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George Monbiot’s latest book Regenesis states the case that our food system was already broken before the Russia-Ukraine crisis, and unable to sustainably support the world’s current population and consumption patterns.
Inflation, and in particular the price increases we are witnessing with our food, are a central concern, which has only been exacerbated by the ongoing crisis. The recent UN Food Security and Nutrition report stated that the world is moving backwards in its efforts to eliminate hunger and malnutrition. There is a true need to disconnect food production, and the production of other goods, from agriculture.
The largest UK dairy producer announced last month that the price of dairy milk will have to continue rising despite prices already increasing 37% in the LTM (May 2022). This is a direct consequence of the dependence on feed, fertiliser and fuel (energy costs) inputs for food production. It has been noted that the price gap between plant-based meats and conventional meat is narrowing, given inflation has been more acute to animal-based products. However plant-based meat sales have not met their targets in recent months, bringing into question its ability to compete and ultimately replace conventional agriculture on a meaningful scale. Whilst the plant-based sector has created intrigue for more sustainable food systems through innovation, we identify cellular agriculture as the ultimate solution, and a more attractive investment opportunity with higher barriers to entry.
Products derived from cellular agriculture have the ability to match or beat the sensory profiles of conventional animal products, as well as offering an opportunity to disconnect food and material production from conventional agriculture. We remain constantly impressed by the rate of innovation we are witnessing across the cellular agriculture sector; companies continue to achieve their technical milestones and develop optimised processes that have the ability to succeed at commercial scale.
Highlights
Here, we bring you the highlights from Q2 2022:
- Expanded the portfolio to 22 companies, covering major categories within cellular agriculture including beef, chicken, pork, fish, crustaceans, leather, egg proteins and collagen as well as infrastructure for precision fermentation
- Launched Liberation Labs, a contract manufacturer for precision fermentation, alongside alternative protein investor CPT Capital and New Agrarian
- Made a further investment into Shanghai based cultivated meat company, CellX, co-leading its Series A round alongside LeverVC and Joyvio Capital
- VitroLabs, US based cultivated leather company, announced it had raised US$ 46m with completion of its Series A – led by Agronomics with participation from Kering, the global luxury fashion group
- Tropic Biosciences announced it has received US$ 35M in fresh funding via a Convertible Loan Note (CLN) round, led by Blue Horizon
- Agronomics appointed Canaccord Genuity as its Joint Corporate Broker
What is cellular agriculture?
Cellular Agriculture is the direct production of agricultural products from cells, removing animals from supply chains:
- Cell culture – cultivated meat, seafood and materials such as leather
- Fermentation – inclusive of biomass and precision fermentation – the modification of microbes to produce valuable molecules such as proteins, fats and oils
- Enabling Technologies – bioreactor manufacturers, low-cost growth factor methodologies, biodegradable or edible scaffolding for cultivated meat
These technologies aim to provide more sustainable methodologies for the development of such products, reducing greenhouse gas emissions, antibiotic requirements, land use, water use, energy use, improving animal welfare and mitigating climate change.
Investments
In Q2 2022, Agronomics made 2 investments, seeing the addition of Liberation Labs to the portfolio and a follow-on investment into CellX’s Series A.
In June, Agronomics announced it had led the founders round of Liberation Labs through an initial investment of US$ 627k for a 47% equity stake, alongside investment from CPT Capital and New Agrarian. Led by industry veterans Mark Warner and Etan Bendheim, Liberation Labs aims to become the global leader of precision fermentation with purpose-built production facilities for industrial biotechnology. The shortage of fermentation capacity for cellular agriculture is one of the most pressing issues currently facing companies approaching commercialisation. There is simply not available capacity to conduct precision fermentation at the scale, quality and cost required to meet consumer demands. Liberation Labs will endeavour to fill this gap, providing the industry with millions of litres of fermentation capacity in the coming years. Full announcement here.
