On navigating the Alt-Protein pivot and why startups can't disrupt Nestlé- Kim Odhner, Unovis

trying to build a business around changing consumers' behavior away from things that are deemed to be attractive, like meat eating. I think it's kind of a lost cause. I think we're better served to try and address the growing market, the growing demand, and try and help bring costs down. Unfortunately, the gatekeepers in the food system are industrial food companies. As you look at investment opportunities in the space, you definitely need some kind of an industrial connection in order to make these products work. I'm a chemo-dner. I'm a managing director of Unobus asset management based here in Amsterdam. I came over here about eight years ago to set up our fund management business in Europe. We raised our second fund here in Europe, raised about 150 million euros. And I sit here together with the operations team focused on Europe and Asia. And I have three other partners in the United States. Chris Kerr, Dan Outchuler, and Mark Langley, Mark and Chris are based in New York, and Dan is based in San Francisco. Well, Kim, I'm really excited about this conversation. I think when I got a chance to speak to Unobus and the spot, because I said, you're basically going to the root of all wisdom. One of the most experienced investors in the space has been here for a long time. They saw a lot of the trends before they became trends and also made a lot of bets. I think a lot of the other investors are looking at and thinking how they're going to play out. So we're going to be very excited about going through where you're at at this point, what the fees is involved and what's next. And where I want to start is just look at where you deployed cash recently. So there's three deployments. He recently done the follow investments into the space. And maybe we can talk to what's making it comfortable around putting additional cash into these businesses. What's learnings have gone from other companies that you're applying here and let's just start with green rebel foods. Maybe Kim, you could just give to our audience a quick word about what the business is and more importantly, why did you decide to make a follow-on bet? Sure. Okay. So this may be sort of information that people already know, but essentially if you look at a classic venture portfolio, let's say assuming maybe 20, 20 deals in a portfolio, some percentage of those deals are not likely to succeed. Let's say, maybe out of 20, five won't make it. And then you'll have another five that'll five to seven that'll bump along and do okay. And then there's one, two, or three that you have higher levels of conviction that continue to perform. And so those ones typically are the ones that you look to put money into. The other ones that you might look to put money into would be ones where you have a downside risk. And so you put more money into to hedge against that risk so that you don't have a loss. But it may not result in significant upsides. The ones that we're talking about today are essentially ones that we have optimism about. So we're hoping they will contribute to the performance of the fund. And by the way, that's fairly typical. So when you hear numbers about the number of companies that have failed in the marketplace, bear in mind, there was never an expectation that all of them would succeed. So I mean, it's sort of understandable that there's going to be a significant number of losses given the number of companies that were invested in over the last cycle. So the company Green Rebel that you referred to is a company that's based in Indonesia. It's one of the early plant-based companies that was servicing the Southeast Asian market. Southeast Asia has been kind of an interesting place because on the one hand, non-animal proteins are not uncommon in Asia, particularly in Southeast Asia, things like Tempe, what they refer to as mock meats, tofu, certainly. These are products that have been known for a thousand years. So trying to break into that market with meat analogues is both interesting and at the same time, people understand them. And so there's a greater openness to them. Green Rebel was a particularly interesting company in the sense that it was domiciled, not in Singapore, but in Indonesia. And Indonesia is a very, very large country, about 365 million people. And I like companies that serve a very large domestic community population. I'm also an investor in a company called Eura, a Spanish company. And it follows a very similar theme that flavors the formats and things like that. They follow foods that are consumed locally. So people understand them. They can relate to the products that are being offered. Very similarly in Indonesia, with green Rebel, they were producing products that were understood in the marketplace. The flavors, the formats and so forth really follow the market. And so that's the starting point. Do you want to get a word in there? Well, of course, it's really interesting. And I was in the trip to Singapore recently. And I was just looking at the map of the individual family earned income, right? All for that region of the Southeast, right? And I was like, okay, the Singapore, like 100,000 per per, you know, per individual family. And then when the news is one of developing countries, it's highly populate, right? So it's most populate, I think largest populate Muslim country in the world, I believe. But if you look at say the average income per family per individual, it's still developing. I think