Plant-based NotCo gets $235M for expansion

Dive Brief:

• Artificial intelligence-powered plant-based food company NotCo raised $235 million in a Series D funding round, bringing the Chilean company to a $1.5 billion valuation. The round was led by Tiger Global and included repeat investments from Bezos Expeditions, EHI, Future Positive, L Catterton and Kaszek Ventures. New funders in this round include DFJ Growth Fund, Zoma Lab, athletes Lewis Hamilton and Roger Federer, and musician Questlove.
• NotCo, which currently sells its AI-designed NotMilk plant-based dairy substitute in the United States, says the money will bolster its expansion into new categories in North America, scale its AI technology — a system known as Guiseppe — and accelerate plans to launch in Europe and Asia.
• NotCo, which launched in the U.S. early this year, is the latest alternative protein company to haul in a huge investment round. The company is on track to have its products in about 8,000 U.S. stores by the end of the year.

Dive Insight:

As a food company, NotCo shows a way to turn algorithms, food tech and merchandising into a diverse product line. Outside of the United States, the company has several algorithm-designed products, including NotBurger, NotMeat, NotIceCream and NotMayo. The result, so far, has been rewarding in terms of sales — and in terms of what many investors see as future potential.

NotCo CEO and co-founder Matías Muchnick said in a previous interview the company has been able to use data to figure out what contributes to the taste, texture and feeling of food, then work with plants to replicate and improve on that formula. The goal, he said, is to use technology to create food that is tasty, accessible, affordable, healthy and sustainable.

And that’s paid off. While NotCo is a private company and does not report sales figures, Maximiliano Silva Figueroa, NotCo’s country manager in Chile, told Latin American Business Stories earlier this month that NotCo’s business has grown five times since 2020. He told the business website the increase in sales is roughly proportional to the increase in funding the company has received between its $85 million Series C round in September — which gave the company the funds to expand to the United States — and this $235 million Series D round.

But this sort of growth is nothing new for NotCo. Within eight months of launching its NotMayo product in Chile, Muchnick previously said, it had an 8% market share. Last year in Argentina, it had a 50% market share for hamburgers, including those made from meat. Muchnick told Bloomberg earlier this year the company expects this type of growth to continue to snowball, and is considering going public in 2023.

In a written statement, Muchnick attributed NotCo’s growth and successful R&D to the Guiseppe technology platform, for which the company says it has five U.S. patents.

“Our patented A.I. gives us a significant competitive advantage due to the speed and accuracy with which we’re able to develop and bring new products to market,” Muchnick said. 

This is the latest mega-funding round for alternative protein and tech-enabled companies. During the pandemic, many of these companies have reaped significant funding benefits. In 2020, $3.1 billion was invested in alternative protein companies, according to The Good Food Institute.

Last week was 2021’s largest food funding round to date: $350 million to fermented protein company Nature’s Fynd.  Earlier this year, plant-based egg and cell-based meat maker Eat Just raised a total of $370 million in two funding rounds — $200 million for the company as a whole and $170 million for its Good Meat cell-based chicken division. The LiveKindly Collective, which is an international platform for alternative protein brands, closed a $335 million funding round in March. Plant-based ingredients company Motif FoodWorks announced a $226 million funding round in June, and this month Israeli cell-based meat company Aleph Farms raised $105 million in hopes of bringing products to consumers next year.

NotCo says these new funds are will be used to facilitate expansion, both to new global regions and in new products. As NotMilk sees success in U.S. dairy cases, it’s anybody’s guess as to which products will roll out here next. While plant-based burgers and ice cream are fairly crowded categories, plant-based dairy is the largest and most established of the alternative protein categories.