks ago, Nahmias said he envisions a role for what he calls hybrid farmers: Traditional livestock producers who invest in a bioreactor, a large steel vat that maintains the environment need for cells to grow and divide, allowing them to culture meat. Farmers could continue to raise livestock and simultaneously take advantage of the efficiency and safety advantages of cultured meat, Nahmias told me in an interview. 

It takes between six weeks and six months for a chicken to reach market weight. Cattle require 14 to 22 months. But if a farmer were to invest in cultured meat, they could also produce a new crop of cultured meat every couple of weeks. Nahmias estimates that a bioreactor the size of a standard refrigerator could generate the mass of 100 chickens every two weeks. And farmers could easily vary the type of meat they’re growing from batch to batch based on demand. “You have the ability to do chicken today, pork for Christmas, and turkey for Thanksgiving and beef for Memorial Day,” he said. 

There will always be a market for traditional agriculture, but this is a way for farmers to diversify, Nahmias told me. On top of faster production and the ability to grow a variety of meats, cultured meat also has a shorter supply chain because there’s no slaughter step. Farmers could sell directly to processors and packers. And maybe most importantly, hybrid farmers would have access to a new customer base–those buyers looking for animal-free protein.

There’s also a safety and efficiency advantage to cultured meat. Viruses can do serious damage to a flock or herd before they’ve even been detected, costing producers months of work and investment. But bioreactors– at least the ones manufactured by Future Meat– will offer real-time detection. A contamination would cost a farmer a couple weeks instead of months or whole animals, Nahmias said. 

Culturing meat does have its limitations, like the fact that it’s not yet possible to produce high value cuts of meat like steaks, chicken breasts and pork chops in a bioreactor.  Future Meat grows muscle and fat cells in separate bioreactors and then combines them using extrusion technology to give the desired texture.  Other start-ups grow the fat and muscle cells concomitantly, but the outcome is the same: a ground product. There are companies developing ways to culture whole muscles, but that technology is a decade away from commercial application. 

Nahmias acknowledges that right now farmers feel threatened by the alternative protein industry and cultured meat. “But they are threatened the same way horse cart drivers were threatened by the car,” he said. The car was a major investment, but in the long term it offered greater financial stability. In other words, the mode of production might be changing, but there’s still room for farmers to be involved. 

Mosa Meat's steak tartare on white plate with garnishes

Cultured meat takes sides on CRISPR

In 2017, a patent assigned to Memphis Meats detailed a way to overcome one of cultured meats biggest obstacles. The startup would use CRISPR gene editing to create a small mutation in their cells. The mutation would inactivate two proteins and ultimately increase “replicative capacity of the modified cell populations indefinitely.” They had transformed unpredictable cells with a limited capacity into hyper-proliferative ones  equipped for industrial production.

Longevity and predictability are the obstacles all cultured meat start-ups face in the effort to bring production to scale. Commercial scale cultured meat will require a mass production of cells like no other project to date, but cells in question aren’t inherently capable of that kind of output. After a certain number of replications, the fat, muscle and connective tissue cells max out. They  begin to die off or lose control. Left to itself, cultured meat eventually becomes self-contaminating. 

CRISPR gene editing offers a work around, a cheap and accurate way to equip stem cells for industrial capacity and consistency. Muscle and fat stem cells that naturally peter out can be edited to divide forever. Induced pluripotent stem cells that easily veer off course can be reprogrammed to exclusively produce muscle cells, fat or connective tissue. 

“Technologies like CRISPR allow us to safely increase the quality of our cell growth, which means we will make meat that is tastier, healthier, and more sustainable than slaughtered meat,” Brian Spears, the co-founder and CEO of New Age Meats, told Business Insider last year. Ostensibly, genetic tweaks made using CRISPR could make industrial cell culture faster to market, more predictable, and more cost effective.

But while some start-ups make CRISPR gene editing intrinsic to their process, others are intentionally separating themselves from the technology. They’re concerned that genetically altering their cell lines could lead to regulatory hang-ups — if not in the US or Asia, then in Europe. They’re calling their cultured meat non-GMO.