it's something like the 15 something like that. So typically for those individuals, you start in watch population, but their income is still limited. So price is really really good. You could be key to winning, right? Flavor of course is going to be in winning. But things like impact, sustainability, ethics. I think those are going to take it back to you most likely with that be correct. So how is green Rebel winning in those categories? Or they just trying to focus on more of the middle upper class of this of the country that has this old set of priorities? Yeah, good question. I think that one of the important things to consider is that, you know, what market are we talking about? There's markets they've been quite successful in and there's markets where they haven't performed as well. So if you look at retail, I mean, retail is sort of the holy grail and the one that we often think of because we're all sort of consumers of these products. Retail channels in Indonesia are fairly challenging. And it's because we don't have centralized retail and quite the same way that they do in the United States, for example, or in Europe, where you can get a centralized listing. And so through that centralized listing, you get deployed in multiple stores at once. They tend to be more fragmented. Distribution is a bit more challenging, particularly in a country like Indonesia, where it's, you know, San Arcapego with different islands and things like that. The retail experience has been an interesting one and it's been one that's, I think we've had a decent following in retail. But the bigger opportunities are really in food service. So where we've really gotten traction is in not only servicing things like QSRs, but QSRs, I mean, you know, things like Starbucks and various local QSRs as well as regional Ikea. So we provide a lot of the commissary services for Ikea's throughout the region. That's Malaysia, Singapore, Indonesia. We also provide products on Air Asia. So in other words, the plant-based meals on Air Asia are produced by Green Rebel. It's like Cedexo with some of the largest, let's say, competitors of Cedexo that service hotel chains and things like that as well. So those channels have been quite successful. And there's different types of products that we can sell into those channels. But our basic kind of meat analog products performed quite well through those channels. And then that food service play, who's the ideal client in that play? Is it moving individuals or flexic areas into the TSEMOS products? Or you're focusing on individuals who are looking for vegan, middle-chirinthive, right? And they're choosing between toe-for-this. Yeah, good question. I mean, at the end of the day, the numbers, you know, market-to-market don't vary too much, you know, around the world. So in other words, the the vegans represent a relatively small percentage of any target population, it seems. If vegetarians, what you've got in Asia is you have many more people that follow sort of cultural norms or religious norms that have them eating, let's say, vegetarian food a couple times a month or maybe, you know, for an entire month of the year or things like that. So obviously, they represent opportunities. The Buddhist community is quite massive in Asia and they tend to eat alium-free and, you know, alium-free is like garlic and ginger and things like that. Root vegetables, they tend to avoid those for religious reasons. They don't tend to, the alium-free customers don't tend to be so much of our target market. A lot of it is price-driven. A lot of it is shelf stability, things like that. You know, meat is just not as prevalent and particularly now when meat costs are going up and where we found an additional market opportunity is through creating hybrid products. So we actually have produced what is essentially a texturized, vegetable protein that's pre-texturized, pre-flavored, and it makes us very nicely with meat to extend meat and reduce price. And we do attempt in some markets to make health claims around those products. Another was a slower fat, a slower and sodium, things like that. And those messages do resonate with certain populations. It's funny. You mentioned the Buddhist, I keep a kosher diet, so whenever I travel and I eat, I'm usually in a jade or Buddhist temple kitchen. With my keeper there, just enjoying my pho meat, if you're a restaurant afterwards. So I can definitely relate to that pain point and seeing that that could drive customers. And I like that actually what you mentioned. interesting about the hybrid model, which is something that more and more people are kind of embracing as a path forward. Is the pain there that you essentially are cutting costs for meat producer with your product, you're extending the meat solution to larger volume because it's going to simply be cheaper than what's in the market with, say, beef? Yeah. I mean, it's interesting. Every market is talking about sort of blended products and things like that today because it represents potential opportunity. One of the things is the expectations, quality of meat, let's say, and the way that meat is consumed, let's say, in the West makes it a little bit more challenging because there is a, I hope it's okay to say it, as I mean, sort of a more sophisticated consumer around what meat, quality meat should taste like and things like that. As a result, I think the experience that we've seen at least here in the West is that it's been a little bit more challenging to get consumers to embrace blended