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Impossible Foods, a Silicon Valley-based meat alternative startup, raised $300 million on Monday from institutional investors and celebrities as fast-food chains scramble to fulfill the public’s increasing desire for plant-based replacements.
The company, which says its products help reduce greenhouse gas emissions, is valued at $2 billion after its fifth round of funding, led by VC firms including Khosla Ventures and individuals such as Bill Gates and Katy Perry, according to Reuters, which first reported the latest round. Impossible Food’s CFO, David Lee, told the Financial Times that the new cash would be used to ratchet up production to meet demand for its products, but the company doesn’t want to rush to IPO.
Other investors include Microsoft, UBS and Viking Global Advisors, according to Crunchbase.
Warm responses from fast-food chains largely boosted the meat alternative industry, which is predicted to reach $5.81 billion by 2022, according to a Grand View Research. Impossible Foods may see its revenue triple this year as it seeks to strike partnerships with multiple chains including Little Caesars, according to The Information.
The successful IPO of Beyond Meat, Impossible Foods’ main rival, attests to consumers’ and investors’ appetite for artificial meat. Beyond Meat’s share price almost tripled when it debuted on May 2, giving it a market value of about $3.8 billion.
Seven major fast-food chains have launched meat-free products. Burger King, in collaboration with Impossible Foods, is rolling out “Impossible Whopper,” a meatless alternative to its signature sandwich, to more than 7000 restaurants and expects to go international by the end of the year. Impossible burgers are also on White Castle’s menu. Del Taco and Carl’s Jr. are territories of Beyond Meat.
Founded by Stanford biochemistry professor Pat Brown in 2011, Impossible Foods sets itself apart through “heme,” a meat-tasting molecule that enables artificial meat to mimic the texture and aroma of beef. Inserting the DNA of heme-rich soy plants to a genetically engineered yeast, which produces more heme, the company is able to produce a convincing meat alternative, according to the company’s website.
Impossible Foods claims it reduces water use and greenhouse gas by almost 90% and essentially frees up land that was used for animal farming.
The alternative-meat industry faces at least two major challenges as it tries to scale. The first is meeting various regulations worldwide. The second is satisfying the different preferences of numerous cultures. For instance, people in the Asia-Pacific region prefer wheat-based meat substitutes, while soy-based products dominate the West, according to Grand View Research.
Opportunities for growth come from strong demand for meat substitutes in emerging economies such as China and India. The growing popularity of the veganism movement also is an important industry driver, according to Market Mirror research.