Whether CRISPR is a GMO has been hotly debated since the technology was first adapted for research from bacterial defense systems. Unlike genetically modified organisms, which have had foreign genetic material inserted into their DNA and been edited in a way that couldn’t occur naturally, CRISPR alters an organism’s own DNA to exhibit the most desirable traits. 

“Scientifically I buy that it’s not a GMO,” Paul Mozdziak, a cell biologist at North Carolina State told me via Zoom, “but regulation is often based on more than science.” Mozdziak is also an affiliate of Peace of Meat, a B2B cultured meat company that’s decided against CRISPR. “Our profile is we are not going to do anything that can be construed in any way shape or form as GMO,” Mozdziak said.  The same is true of Mosa Meat, a cultured meat elite who produced the first lab-grown burger in 2013. The decision is partly because Mosa is in the European market which doesn’t have a favorable attitude toward CRISPR at all, said Joshua Flack, cell biologist and leader of Mosa Meat’s Stemness & Isolation team. But “It also makes scientific sense. It is a lot of work to engineer your cell lines in this fashion.There’s a lot of ground work in the beginning if you’re using CRISPR and engineering.”

For those that don’t go the CRISPR route, the key is identifying the optimal cell line, finding out exactly what those cells want, and then catering the entire process to them, Flack said. The non-GMO approach is about optimizing the process while CRISPR offers a way to “turn the thing on its head” by genetically optimizing the cell line.  

From a scientific standpoint, no one is challenging CRISPR’s potential. Mozdziak called it a “promising technology” for the entire industry and even expects US regulatory bodies to be fairly amenable to the technology. Meanwhile, Mosa Meat has invested in inhouse explorations using CRISPR for R&D purposes. “We have to understand the risks of not employing these strategies,” Flack said. “The potential upside is really massive.”

CRISPR could very well be the fastest and cheapest way to commercial scale, but it’s unclear how much that will matter in the long run. Which process will be first to market or which will be stalled in regulations? These questions are just proxies for the one question that we can’t answer yet. That is, what will people buy–and buy enough to disrupt the meat industry? Maybe this new age GMO debate ends like the last one: both sides proceed so customers have the option. But one thing is for sure, Flack said,  “if you can’t sell it at the end, the effort is wasted.”

UPDATE: An earlier version of this article contained a quote from Daan Luining, CTO of Meatable. For administrative reasons, that quote has been replaced with a quote from Brian Spears, CEO of New Age Meats, originally published by Business Insider.

New Report Calls Fermentation The Next Pillar of Alternative Proteins

A new report released today by the Good Food Institute adds a third pillar to the alternative protein sector alongside cultured meat and plant-based proteins: fermentation. 

In the last five years there’s been a “Cambrian explosion” of companies in this segment, Nate Crosser, start-up growth specialist at GFI and author of the report, told me in an interview this week. By mid-2020 there were 44 fermentation companies globally working on alternative proteins, up from 23 companies in 2018. 

“I was surprised to see how much traction was behind this segment, in terms of investment in particular,” Crosser said. Cultured meat gets all the press, but in 2019 fermentation-based protein companies raised 3.5 times more capital than cultivated meat companies, and in 2020 they’ve already raised $435 million of the total $1.5 billion invested in alternative proteins. 

Fermentation uses microbes to produce proteins and functional ingredients used in animal-free meat, egg and dairy products. Part of the allure to investors is that the technology is “commercializable today,” Mark Warner, a consultant on alternative proteins who specializes in scaling up fermentation commercialization told me in an interview on Tuesday. There are already companies and facilities using similar methods to mass produce enzymes. “The tech is generally proven. It’s the organisms that are being newly introduced.”

Because there are a myriad of organisms and approaches that can be used in fermentation, GFI breaks down fermentation companies into 3 categories in their report: traditional, biomass, and precision fermentation.

Traditional, as its name would suggest, refers to a long-established use of microbes to alter flavor, nutrition or texture—like the lactic acid bacteria used to make cheese or MycoTechnology’s plant protein with improved taste and functionality.