products. Whereas when you're looking at food service and things like that, I mean, I think depending on the application, you can cut the meat with something like a vegetable protein and consumers are less, they notice it less. And so if you look at a market like Southeast Asia, consumers typically are not that accustomed to eating, let's say, a center of the plate piece of steak, for example. And so as a result of their eating piece of meat that is a minced meat, for example, that minced meat could very easily be cut, and it probably wouldn't necessarily draw their attention. And also flavoring is another issue. Flavoring is fairly bold frequently. And so as a result, that flavoring kind of masks things like the soy taste or the key protein taste that you would typically object to here in the West. And it was a green label like a deep ex solution or was it just the execution plate that's gone really well for product market food? Was there a deep IP in what they're doing? Or were you just surprised about how that's just focusing on margins, flavor, execution, understanding who the customer's are and just go ruthlessly after their consumers? It's been trial and error. I mean, to suggest actually to say that that's been an easy business to scale is not accurate. It's been very challenging. And I think we've had to pivot along the way. You know, initially we were serving pretty much the entire Southeast Asian community. You know, we were as far as far as flung is the Philippines and the North. We were making products for the, actually for the Korean market. We made products for Thailand, Malaysia, Singapore, Vietnam. And what we've come to realize is that, you know, those products work in each and every one of those markets, particularly when they're adjusted to local flavors and formats. Our setup in Indonesia was very capable to produce those kinds of variations for each of those markets. That made it quite interesting. But just just the logistical cost of servicing kind of a broad Southeast Asian market has made it challenging. So we pivoted and we were much more focused. Maybe we continue to serve some of those markets, but we're very focused right now on the Indonesian market. And we're also looking more and more at what are some of the other protein products that people typically consume that they understand that they already know how to cook with and things like that. So we've broadened to focus on things like tempeh and shelf stable tofu. So we've made small innovations, particularly around the theme of shelf stability, using things like retort, you know, to actually create packages that are shelf stable. And in a market like Indonesia, where distribution is challenging and, you know, fresh product is more difficult to manage. Shelf stability has really made a big, big difference. Yeah. And I think to our listeners, the way I'm kind of projecting it to my end of all this sort of like marriage therapy here, to see if I heard him. But I'm hearing from that is there is a problem with cold storage, just that. So the cold storage supply chain is really under threat in that region. So for a meat product, it could spoil, right? It could, it's a risk. There's a larger risk when you're missing cold storage. So this is just a better solution for a country that has a challenge for storage, freezing or refrigeration, you know, a shelf stable product that can still shelf safe six months. It's just a better solution than a steak or a meat product which can, you know, which maybe taste profound maybe better, but from a risk standpoint when the cold storage is much more risky. Is that, is that correct? Yeah. I mean, I, I think it's certainly it's proven to be a successful recipe. I mean, at the end of the day, shelf stability, even here in the West, whether it's deli slices or or or chilled product in in the, in the, in the chilled cabinet. I mean, shelf stability really leads to, if it's not consumed, it's ultimately waste, right? Yeah. The whole idea is that if you, if you've got a fragmented distribution network and you've got shelf stability, then, you know, you're, you're wasting less product and I think that makes it so that actually even retailers and things they're willing to try a product because it's shelf stable. They don't have to worry about whether or not it's going to go bad. And so they'll be willing to take a risk on it. Okay. So, so with the green gravel use case, like we'll got summarized on one before we move to next one. What I'm hearing is look, Alex, whether, you know, a tasty product that was in line with expectations of the current of that market. We, we know that part of what we need to evolve is we were limiting our geographical focus right to the markets that work the best. And we have identified that, you know, hybrid shelf stability, the latest preferences. This is where we're working. This where we're winning and we're going to just double down on those, on those, on those pieces. And I'm not hearing is correct me if I'm wrong. Is this notion of look, meet eaters are going to stop eating meat. That's, that's not part of the, you know, that this is this product will replace meat eaters consumption and meat. It's more about doing the religious moments they're going to do so because of cold storage. It has to do the price rise. Those elements are going to drive more cut stuff of our product. Yeah, that's right. That's right. I mean, put it this way. I mean, I think at the end of the day trying to build a business around, you know, changing consumers