Outlook for Investing in Sustainable Food Tech

EMS:
Absolutely. Brian, so to kick off the conversation, tell us a little about the firm and how you got to where you are today.

BR:
Sure. So, Earth First Food Ventures was founded in 2020. It's a venture capital firm focused solely on channeling climate capital toward the production and scaling of alternative proteins, and we define alternative proteins broadly as three divisions, plant-based, fermentation, and cultivated technologies. I got here. I've been in finance for close on 30 years. I started first at JPMorgan, where I ran the Latin American private bank suite for many years, and then afterward I were in Greece and Turkey for Deutsche Bank. All told, I've managed just over $10 billion across the three decades of financial enterprise that I did on both teams and two separate financial institutions across two separate geographies. It wasn't a difficult transition to go from broad-based asset management in the private bank to a very niche play within the venture space around alternative proteins. It's still, at the end of the day, moving capital around the world and investing. So we remain asset managers, just with a niche approach today, and we take advantage of our footprint and global access to move those funds and investment opportunities towards alternative proteins.

EMS:
Great. Brian, so further to the conversation, love to hear your high-level outlook for VC investing in sustainable food tech.

BR:
Yeah, sure. That's, of course, very topical for everyone these days. Our industry was very euphoric in 2019, 2020, 2021. That's all kind of come down with the financial crisis that we saw over the last year. No different than the other asset classes out there, 16 income equity, et cetera. Venture took a bath and especially alternative proteins, and so we see that revaluation in the space as looking very, very attractive today, and we're very excited about it because the new technology that we have at our space, at our fingertips in fermentation, biotech, are completely repriced today versus two, three years ago. We, as investors, are now writing the term sheets. We are taking advantage of the repricing and the valuations in this space to really put capital to work in what we view as a continued compelling technologies at the right price. We think 2023 and 2024 are going to be the best vintage years out there in our space.

EMS:
And more specifically, Brian, what are some of the greatest opportunities you see in your space and why?

BR:
So it's not one size fits all. We do invest across all three verticals, plant-based, fermentation, and cultivated, but we're... of the three, I would have to say we're most excited about the fermentation space, biomass fermentation, and precision fermentation. Both of them have low regulatory hurdles. There's no FDA or USDA approval required, nor in Europe for SSA, unlike cultivated technologies, where there are significant regulatory hurdles. The technology is robust. There are close to 145 companies that we're aware of around the globe today, in both of those spaces, and I would say it is 50% of our allocation across the portfolio, and on our direct investment platform, is in fermentation and, to a lesser degree, cultivated meets. We're excited about the space, but there are significant regulatory hurdles for that industry to scale.

EMS:
Brian, on the other hand, what are some of the greatest challenges you face, and how do you seek to conquer them?

BR:
Well, we have a lot of challenges in our industry, but I would say that the biggest hurdle and challenge in our space is the amount of CapEx required for the industry to scale. Most of the facilities, whether it be biomass fermentation, precision, or cultivated technologies, 10,000-ton facility in our space is upwards of $150 million. So with that kind of CapEx, the requirements for the industry to scale are staggering, and that's not going to happen overnight. Our facilities require bioreactors. Most of the bioreactors in the world sit in the pharmaceutical industry. They're producing insulin and antibiotics through fermentation, and we don't have food-grade bioreactors at the moment. It's all pharma grade, and we don't require pharma grade to scale, so we need to reinvent and recreate all of those equipment and bioreactors come over to the food sector. It'll happen, but it's not going to happen overnight. I think those are two of the biggest challenges, the CapEx requirements and the restructuring of the entire hardware and bioreactors required for our industry to scale.

EMS:
Brian, we've covered a lot of ground today and wanted to see what your future plans are or if you have any final thoughts you'd like to share with us.

BR:
Well, for us as a firm, it's all about scaling. The more capital we can put to work, the more we can fund entrepreneurs, founders that are really making the changes in the industry for lower greenhouse gas emissions and lower carbon footprint in the food industry through synthetic biology and alternative proteins. We're a small firm today, but we do have aggressive plans to scale up to close to 3 billion in assets over the next decade, and that's going to require global partnerships, global partnerships with corporate venture arms, sovereign wealth funds, pensions, institutional capital. And I don't believe the industry, without the deployment of significant amounts of capital, is going to be able to scale to the degree where it's going to make a difference for our food production or supply chains.

EMS:
Brian, I wanted to thank you so much for sharing your perspective with our listeners.

BR:
Well, thanks for having me. I really appreciate it.

EMS:
And thank you for listening to the EisnerAmper Podcast series. Visit eisneramper.com for more information on this and a host of other topics, and join us for our next EisnerAmper Podcast when we get down to business.

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