- Impossible Foods is working with investors to raise an additional $300 million to $400 million in funding that would more than double the $2 billion valuation it obtained in May, Reuters reported.
- Current plans indicate the plant-based company is seeking a valuation of between $3 billion and $5 billion. The latest funding could pave the way for Impossible to announce an IPO.
- Excluding the latest round, Impossible Foods has raised more than $775 million in five funding rounds since it was started by Stanford University biochemistry professor Patrick Brown eight years ago.
With the plant-based meat space expanding at an impressive clip, Impossible Foods is ideally positioned to raise additional money from investors. Sales for plant-based meat climbed 42% between March 2016 and March 2019 to $888 million, Nielsen figures cited by the AP show. At the same time, sales of conventional meat were up 1% to $85 billion.
Still, even with evidence of strong growth in the space, asking for more funding on the heels of a $300 million fundraising round in May indicates the company is looking for more than just an extra cushion in its coffers. If Impossible is thinking about going public, it would be wise for the faux meat maker to have a comfortable balance sheet so it doesn't have to offer as many shares to the public in its IPO. At the same time, Impossible wants to make sure it's growing sales and executing so it can attract as much positive attention as it prepares to make its debut on the stock market.
Impossible Foods wouldn't be the first plant-based meat maker to go public. Competitor Beyond Meat watched its stock soar after its spring IPO — and while its shares have come down significantly, the success has helped stoke demand for Impossible Foods and others to test the market.
Although IPO rumors have been circulating for Impossible Foods for some time, the company told Food Dive as recently as October that there were no plans to go public. "We have no immediate plans for an IPO," Impossible Foods CEO Pat Brown told Food Dive. "There is a pretty high likelihood that at some point in our history, we will decide that that's worth doing. Right now, we have the funding that we need.”
In addition to raising money ahead of an IPO, the extra cash will be needed for Impossible Foods to conduct research and expand into new areas like plant-based fish where it is conducting work. As upstarts and big-name players such as Nestlé, Tyson Foods, Perdue, Hormel Foods and Conagra enter the space or improve the taste of their existing offerings, Impossible will need the firepower to compete with these cash-rich giants.
Finally, after focusing much of its early attention on establishing its presence in restaurants such as Burger King and White Castle, Impossible Foods entered grocery stores this fall. The latest funding no doubt will help Impossible Foods increase production as its customer base increases. Earlier this year, Impossible Foods struggled to meet rapidly growing demand, leading to a shortage of the product for some of its restaurant customers.
"It greatly exceeded our plan, and we had to catch up. We're never going to do that again. That's the point," Brown told Food Dive. "We're not going to make commitments to new customers until we know we have excess capacity to satisfy them."
In any case, Impossible Foods is unlikely to have any problems getting investors interested in its latest funding round. After Beyond Meat's successful IPO and continued growth in the plant-based space, investors are eager to find any way they can to invest in the space.