behavior away from things that are deemed to be attractive like meat eating. I think it's, it's, it's kind of a lost cause. I think we're better served to try and address the growing market, the growing demand and try and help bring costs down and at the same time, you know, where in certain applications, where meat is not the central ingredient where, where a meat analog can serve the purpose, then I think those are the applications where they tend to succeed. And I think that's another important lesson. I mean, if you look at, you know, one of our most successful products in Indonesia is, is a beef rendon product. The texture of our meat analog and the flavors and things like that are prepared flavors. You wouldn't even know the difference to taste it. I mean, you're not losing anything in that experience. What is the beef rendon? What is that? Beef rendon is a local delicacy. It's like a, it's like a form of curry. Okay. But it's, it's a really tasty kind of unique to Indonesia. It's something that they do very, very well and it tastes wonderful. But in that experience, like the sauce plays a very big role, right? It's a sauce-per-important role. The meat is also tenderized, right? So it's, it's also sort of, let's say softer and more fibrous in the way that plant-based can function nicely. Okay. And so, you know, the whole experience is very similar to, to a meat eating experience. I feel like everybody's stopping the podcast now and like ordering and ordering at this point. Like, okay, they're just like, I have to figure out what the heck did. Let's go to Indonesia and restaurant next to my house and I'm basically so. No, thank you for that. Pro-Timburri. Okay. Let's look at Pro-Timburri. This is definitely one of my favorite entrepreneurs that I've interviewed him already twice on this podcast. And I love him very deeply and become a personal friend. What about that business major field confederate? Was it the FSA approval? Was it the fact that they, you know, they had orders? Of customers who were ready to buy? Was it the trans or GLP ones? What was about that business, I made you feel okay? No, that's something we willing to follow on. Quick word from our sponsor, FDW+. Current fundraisers are taking 12 to 18 months, runways again, shorter, and founders are raising during one of the most difficult fundraising environments in history. They need more than a database. They need a bootcamp. FDW+ is a digital bootcamp for agri-fort founders who are actively raising. The most important is the accurate investor database in the space. Pitchbook at 1% of the price. Here are the warming reductions already built in and complimentary one-on-one office hours experts in deck design said they would do diligence regulatory. And here's what FDW+ is not. A broker taking a retainer at a cut of your raise. No percentage, no human fees. This is a membership community. Venture-backfoundraisers are in the exact same trenches as you are. They back it with a grantee. They work with you until you book three meetings with your one investors because in this market you don't have time to waste on something that doesn't deliver. Go to futecweekly.com and join the W+. Think for the protein brewery, when we first invested in that company, let's say five years ago, six years ago, the thesis at the time was basically this company is going to produce a novel protein, a fungal protein that's going to replace soy or pea protein. So the focus was very much around meeting. analogues and it was very kind of, let's say, consistent with where we made a lot of earlier investments. Over time, what we discovered is that that product didn't really work in that application so well. And part of the reason why is because it's fibrous, it's got decent protein content, but it doesn't tend to bind very well. So we said about trying to figure out where does that, where do we have room to play with that product? And so over the course of the last, you know, the few years, we've really focused on different applications. And what we've discovered is that there's a couple of things that that product does very, very well. And one of them is it delivers really interesting micronutrients and nutritional profile for certain things that aren't readily found in other applications. And one of them, without spending too much time on all of them, one of them, particularly interesting is something called spermidine. A spermidine is a kind of anti-aging ingredient that's most commonly found in wheat germ. And what we discovered is that one teaspoon of fermotine, which is our heroine ingredient, is equivalent to eight teaspoons of wheat germ. So another was very, very rich in this ingredient. And along with other sort of micronutrients ingredients that serve sort of, you know, the need for greater nutritional density and for active nutrition and for healthy aging and things like that. This product functions very, very well. And it also delivers protein and fiber. So it's what we've discovered and what we've kind of pivoted with this product is more toward the supplements. So this ingredient actually functions nicely as a supplement ingredient. So that changes the price dynamics of that product significantly. So the product is much more valuable than what it originally was believed to be as a medium ingredient. And so as a result, it's a much more attractive company for follow on investment purposes. And yes, of course, you know, when you have regulatory approval, that's a real game changer. I mean, that means that we can sell