Tyson Ventures, the venture capital arm of Tyson Foods, co-led a $2.2-million seed investment round for Future Meat Technologies, an Israel-based biotechnology firm developing a manufacturing platform for the cost-efficient non-GMO production of lab-grown meat.
Tyson said that other participants in the funding round were the Neto Group, a leading food manufacturer in Israel; S2G Ventures, a Chicago-based VC fund; BitsXBites, a Chinese food technology VC fund; New York-based VC firm HB Ventures; and Agrinnovation, an Israeli investment fund.
"This is our first investment in an Israel-based company and we’re excited about this opportunity to broaden our exposure to innovative, new ways of producing protein," Justin Whitmore, Tyson Foods' executive vice-president, corporate strategy and chief sustainability officer, said in a release. "We continue to invest significantly in our traditional meat business, but also believe in exploring additional opportunities for growth that give consumers more choices."
Tyson has recently invested in other alternative protein firms. Earlier this year, the company's VC arm bought a minority stake in Memphis Meats, a startup in San Francisco developing lab-grown meat, It also purchased a small share of Beyond Meat in 2016, a California-based maker of plant-based meat alternatives.
Why would an animal-based protein company want to back the production of alternative protein sources? After all, some of these startups could end competing with Tyson's products. Answers may be found in the Arkansas company's increasingly diversified portfolio — which, besides chicken, pork and beef, includes sausage, pepperoni, scrambled eggs, convenience snacks, deli turkey and beef jerky.
Anticipating the question, Tyson CEO Tom Hayes responded with a statement the company posted in January headlined, "Why We Are Investing in Alternative Proteins." He said that investing in lab-grown meat does not compete with Tyson's core businesses.
"This isn't an 'either or' scenario; it’s a 'yes and' scenario," he said in the statement. "If you think about it, a protein strategy inclusive of alternative forms is intuitive for Tyson Foods. It's another step toward giving today’s consumers what they want and feeding tomorrow's consumers sustainably for years to come."
Currently, a major obstacle to producing and marketing lab-grown meat is the cost. Memphis Meats is trying to bring its products to high-end restaurant menus by next year, and, by 2021, bring production costs down to equal grocery store meat products at $3 to $4 per pound. It has a long way to go since the company produced a pound of cell-cultured meat for about $2,400 last summer. JUST, formerly Hampton Creek, has said it plans to debut a lab-grown meat product by the end of this year and hopes to get within 30% of the cost of animal-based products, Fast Company reported.
Professor Yaakov Nahmias, the founder of Future Meat Technologies and its chief scientist, indicated one of the company's goals is to reduce the cost.
"It is difficult to imagine cultured meat becoming a reality with a current production price of about $10,000 per kilogram,” he said in a release. "We redesigned the manufacturing process until we brought it down to $800 per kilogram today, with a clear roadmap to $5 to $10 per kg by 2020."
If things progress well for Future Meat Technologies, Tyson could end up partnering with the company. Tyson clearly believes the market will be there — as the global population grows and people look for calories from protein, Hayes' statement noted, the planet will need 20% more calories in 2030.
Such a partnership is similar to the one dairy processor Dean Foods entered into last year with a minority stake and distribution deal with Good Karma Foods, a producer of flaxseed-based milk and yogurt alternatives. Then there's Danone and WhiteWave Foods, with the dairy-based yogurt giant buying the organic soy and plant-based products manufacturer for $12.5 billion in 2016. These investments — which may have seemed counterintuitive at the time — helped the larger firms diversify their brands and ended up being smart moves.