The explosion in global sales of plant-based foods has a Chilean start-up backed by Amazon.com Inc founder Jeff Bezos targeting a record valuation for the country.
NotCo SpA, maker of the vegan NotMilks sold at US Whole Foods stores, is determined to reach so-called “unicorn” status in its next funding round, or an estimated value of US$1 billion. It is citing outlook of a fourfold increase in sales and a fivefold jump in volumes this year as the basis for what could be a tripling of its current worth, which some reports have put at more than US$300 million.
The company is funded through this year, and would only take money before that to reach its goals more quickly, chief executive officer Matias Muchnick said in an interview.
“It has to be for a valuation of US$1 billion,” Muchnick said. “We won’t budge from there.”
NotCo’s optimism about its potential worth is not uncommon in the alternative protein sector, which investors have showered money on in the past few years. Concerns about the environmental effects of meat have fueled a boom in the popularity of protein-rich products made from plants, especially faux burgers and imitation milk.
Global sales are about US$35 billion, said Nick Cooney, a managing partner at Lever VC, which invests in the space, and several “unicorns” have already emerged.
Vegan burgermaker Impossible Foods Inc is valued at about US$6 billion, while Just Inc, which makes plant-based egg substitutes, has a valuation north of US$1 billion, Cooney said.
Oatly took US coffee shops by storm with milk made from oats in 2018, and most recently raised US$2 billion. The company has announced plans for an initial public offering with a target of US$10 billion.
Latin America’s burgeoning tech industry struck a record number of venture capital deals last year, an industry association has said.
Brazil-based fintech Nubank, the region’s largest private start-up, is valued at US$25 billion, and Colombian delivery app Rappi Inc is valued at at least US$3.5 billion.
Payment provider dLocal became the first unicorn to hail from Uruguay, while Mexico’s used-vehicle platform Kavak’s valuation reached US$1.1 billion.
If NotCo succeeds, it would be a first for Chile. The previous biggest start-up deal from Chile was the 2019 sale of a controlling interest in Santiago-based online grocery delivery firm Cornershop to Uber Technologies Inc for US$459 million.
NotCo, founded in 2015 by Muchnick, Karim Pichara and Pablo Zamora, has raised US$120 million in three funding rounds. Among its investors are Bezos Expeditions, Catterton Partners, Kaszek Ventures, Twitter Inc cofounder Biz Stone, and 3G investment arm The Craftory, among others.
Muchnick is betting that the company’s rapid growth would justify the valuation and a potential initial public offering of shares in 2023.
Because of confidentiality agreements, Muchnick declined to say how much the company plans to sell this year.
NotCo uses artificial intelligence to analyze molecular structures and find new combinations of plant-based ingredients. Its products include mayonnaise substitute NotMayo, NotIceCream, NotMilk and NotBurger.
So far NotCo has entered the Argentine, Brazilian and US markets, outsourcing production activities to local food suppliers. It is in talks with supermarkets in Canada to sell NotMilk, and also eyeing an entry into Colombia, Mexico and Peru.
In the US, it is only selling NotMilk, because the plant-based burger market is crowded.
In the US, “60 percent of consumers of plant-based milks aren’t happy with the taste of the product,” Muchnick said. “We saw we could become the first ones to sell a plant-based milk that tastes like milk.”
In line with a strategy of targeting the right products to each country, the start-up would not be offering the NotBurger in Peru, as local specialties, such as lomo saltado, are more common than burgers.
The company is also forging new alliances with restaurant chains this year, mainly to increase brand awareness, Muchnick said.
It already has deals with Burger King and Papa Johns in Chile.
Last year, in the midst of the COVID-19 pandemic, plant-based substitutes increased 24 percent, compared with 2 percent for animal-based food sales, Muchnick said.
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