it here in Europe as well as the United States. So that's the principle investment thesis behind that one. And I think that works very well with that lines up also similar to Alpine Bay as well, where you had this move from evolution as a science evolved and you learn things and then market also, you find new applications to talk about Alpine bio. Sure. Alpine bio is a quite an interesting company. I mean, we invested very early on. We kind of liked the thesis. We liked the idea of creating casing without without the animal, so to speak. And Maggie, the CEO has actually been effective in creating that casing business case. And so the product that she developed was one where casing is the protein and milk that is commonly used in cheese. And it's what gives cheese that wonderful stretch and things like that. And a casing, she was able to through molecular farming, which is essentially it is, it's more less GMO, but she's been able to get casing to express in soy. So soy becomes the bio reactor that helps to create that protein. She was not only able to get that to perform in the laboratory, but she's actually been able to do it sort of at a more farming scale. And we've actually grown it in field and produced product from that. The problem is is that as people have started to pivot a little bit away from plant-based foods in the last, let's say, 18 months, the demand for plant-based casing is kind of declined a bit. So we've started to concentrate on something else that she's been working on, which is that in order to separate out that casing from the soy, there needs to be some kind of a wash and that wash is a, the process is like an enzymatic wash. And in the process of exploring that, what we discovered is that that wash, washing process reduces some of the allergens that are currently found in soy. And it makes for a more medical grade, let's say, soy milk. And it could be applied for what? It's commonly used. It's in formula. But companies like Denon are very, very interested in this product because all of a sudden they can produce something that is high protein and it doesn't have the allergens. Yeah, which anyway was following the children formula space right now. They're definitely in need of a rebrand and the supply chain, second look of supply chains. So that's exactly. Yeah, exactly. It's a very sensitive area, right? Because people want to know that their kids are consuming things that are allergine-free and things like that. Part of what we can do now is she can actually recreate the equivalent of like a soy milk, a liquid that is completely colorless. So not only can she strip out some of the allergens, she can even strip out the color in. It's pretty, pretty impressive. And that's unique. And I think it's gotten a lot, a lot of interest. And she's also, you know, I could along the way she's also been able to create some higher value ingredients that are also really in demand right now. And being lack of fair and for example, which is also far more. This is really interesting. And so again, this is not a play of moving where the market is moving, where the science is moving. You know, and each one of these examples is really something that each one of our clients, each one of our listeners can learn from. Other other themes that you feel very passionate about as investors been playing the last, you know, while one of the original investors in the space, how evolution of your thoughts as investors changed looking forward for next 18 to 24 months, where do you see, you know, what you believe is investor can give outsize returns for investors. I think, I think a lot of investors that came into the space and a lot of people that actually raised money to try and invest in the space. I mean, I think they let's say most came with good intentions in the expectation that we were going to see returns relatively quickly, particularly in food tech investments because of the tech attachment. The reality is that food is something that evolves very slowly. And typically consumers directly don't make calls about ingredients, for example. That's something that industry sort of refines and presents scalable and cost-effective ways that consumers ultimately, you know, let's say benefit from. I think one of the things that I would encourage people to continue to think about is that our food system today is still under stress. We're trying to produce more with a system that really is not designed to continue to produce at the levels that we're going to need it to produce at going forward. And so there's still tremendous opportunity to invest in the food system. The question is how and where at what stage is and who ultimately decides what gets used and what doesn't get used. And I think that's where I would encourage people to look more at, unfortunately, the gatekeepers in the food system are industrial food companies. I mean, the ones that know how to take those ingredients and deploy them in recurring fashions in the food system. And so as you look at investment opportunities in the space, I mean, you definitely need some kind of an industrial connection in order to make these products work. So really in between the lines, that means that when we talk about disrupting the food system, it's going to be very hard to disrupt Nestle. It's going to be very hard to disrupt new lever. It's not like a piece of software that can then essentially, like an AI solution, you know, disrupts SaaS. Now you could build your own SaaS. It's going to be very difficult for you to create a