Vancouver investment fund offers retail investors a piece of the plant protein boom – The Logic

VANCOUVER — A relatively new investment fund that bets on what it believes is the future of food will see its shares start trading on the Canadian Securities Exchange (CSE) on Tuesday. Eat Beyond Global Holdings believes the move that made its shares available in the secondary market is a first in Canada: giving retail investors the opportunity to get in on the ground floor of the much-hyped plant-based protein sector.

The Vancouver-based fund, with former grocery retail bigwigs leading its investment decisions, expects European and American listings to follow over the next several weeks. Its partners will watch its share price closely, with fingers crossed in hopes it rises. Strong interest would prompt a new offering to raise more cash, and see Eat Beyond become a more significant player in the alternative-protein space. The group wants deeper pockets with tens of millions of dollars to spend, rather than the roughly $966,000 left in its coffers, as it looks to seize on the industry’s popularity.

Plant-based and alternative protein has been the darling of the food world in recent years as consumer appetite grows for the purported health, environmental and animal-welfare benefits of a shift away from meat. Silicon Valley startups have popped up aiming to make vegan and vegetarian food look and taste better, or to crack the cellular agriculture puzzle of how to grow meat and other animal products from cells, skipping the factory-farming step. 

The sector has also caught the eye of some of the world’s most influential private investors. Venture capital activity in bioengineered foods—which includes plant-based meat, dairy and seafood companies, as well as those working on cultivated-food and fermented protein—saw US$1 billion invested through 35 deals in the third quarter, according to PitchBook. That marked its highest quarterly deal value in the past decade. So far this year, the sector has seen US$2.6 billion across 101 deals. In the quarter, Impossible Foods closed a US$200-million funding round, bringing its total funding to more than US$1.5 billion from investors such as Li Ka-shing and his Horizon Ventures, as well as a who’s who of Hollywood, including Kal Penn, Mindy Kaling and Trevor Noah. California-based Beyond Meat, one of the most well-known names in the plant-protein space, went public in May 2019 at US$25 per share. It’s traded at over US$100 for the past several months.

“Part of the problem is that your average investor can’t necessarily participate in some of these companies,” said Patrick Morris, Eat Beyond’s CEO and director, who describes himself as a flexitarian en route to vegetarianism. (It appears to be a risk of working at the company. Another director became vegan about 12 months ago.) Eat Beyond makes many of its investments in companies before they go public, at a stage when the common investor lacks access. But by trading in Eat Beyond’s shares, Morris said, “they’re participating, just through us.”

Eat Beyond has so far raised money privately to fund its activity. Its latest private placement, closed August 12, raised nearly $1.7 million with almost 3.4 million units at $0.50 each. It looks to invest the funds in companies involved in plant-based proteins, fermented foods and food technology, as well as cultured and cellular agriculture. 

So far, it has put $800,000 total into four Canadian companies, and about $552,000 into three others. Eat Beyond bought nearly 6.2 million shares of Toronto-based GreenSpace Brands for $400,000; $250,000 into Edmonton-based Nabati Foods for a roughly 14 per cent stake; and $100,000 for some 714,000 shares of Vancouver-based Good Natured Products. It made a smaller investment of $50,000 for 200,000 shares, at $0.25 per share, of The Very Good Food Company in B.C. That one has already paid off in dividends after the company went public, listing its shares on the Canadian Securities Exchange in June. They’ve traded at a high of $5.70 since then, with their lowest point of $0.46—still well above the buy-in price for Eat Beyond. “We sold our initial investment for a significant profit,” said Morris, declining to provide the percentage gain, and noting the company still holds a position in Very.

While they’re not just considering Canadian companies, there’s a definite advantage to being located in the country, said Morris.

That advantage is one Bill Greuel sees and is working to strengthen. “A large, abundant supply of sustainably produced plant protein, I would say, is the key driver,” said the CEO of Protein Industries Canada, one of Canada’s five superclusters. Homegrown companies in the space benefit from access to an abundance of raw materials. Canada produces, on average, more than 10 million metric tons of plant protein a year, he said, providing an alternative to soy protein. “We’re offering something a little bit different,” he said. Additionally, the supercluster and its 250 members focus on growing the sector, and can provide connections between “this emerging community of organizations and companies and academic institutions and government labs.”

Eat Beyond also committed funds to four companies beyond Canada’s borders. That includes $200,000 into U.S.-based Eat Just; $200,200 into TurtleTree Labs; and $152,000 into SingCell, both out of Singapore––the firm is now left with $965,850 of unallocated working capital and reserve for future investments, according to financial documents. Eat Beyond has several possibilities in the queue, said Morris, and expects to make another two or three moves in the next 60 days. That will chip away at its reserve, which is already well short of its stated goals. Eat Beyond had initially planned to take a minimum five per cent stake in 10 to 15 investments of between $1 million and $10 million over 48 months. It later revised that to seven to 10 investments of between $50,000 to $1 million. The countdown begins at the start of trading on the CSE.

“We found that smaller investments in companies that are soon to be public/IPO were giving us excellent returns so we broadened the scope,” wrote Morris in an email to The Logic explaining the change. “Again, each investment is reviewed on a case by case basis as each is offered with different terms so we need to be nimble as the segment evolves.”

The company believes “there will definitely be another offering,” Morris said in the interview. That’s one way it plans to raise funds for future investments.He anticipates a new offering in the next four months. “Our goal, in the next 12 months, is to be more in the $50-million range.”

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