Alt protein VC Better Bite Ventures launches $15m fund 

An alternative protein venture capital firm targeting Asia-Pacific-based companies has launched with a $15 million fund.

Founded in January 2021 by former Polish e-commerce company Allegro executive Michal Klar and mobile game maker Frenzoo’s co-foudner Simon Newstead, Better Bite Ventures aims to invest at the pre-seed and seed level on the backs of growing demand for meat and dairy substitutes, particularly in a region with 60% of the world’s population that is still largely emerging. Both Klar and Newstead had been angel investors in the industry before starting this fund.

The alternative meat market was valued at $5-10 billion in 2021 or less than 1% of the global meat industry, but that could rise to between $77 billion and $153 billion by 2030, making up 5% to 10% of the global meat market, an EY report projected last year.

“This is the right time,” Klar told DealStreetAsia, pointing out that while it is expected to make up 64% of the global alternative protein market by 2035, according to consultancy BCG, the sector in the region is still under-invested.

Data from Dealroom showed that funding into alternative protein companies worldwide grew from $3.3 billion in 20202 to $4.9 billion in 2021. Companies in the US accounted for $3.5 billion of last year’s total, while only $772 million flowed into Asia.

Better Bite Ventures has invested in 10 companies so far, including Singapore-based plant-based chicken maker Next Gen Foods, Indonesia-based Green Rebel Foods, Chinese cultivated meat startup CellX, and Change Foods, an Australian startup making cheese with fermentation technology.

Klar said that the fund has been 80% committed, with limited partners including PropertyGuru co-founder Steve Melhuish, Rainforest co-founder JJ Chai, and Joel Neoh, founder of Fave. Other LPs are tech executives from companies such as Gojek, Tencent, and Google, as well as family offices. Sonalie Figueiras, the founder of Green Queen Media, is a venture partner.

The fund will invest in around 20 to 30 companies, issuing cheques between $200,000 and $700,000 as initial investments — “in many of these companies, we are usually their first cheque” — and reserve less than 30% of the $15 million for follow-on rounds. It has a 10-year life cycle, with the possibility for extensions. There is no specific target internal rate of return, but Klar said they keep track of industry benchmarks, which are around 15% to 20%.

He said they decided to keep their first fund small so they would not have to dilute the quality of investments or change the stages they invest in.
“Even if we don’t follow on, and dilution happens, and (one becomes a) unicorn…This becomes a struggle if run a $50 million fund, because you are diluted so much, and this one unicorn will not return the whole fund. But for $15 million fund, it’s actually quite likely,” Klar said.

“Asia Pacific has the potential to become a hotbed of alternative protein unicorns, but they won’t fly at full speed until investors dramatically ramp up support for plant-based and cultivated meat manufacturing infrastructure, which is critical for nurturing growth. The launch of the first fund dedicated to APAC alternative protein startups is an encouraging symbol of changing times and the broader VC world,” said Mirte Gosker, the acting managing director of alternative protein advocacy group The Good Food Institute APAC, in a statement.

Despite seeing many alternative protein brands popping up around the world, Klar said he is still betting on Asian makers because unlike global brands, they are attuned to their market and are able to customise products for the local taste and wallets.

Food is also an industry with many local players and no one dominating brand, he said, although he believes consolidation among alternative protein players will happen in the future.

Klar is undaunted by doubts whether cell-based meat can be commercialised. While it will still be a few years, cultivated meat can be marketed first as a high-end product – the way Tesla entered the market – or as an ingredient in plant-based products to make them taste more meat-like.

“We are big believers in hybrids. We think this is also a way to close this affordability gap,” he said.

After this initial fund, Better Bite may launch either bigger funds, or funds that invest in specific countries.