whole manufacturing system of feeding 9 billion people. That's quite quite a big, you might be able to feed people software through a lovable or anthropic. But to do the same thing for physical, good-like food, you don't have to play with existing players. There's no going around. They're the gatekeepers. They had the accords? For sure. I think that's a really good coin, Alex. And I think, you know, that's not to say that we won't see new food companies pop up. But a lot of new food companies, if you will, are companies that are sort of spin outs or, you know, companies that had formerly been part of a larger enterprise and that were then spun out to operate independently, you know, things like that. And so they be, and in so doing, they become more specialized, more focused on what they're doing. And as a result, you know, maybe they're in a better position to look at and absorb new technologies or new ways of producing products or even new ingredients and things like that. But a lot of these big sort of CPG companies, as we know them today, you know, the crafts of the world, the young foods of the world, the nest lays, you know, all unilever, you know, all these companies are sort of reevaluating how they do business today. Because their relationship with consumers has actually kind of fallen down if they're not reaching consumers in the way that they used to. And I think that's where more nimble companies are better able to sort of understand what the market's looking for and address those needs. But to recreate a food company from scratch, I think that's a tough one. Kim, for those who are listening, you know, and want to give back for the wisdom you shared, what are you looking for in the next 12 to, you know, 12 months? If I'm a listener and I want to say thank you, I want to reach out. What should I be reaching out for? What will be the next step for after I listen to this podcast? No, I appreciate Alex. I mean, we're just about to launch a new fund and that new fund is really going to be growth focused. It's going to look a little bit more broad at the food system by broad. What I mean is, you know, historically, we've been very focused on the alternative protein space. We're looking a little bit broader at ingredients because I think functional ingredients, all the ingredients, the way that these ingredients are produced, those are all really important issues to sort of look at. And obviously how that all that fits into the food system is really dependent on some of the industrial players that are already operating in that space. So I wouldn't. necessarily build a fund and focus my entire efforts around big CPG companies. If I'm right in my thesis, then I think where the real opportunities lie or in some of the more nimble maybe spin outs from some of the larger companies, they're really looking more specifically at some of the areas where change can happen and change can happen quickly. And those spin outs would have an independent balance sheet and depend. They just have these corporations have an equity position in the company, right? But they're independent businesses. Yeah, I mean, what you're really seeing, I mean, just something like that, which is a spin out of DS7, Fentera. Yeah, something like that. I mean, that's well and truly a startup. But I guess what I'm thinking more is if you look at how companies are starting to sort of separate out today, you're seeing more of these big ingredient players. So you're looking at companies that have kind of repositioned themselves as ingredient players. So they're looking more at the strategic sides of food production and they can work more closely with with, you know, let's say they're a little bit more asset light than the companies from which they originated. So to work with those folks, I mean, they're in a better position to know how to take ingredients and deploy them and where, if you know, that'd be like a magnet spinning out of you. You live where it was magnet too big. Actually, a lot of companies have kind of repositioned themselves as ingredient players. You look at ADM, for example, ADM is rebranding itself effectively as an ingredient play and they're divesting themselves with some of their, you know, sort of legacy industries that are a little bit more asset heavy that are more, you know, sort of industrial DSM Firmish and DSM was originally a mining company and acquired Firmish as an asset. And so now it's its repositioned itself effectively as a more of an ingredient player. It's not to say they don't still have some of those heavy assets, but actually what they're trying to do is sort of leverage their ability to work across the food system and find, you know, different ways to work with some of the food producers to deliver solutions and things like that. So you need to work with those kinds of folks because they are the ones that are actually out there talking with food producers, deploy innovation into some of those legacy food producers. Well, okay, I think you've given us a lot of food thought and this conversation. And thank you so much for being one of the leaders in the space. So gave me the way for so much innovation that's happened. But exciting to see the next stage of the invasion take place over the next 12 to 18 months. Thanks very much, Alex. I really appreciate the time. It's been an interesting conversation. One more thing. Don't close this episode yet. If you got value from this conversation, here's what I need from you. 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