May saw Agronomics invest a further US$ 2M into Shanghai based cultivated meat company, CellX, following their sustained and impressive progress – establishing themselves as the leading Chinese cultivated meat company. With a population of 1.4 billion, China is a large and attractive market ready for disruption via cultivated meat, and we remain excited by the commercial opportunity this presents to CellX – particularly with the Chinese government including cultivated meat in their 5 year agricultural plan.
Agronomics first invested in CellX in December 2020, with a US$ 50,000 investment in the form of a SAFE (“Simple Agreement for Future Equity”). This SAFE converted to 230,681 preferred shares as stated in the 28th May 2021 announcement. Subject to audit, in aggregate, Agronomics will now carry the combined position in its accounts at a book value of US$ 2,54M including an unrealised gain on cost of US$ 488k, representing an internal rate of return of 350% and a multiple on invested capital of 10.76 of the initial US$ 50k investment.
Portfolio breakdown
Portfolio breakdown by Net Asset Value contribution shown below. Agronomics currently has approximately £52 million in cash reserves, positioning us well to take advantage of the recent headwinds facing the market, and ensuring we can provide portfolio companies with financial support throughout this period. Given Agronomics’ current cash position, we believe that we are well funded and have no immediate plans for further financing.
Largest contributors to Net Asset Value, aside from cash, are: cultivated poultry company SuperMeat, cultivated leather company VitroLabs, precision fermentation company Formo, precision fermentation designer protein company Geltor and cultivated beef and pork company Meatable.
Agronomics has a global mandate, investing predominantly in US and European companies. The majority of the portfolio is currently at the Series A stage. Agronomics focuses largely on cell culture and precision fermentation technology companies.
Portfolio in the news
BlueNaluNew Harvest Conference
Fishing without the fish: Lab-grown seafood is on the way
VitroLabs
Kering backs cow-free, lab-grown leather. Game changer?
Geltor
Cosmetics: when biotech is better than nature
Meatable
How the Netherlands is leading the global food revolution
Onego
One of 7 nominees for the ‘Sustainability Pioneer Award’ at the Sustainable Food Awards, and Science Breakthrough of the Year Finalist in the Falling Walls Venture 2022. We wish them the best of luck!
Solar Foods
Solar Foods granted EUR 15m financing from Danske Bank Growth
Mosa Meat
Blog: Five Ways Cultivate Fat Makes Better Burgers
California Cultured
WATCH: Welcome to the future of Sustainable and Ethical Chocolate
Tropic Biosciences
Crop gene editor Tropic Biosciences banks $35M in fresh funding
New Harvest Conference
Agronomics was proud to sponsor the New Harvest conference in Brooklyn this June, which saw researchers, companies, students, policymakers, investors, activists and journalists come together to discuss the future of cellular agriculture. Founded in 2004, New Harvest is a global non-profit research institute dedicated to the field of cellular agriculture. It was inspiring to meet such large swathes of the community in person, and an excellent opportunity to share ideas and engage in interesting discussion.
Wider industry news
- Israeli precision fermentation company, Remilk, received regulatory approval for its dairy protein
- GoodMeat, the cultivated meat division of EatJust, announced its multi year exclusive agreement with ABEC, Inc. to construct a large scale facility in the US housing 10 x 250,000L bioreactors – a first for mammalian or avian cell culture
- GoodMeat also announced it had broken ground on a cultivated meat facility in Singapore, capable of producing ‘tens of thousands’ of pounds of cultivated meat
- Perfect Day revealed its collaboration with Mars to produce CO2COA, a new brand of dairy chocolate containing Perfect Day’s dairy proteins produced via precision fermentation
- Unilever and biotechnology company, Genomatica, launched their new joint venture focused on producing sustainable palm oil alternatives. US$ 120M has been jointly invested into the new initiative
- BCG released its latest research on alternative proteins, following their 2021 publication: ‘Food for Thought’