Singapore firm targets bigger fund to invest in alternative proteins


JAKARTA — One sector hit hard by the funding winter is alternative proteins, but that does not mean innovation has stopped in the area, according to Gautam Godhwani, managing partner of Good Startup, a Singapore-based venture capital company that focuses on new types of protein.

Good Startup plans to invest between $500,000 and $1 million each in up to 10 companies next year, Godhwani told DealStreetAsia in an interview.

“We’re looking for passionate and driven entrepreneurs who are building great products that fit the market,” Godhwani said. “In addition, we look for founders who are making an impact and excited about creating a sustainable food system.”

Alt protein is defined as protein derived from sources other than animals, which include plants and cultured cell-based meat grown under controlled conditions. The industry saw a huge influx of funding in 2020 and 2021. According to a report by Good Food Institute APAC, investment in alt protein startups in the Asia-Pacific region increased 92% in 2021, totaling about $312 million — almost double the $165 million raised a year before.

However, funding activities slowed in 2022. “The alternative protein industry had a 50% reduction quarter over quarter, so clearly the sector has been impacted,” said Godhwani. “This situation is forcing founders to become more cautious and lean as they’re finding ways to stretch capital further than before.”

Founded in 2021, Good Startup raised about $34 million this year for its first alternative protein fund. The company has made 24 investments to date, deploying around 40% of its capital, mainly to companies from the U.S. Its portfolio includes American plant-based meat company Impossible Foods and egg-substitute maker Eat Just, Israeli cultured-milk maker Remilk, and Singapore biotech company TurtleTree Labs.

The U.S. is currently leading the alt protein industry with about two-thirds of global funding in the sector going to American companies last year. “Our funding activities mimic the global trend, and about 60% of our portfolios are coming from the U.S.,” said Godhwani. “But we’re actually eyeing tech companies whose solutions are applicable worldwide and we increasingly see that Asia is stepping up in that capacity.”

Godhwani expects Good Startup’s portfolio to become increasingly global.

When it comes to the faux meat sector, the U.S. is a more mature market with a higher level of consumer awareness and availability of a wider range of alt protein products. “Therefore, it has many companies with high-scale production facilities. This way, they can offer lower prices to consumers,” said the venture capitalist. “That’s a very healthy dynamic because when you have more scale and more choices, you end up bringing more consumers in over time.”

Meanwhile, Asia is still in the early phase of alt protein development and adoption, so consumer awareness remains low. This has made it harder to offer products at a price that might tempt consumers. It requires a lot more effort to get a small market share, Godhwani said.

Nevertheless, Asia has the potential to catch up quickly. “Experts predict that it will be one of the largest markets for alt proteins in 2025. This is interesting because Asia has diverse consumer preferences,” he said.

“Over time, I think we’ll see a lot more specialization. For example, Israel has become a cultivated meat hub and you might see an area become an alternative seafood hub. Then you have a market like Singapore which obviously stands out in the regulatory environment,” Godhwani noted.

Singapore was the first country to approve the sale of cultured meat in December 2020, when it gave Eat Just approval to sell lab-grown meat to the public.

Godhwani believes that Singapore has done a good job in establishing itself as a regional leader in the alt protein industry: “As the sector grows, Singapore must continue to maintain that position by luring talent. And one way to do that is by building a lot of manufacturing facilities, research and development centers, and giving incentives to startups.”

Besides Good Startup, the city-state is home to alt-protein venture capital companies such as Better Bite Ventures and Big Idea Ventures. A few startups in this sector have emerged in Singapore including Next Gen Foods, which raised $100 million in February.

Approaching 2023, Godhwani is confident the alternative protein industry will continue to innovate despite the lower funding. Good Startup plans to start fundraising for its second vehicle in the next few months after it deploys the majority of its debut fund.

“The next fund will be larger in size, given the amount of capital that these companies need. It will depend on the number of startups we want to work with and the average capital we want to deploy for each of them,” he said. “That’s the starting point for us.”