The plant-based food sector has become a darling for venture capital in China, with total investment rising fivefold in 2020 from the year earlier.
According to CBN Data’s 2020 Report on Investment and Financing Trends in the Consumer Sector, there were as many as 21 investments targeting plant-based food startups last year, accounting for about 10% of the overall 4.8 billion yuan ($740 million) investment into the food and health care sector.
Starfield Food Science & Technology, which supplies ground meat substitute made primarily from seaweed protein, topped the fundraising league among plant-based food startups after completing a third round of financing in October that reportedly exceeded 100 million yuan.
China is not alone in witnessing an investment boom in the plant-based food sector. The flow of money into the industry accelerated with Covid-19, which shone a spotlight on the global food supply chain and its vulnerabilities.
Blue Horizon Ventures, a Zurich-based vegan-focused venture capital firm, closed a 183 million-euro fund that will invest in startups in alternative proteins to smart packaging.
Similar specialized investment institutions are beginning to emerge in China.
Lever China, established in 2020 by Lever Capital VC fund, is focused on investing in the domestic alternative protein startups. It plans to invest 40 million yuan over the next four years in early-stage alternative protein companies, with another estimated 160 million yuan in follow-on funding.
Some food companies have also set up funds geared toward the plant-based market.
The Daofuzi Venture Fund, established last September, is a plant-based investment arm of Daofuzi Foods International. It plans to invest in 30 alternative protein food startups in China over the next three years, with the first investment project being Starfield.
Compared to the plant-based beverage, venture capital in China favors plant-based meat startups, according to CBN Data. Starfield and Hey Maet finished several rounds of financing last year, helping the brands to grow rapidly.
The Chinese Institute of Food Science and Technology released a set of group standards for plant-based meat in late December, drafted by experts from institutes like the China Agricultural University and involved companies such as Unilever, Cargill, and Nestle.