Biomass fermentation is all about mass producing protein. It relies on fast-growing, protein-dense microorganisms like algae and fungi. Meati uses this approach to make its mycelium-based steak. And last but not least, there’s precision fermentation, the process used to make Impossible Foods’ heme protein or Perfect Day’s whey protein. This approach, which can often rely on genetic modification, is used to produce highly functional proteins or ingredients that must be very precise but are needed in lower quantities.

The report is intended to give potential or existing investors an idea of the different approaches and state of the industry, Crosser said. Several major tech and agriculture players are already backing fermentation companies, including ADM Capital, Louis Dreyfus Co., Kellogg, Danone and Bill Gates-backed Breakthrough Energy Venture. Meanwhile major food and lifestyle companies like DSM, JBS, Novozymes and DuPont are working on in-house fermentation-derived alternative protein products.

But it may eventually take more than private funding if alternative proteins are really going to disrupt the meat and dairy industries, Warner said. Like with biofuels, alternative proteins may eventually require government funding to really take off.  “From my perspective, [this report] is going to be vital in framing the need for fermentation for investors,” Warren said, “but also public policy and any discussion around government funding.” 

While the entirety of alternative proteins industry is in a race to market, fermentation companies are expected to do more than join the contest. A high percentage of the fermentation segment is B2B, according to Crosser. They’ll be developing the components needed for cell culture and the ingredients needed for plant-based products.  “Their success is going to fuel the rest of the industry,” he said. “Fermentation serves as a force multiplier for the entire alternative protein sector.”

Investing into the Future of Restaurant Tech:  Navigating the “New Normal”

This is a guest post written by Brita Rosenheim, Partner at Better Food Ventures.

“Normal” noun: the usual, …typical state or condition.

As we have all experienced during this pandemic, we know that nothing has been “usual” or “typical”, particularly for restaurants as they have had to fight and innovate just to survive these last few months. The “new normal” is about change. To thrive in this fluid environment restaurant operators will need to accelerate pre-COVID digital trends, embrace new notions of what constitutes a restaurant, and look to technology to strengthen their brand and relationship with customers. 

Convenience reigns supreme: The shift to take-out/delivery will reshape the basic premise of many restaurants

Well before COVID-related shutdowns, the increasing customer demands for convenience had already fueled a major shift from dine-in to take out/delivery. In 2019, we reached the tipping point where off-premise sales (drive-thru, takeout, delivery, catering) represented a majority of U.S. restaurant revenues. Now, intensified by a decimated restaurant industry and an uncertain socially-distanced future, the growth of off-premise will only continue.

As restaurant operators increasingly respond to our “new normal”, we have seen many full-service restaurant concepts testing a more “fast casual” off-premise approach, with increased tech-focused integration, minimized employee/customer exposure, and a lot of creativity to inject hospitality into socially-distanced interactions.

The bottom line is that the restaurant experience – from QSR to Fine Dining – will increasingly no longer be confined to the four walls of a restaurant. We have reached an urgent point where the basic premise of dine-in restaurants must evolve in order to generate the sales volume and margins to remain financially viable. 

The Evolution of the Digital-Forward Restaurant: Integration is Key

Digitization alone will not save the restaurant industry, but it is becoming economically and operationally imperative to upgrade IT systems for more seamless integration across all digital channels. And with digital channels (online, mobile, app, and kiosk) representing only ~10% of total U.S. restaurant sales (for both on-premise and off-premise combined, pre-COVID), there is still tremendous opportunity to upgrade.

For example, integrating a restaurant’s digital channels provides the opportunity to increase first-party data capture, create operational efficiencies, target higher margin customers, better upsell and customer incentivisation, while also letting operators make better decisions based on the underlying connected data. 

That’s not to say digitization guarantees success. Adding new digital channels can also create operational bottlenecks, silo’d data, or added complexity/margin erosion via third party providers. In order to mitigate some of these key risks, operators are increasingly integrating digital ordering/delivery within the POS system, and driving orders via white label platforms. As most operators are now aware of, third-party aggregator platforms own the customer data through their platforms (not the restaurants), underscoring the importance for restaurants to integrate ordering/delivery through their own branded websites/apps.

