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Heura puts in $20 million funding chunk for its plant-based protein ahead of firmer B round next year • londonbusinessblog.com

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What about the demand for plant-based meat? If you look at the Barcelona-based heura the picture looks rosy — with the alt-protein startup claiming “non-stop” momentum and nearly doubling revenues from the sale of its counterfeit chicken, beef and pork products in the first half of 2022.

Mid-year, the startup founded in 2017 reports that it had reached €14.7 million in revenue, up from €7.6 million in the same period last year, following the most successful first half of the year in its five-year history and packing a number of major retailers to stock their plant-based foods (including Ocado in the UK, Migros in Switzerland, Carrefour in Italy, E.Leclerc, Intermarché and Super U in France). More new partnerships with “major” European retailers are planned this year, with “triple digit growth” of over 100% year-on-year expected.

It also has some visible success in its home market by convincing restauranteurs to add its products (and brand name) to their menus – as plant-based ingredients, enabling them to offer vegan alternatives to meat dishes, from tacos and bocadillos to curries, poke bowls and more. And Heura takes credit for 80% of the local vegetable category growth (although it should be noted that Spain remains one of Europe’s largest consumers of animal meat so the growth of alt proteins starts from a low base). It adds that it expects to close the year with a local market share of 30%, while ramping up its efforts to expand in Europe.

It is also teasing a Series B round coming next year – which it expects to be one of the biggest B rounds of 2023 in Europe in the alternative protein industry (for some context, another European startup, Planted, has previously released this raised a Series B round of $72 million in the fall). And today it is announcing a new $20 million bridge financing round ahead of the expected (beefier) ​​B. It notes that this (pre-) Series B funding includes the issuance of convertible bonds that will lead to equity in the full Series B round next year, so a bunch of investors are clearly bought into its sales growth talk.

Heura says the bridging round will feature contributions from NBA star Ricky Rubio, soccer players Sergi Busquets and Sergi Roberto, comedian David Broncano and Unovis Capital. Part of the funding was raised earlier this year when the has raised more than €4 million in 12 hours through its crowdfunding Equity for Good Rebels campaign – raising support from more than 5,000 individual donors.

The round will help the company further scale up in the region – with a view to deepening its presence in key markets such as France, Italy and the UK, and adding new European regions including Austria, Germany, Switzerland, the Netherlands and more, in the years to come. “With new financing in hand, a primary focus for heura will position itself as the European leader in plant products by 2027,” it notes in a press release.

Right on the menu for 2023: new products in “new segments”, after the filing of the first patents in November 2022 – although exactly what it is cooking is not clear. The PR says next year’s focus will be on delivering novel foods that are “nature positive, nutritious and achieve culinary excellence.”

Sounds so appetizing, if we may say so. But the plant-based meat category has been deflating a bit lately after a previous heavy hype.

Which may explain why Heura is rocking this bridging round and teasing bigger money next year. Sustained momentum is not necessarily a given.

Namely, US giant Beyond Meat announced earlier this month it would cut its workforce by nearly a fifth, citing declining sales.

While Bloomberg reported on refrigeration demand hitting the plant-based category last monthstating a Deloitte report who argued that the ‘stagnation’ of demand could be due to factors such as the addressable market being more limited than originally thought (including as a result of ‘cultural resistance’, perhaps linked to the increasing political polarization in many societies); to inflation (and particularly high food price inflation) eating the consumer’s appetite to pay a price premium to eat plant-based meat alternatives (which typically still cost more than non-premium meat options); and on changes in consumer perceptions of how healthy plant-based proteins are.

Some of these suggestions may indicate that the meat lobby has had success with negative publicity campaigns targeting plant-based alternatives in an effort to block the kind of large-scale food system transformation that is sorely needed if humanity is to cut carbon emissions in line with the climate goals .

For example, the meat industry has spent money on ad campaigns that portray plant-based products as “frankenfoods,” while presenting animal meats as a simple, fair and (relatively) healthy option. Like this US attack ad campaign (indicated by ZME Science last year) — which attacks plant-based proteins by suggesting that the products are much more heavily processed and full of terrifying chemicals than the equivalent meat products (without absolutely mentioning health problems associated with the consumption of meat products such as bacon, such as the risk of a number of cancers that the WHO has associated for years with the consumption of red meat and processed meats); while putting all these selfish claims under an astroturf-y banner of “cleanfoodfacts.com” ie instead of making clear their clear vested commercial interests.

Plant-based startups will likely need to up their communication and product development game (and ideally lift the lid on manufacturing methods, as some already do) to counter these kinds of cynical attack tactics.

At the very least, plant-based startups are positioned to gain support from (wider) environmental campaign groups and movements to amplify their own pro-climate messages.

“Clear communication about the benefits of the protein transition coupled with bringing more people together to vote with their fork will help lead the way in [our] growth across the continent,” is how Heura’s PR describes its growth prospects at this point in the PBP (plant protein) hype cycle.

There is certainly a very clear and loud story that PBP brands can tell to sell climate-conscious consumers their meat alternatives.

Heura alone, for example, could indicate savings of about 55.9 million liters of water consumption and 3.6 million kg of CO2 – as well as saving 509,000 chicken, pig and cow lives – in the first half of this year alone. So expect louder backlash from more alternative protein brands in response to the marketing tactics of the meat lobby’s “tobacco”-style assault.

The Deloitte report advises plant-based/alt-meat producers to “explore ways to expand the addressable market, reduce relative costs, and create formulations that deliver health benefits while preserving flavor” to boost growth — while noting that it’s seen rapid growth in VC investment and major consumer brands in the category over the past year (and suggesting the resulting innovations could pave a smoother growth path for the market).

On the cost side, while plant-based proteins still typically suffer from a premium pricing problem versus meat (not least given the level of subsidies that support traditional food production methods), which is definitely an issue given rising food inflation (and the cost of living crisis) , the scale may tip. Especially in Europe, as the region is still heavily exposed to high energy costs as a result of Russia’s war in Ukraine and the country’s response to Western sanctions as the bloc seeks to reduce its reliance on Russia’s gas imports.

Bottom Line: High energy costs tend to drive the price of meat down more than plant-based food production because the former is a much less efficient way of producing protein for human consumption than raising animals for slaughter — flesh-and-blood creatures that have to be slaughtered. self-feeding proteins. That means if you feed plant proteins directly to humans and you skip a very costly step.

These dynamics suggest that the price differential between animal meats and (at least some) vegetable proteins should continue to shrink – also as startups like Heura continue to proliferate and grow, enabling them to realize greater economies of scale in their production facilities.

So how much the “stagnation” of the PBP industry is due to cynical attacks by the meat industry and self-hype about the reality of the harsher climate (and the cost of living) remains to be seen.

In a statement about its own growth prospects, Heuro CEO and co-founder Marc Coloma was optimistic, writing: “With mission-driven investors on board who dare to take bold action to accelerate the plant-based protein transition, we have the resources to continue growing the category.” across Europe. We have a clear vision and this new funding will help us transition from a successful Spanish plant-based business to a net positive food tech startup leading the protein transition across Europe. This growth path is designed to take us by 2023 in a position to close the biggest Series B rounds in the industry and usher in a future that is better for people, planet and animals.”

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