Key Takeaways
- Alternative protein investments totaled $233 million in Q3 2024, marking a 37% decrease from Q2.
- Fermentation technologies attracted the most funding, with $174 million raised in Q3.
- Overall alt-protein investments since 2015 reach $16.3 billion, significantly lower than other sustainability sectors.
Current Trends in Alt-Protein Investment
The Good Food Institute (GFI) released its quarterly update on alternative protein investments, revealing continued challenges in the sector. In Q3 2024, the total funding for alternative protein companies was $233 million, reflecting a 37% decrease from the previous quarter. However, this figure represents a 25% year-over-year increase, suggesting a potential recovery from a downturn that has affected the broader venture capital market.
A breakdown of investments highlights the growing interest in fermentation technologies, which received the most funding across sectors. Plant-based proteins secured $56 million in Q3, with a cumulative total of $194 million year-to-date. In contrast, fermentation technologies raised $174 million in Q3, bringing the total to $572 million this year. Cultivated meat and seafood companies lagged, managing only $3 million in Q3 and a total of $133 million thus far in 2024.
The investment landscape can fluctuate significantly based on a few large funding rounds. For instance, Q2 2024 saw notable investments such as a $55 million series B for Prolific Machines and $42 million for Mosa Meat, which elevated the average deal size for cultivated meat to $10 million. In Q3, however, the average deal size shrank to about $396,000 for cultivated meat, primarily due to a lack of significant funding.
Noteworthy investments in the fermentation sector during Q3 included $61 million for Formo, which specializes in Koji cheese products, and $45 million for Helaina, a precision fermentation company focused on human lactoferrin. These deals demonstrate a clear trend towards fermentation technologies as the favored area for investors.
Looking towards the future, lower interest rates could positively impact investment in the alt-protein space, although high capital costs remain a concern. GFI recommends that startups investigate alternative funding avenues, including government-backed loans and programs.
Analysts predict that fermentation startups will continue to attract significant investment in 2025. Meanwhile, cultivated meat firms, which have previously raised substantial amounts to expand manufacturing, may pause these efforts while extending their financial runways during what is described as a venture capital winter.
Overall, GFI reports that the cumulative investment in the alt-protein sector reached $16.3 billion since 2015. While this sounds impressive, it pales in comparison to more established sectors, such as the solar industry, which raised $6.9 billion solely in venture capital in 2023. The difference is stark when corporate funding is included, bringing the solar sector’s total to $34.3 billion.
To elevate the alt-protein space and attract larger investments, a more promising exit landscape is essential. Current exit results for alt-protein companies have been disappointing, especially for those that have gone public. Until a compelling success story emerges, investor interest and funding levels may remain subdued compared to other markets.
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