Beyond updating the underlying IT-infrastructure, the new digital-forward restaurant experience also requires physical changes in both back- and front-of-house layouts to address congestion, capacity constraints and the added complexity of accommodating mobile customers and delivery workers. 

Physical characteristics of the new generation of restaurants will likely be smaller footprints, limited/no seating, separate larger areas and clear signage for digital/off-premise orders, as well as increased off-premise commissary/ghost kitchen prep for multi-unit operators. The customer experience will further be supported by dedicated employees for digital orders, increased mobile / kiosk order options, as well as touchless/frictionless ordering/pick-up methods using URLs, QR codes, or NFC tags.

Digitizing the Guest Relationship: Omnichannel loyalty will be a critical lifeline within a sea of aggregators and marketplaces

Hospitality and guest relationships are key reasons why many operators are in this business. However, it has become increasingly hard for them to own and manage a direct customer relationship. This is primarily due to content aggregators and ordering/delivery marketplaces steadily growing control over most restaurant/food reviews and direct ordering/delivery relationships.

Thus a strong, omnichannel loyalty platform is one of the last avenues for operators to own their customer base. Loyalty should be a critical area of investment, and successful operators will optimize their tech strategy to capture as much digital data as possible. 

During this new era of decreased order volumes and disconnected customer journeys, data-driven omnichannel loyalty will help operators uphold the brand, funnel customers into more profitable digital channels, and ultimately drive a richer relationship with customers by connecting all the dots across all touchpoints and interactions.

Automation and Tech-Driven Interactions: Will the Robots Take Over?

In short, no. We have seen the recent struggles of scalability by a number of fully robotic food solutions, due to the fact that labor/cost savings are rarely realized due to the complexity and cost of the technologies. 

However, in contrast to fully robotic food solutions, I do believe that this “new normal” will make specific task automation, voice assistance, and computer vision increasingly vital and prevalent across the industry. Adoption rates won’t skyrocket overnight, but they are absolutely escalating.

As restaurant operators seek to reduce employee/customer contact and offset workforce challenges, while looking to increase operational efficiencies, speed of service and quality control, they will look for technology partnerships to leverage robotics, automation, computer vision, and voice technologies. 

Some of my favorite solutions in this category include: precision preparation/cooking, smart IoT Kitchen Display Systems (KDS), voice- or computer-vision-driven inventory analysis, natural language drive-thru/phone ordering platforms, cashierless checkout, and food waste management technologies. Bolstered by the pre-COVID off-premise trends, “Smart Vending” is also on the rise; be sure to check out the recently published Smart Vending Machine Market Report by The Spoon.

Moving the Needle on Adoption: What’s Next? 

The net effect of the “new normal” is that it has yet to unleash any completely new, innovative concepts in restaurant technology. Instead we are seeing– or are likely to see– the accelerated adoption of innovations that existed pre-COVID that move restaurant concepts beyond their traditional four walls, and closer to the real digitization necessary to sustain financial viability in our shared new reality.  

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At Better Food Ventures, we believe technology will prove to be the single biggest catalyst to solving critical problems across the global food ecosystem, and we are particularly encouraged by the continued growth of tech-driven innovations and frameworks across the food sector. We welcome your thoughts and reactions, and look forward to following this sector together in the coming years.

S2G Ventures’ Managing Director on the 4 FoodTech Trends That Will Rise Post-COVID (Spoon Plus)

I wanted to (virtually) sit down with Krishnan to discuss S2G’s recent white paper entitled “The Future of Food in the Age of COVID-19.” It outlines four foodtech trends that S2G expects will grow in the coming months and years: digitalization, decentralized food systems, de-commoditization, and food as as medicine. Krishnan and I unpacked these four trends — and speculated about how investors will change their focus post-COVID — in our call.

The Deep Dive interview is available for subscribers to Spoon Plus. You can learn more about Spoon Plus here.