Claire Smith: Beyond Investing
Claire Smith, the principal of Beyond Investing, on promoting the development of vegan investment products for the masses, and the food and drink brands ticking all the boxes
“For humanity.” The words in Claire Smith’s email signature embodies the fundamental principle of Beyond Investing, the platform she created in 2017 to help investors channel their assets into vegan and cruelty-free businesses.
“Throughout my life, I’ve maintained vegan principles. It became obvious to me that veganism had the possibility of getting a lot more people on board if there were more products available in the market that were tasty, nutritious, convenient and affordable,” she says.
Smith has also created other vehicles to join the Beyond platform with the same ethos. Beyond Animal, an online portal seeking to democratise impact by giving everybody access to the deal flow so that people can invest directly, and Beyond Impact, the advisory firm facilitating investment in products and services.
To this day, there are 22 companies in the Beyond Investing portfolio, and 80% are food and drink brands.
Food and drink investments
Smith says the scope in Beyond Investing goes across four areas: alternative protein and direct animal replacement; vegan convenience foods; animal cruelty-free in other areas such as cosmetics and alternatives to animal testing; and the vegan lifestyle segment, from clothing and food testing to media.
When it comes to investing, Smith applies three key screening terms: “Aspects that I really need to be convinced of are the product is superior, sustainable and scalable,” she explains.
The superior quality relies on the taste. “These products are basically replacing another, so to help people transition to the new product it has to taste as good. It may not taste the same, but it has to be tasty,” she enthuses.
Smith confesses to having been very picky about some of the brands she has taken into the fold: “People send me samples. I’ve tasted them and my daughters have tasted them, too. I sent products to friends in the US if it is for that market.”
The superior quality is also related to the nutritional profile of the product. “I look through the ingredients list and go for the cleanest label,” says Smith, adding this was the reason she invested in the British company Meatless Farm.
“I compared the ingredients list with Impossible Foods, and I saw that it was shorter and the product was very good,” she explains. “I thought [Meatless Farm] was a good investment, given I made it at the same time as Beyond Meat was hitting the market.”
Smith recognises that the valuation of Meatless Farm was a lot lower compared with Impossible Foods, but she believed the challenger brand with the cleanest label “had enormous potential”.
The same superior criteria went into selecting Perfect World, the vegan sugar-free ice cream brand. “These ice creams are high in vitamins, so they can actually be seen as a health product,” she says.
For Smith, the sustainability criterium is given by virtue of the way that products are made. “That’s a given,” says Smith. “I expect the companies to be investigating their supply chain, looking into where their raw materials come from, using organic as much as possible, and that the packaging is sustainable as well.”
The scalability is an issue related to the company’s capacity to grow the business and to scale up quickly to get products into many different markets. “To grow revenues, but also save more animals, that’s the key element of why I’m doing this,” says Smith. “I want more people to be able to eat these products more easily, and they would be doing that instead of buying a sausage or chicken.”
“I expect the companies to be investigating their supply chain, looking into where their raw materials come from, using organic as much as possible”
Plant-based meat and dairy alternatives have been in the limelight recently, but not so much on the cheese front, which is why Smith invested recently in Les Nouveaux Affineurs.
“I’ve been searching for two years to find a decent cheese, and Les Nouveaux Affineurs [is making] really exceptional French traditional cheese, with a very interesting process,” says Smith.
Many vegan cheesemakers use nuts for the texture they provide, but the vegan French cheesemaker has found a combination of plant-based ingredients that gives a more melty and creamy texture to the cheese.
“Les Nouveaux Affineurs has been making the product in the lab for over a year in small amounts, and every time it sells out,” says Smith.
Knowing the company has capacity constrains but very good proof of demand helped to make the decision. “On that basis, we could project quite well what the revenues would be in the first year, and we came to an agreement about the valuation.”
Smith co-invested with a couple of investors who are in France and very well connected. “They know about industrial processes, branding and marketing. I’m providing vegan mindset,” she says.
Challenger brands take off
Through the Beyond Investing platform, Smith has helped dozens of companies to get off the ground while at the same time put the vegan movement in the investment scene.
Companies in the Beyond portfolio are pre-revenue, seed or early-stage companies, hence valuation is done based on projections plus the conviction that their products are going to fly off the shelves.
Smith explains: “I’ve only gone for consumer brands where they have got good interest from supermarkets or foodservice, and they are starting to put some hard numbers in terms of what the first year of revenue is going to be. I have to be super convinced that it is something nobody else is making, it is a quality product, and there is a real gap in the market.”
“I have to be super convinced that it is something nobody else is making, it is a quality product, and there is a real gap in the market”
Mighty Pea, the alternative milk brand in Beyond’s portfolio, ticked all these boxes. “Nobody was creating pea milk in the UK, but it was very successful in the US, so I knew consumers would like it if they got hands on it,” says Smith.
The same applied to Jack & Bry, the animal-free company making pepperoni, chorizo, beef crumble, bacon, burgers, sausages and beef pieces from the jackfruit.
Food and technology
All 22 brands in the Beyond portfolio have a unique proposition with promising commercial growth.
For example, in the field of food technology, Smith invested in the first person who ever created burgers from animal cells without the animal: Mark Post, the chief scientific officer and co-founder of Mosa Meat.
Based in the Maastricht, in the Netherlands, Mosa Meat is creating production methods for growing meat in the lab.
Biotech company Geltor is also in Beyond’s portfolio. The company is making collagen (the protein in our skin) utilising a clean fermentation technology that uses a yeast expression to create the protein with applications in food and cosmetics, for example.
Also in the food-tech landscape is Algama. A French start-up, Algama harvests the potential of algae to create protein-rich foods.
Smith is bullish on the upward trend she sees in the investor community active in the vegan landscape.
Back in 2017, she recalls, there were only 30 investors in a room full of people, most of them were advisors or animal charities keen to support and do what they could do to encourage investment in this area.
“It has grown dramatically since then, but what is really important is that it started with people who had a very philanthropic aim; they were impact investors,” says Smith. For her, this community — dubbed ‘vegan mafia’ — is paving the way for a sustainable future.
“We have seen more investment coming. In March 2018 we saw Bill Gates and Richard Branson in the $50 million round of Memphis Meat. I think that made people sit up and take notice,” she says.
Smith believes that it’s absolutely essential that investments in sustainable food and drink businesses continue for humanity. “It’s not a fad, but absolutely essential,” she says, quoting research from the University of Oxford that in 2018 had forecast land use by 2050 would have to be solely for livestock if we were to feed the expected population.
“That’s not possible. There has to be a shift otherwise none of us will have enough food!” she says.
Seeking a greater social impact led Beyond Investing to launch in 2018 the US Vegan Climate Index (ticker VEGAN), a broad-based portfolio of US domestic companies that screens out all animal exploitation and fossil fuel from a US market benchmark.
And in a move to promote vegan investment products to the masses, Beyond Investing sponsored the creation of the first-ever vegan-friendly and climate-conscious US-listed Exchange Traded Fund (ETF), the US Vegan Climate ETF (ticker: VEGN).
The ETF was listed on the New York Stock Exchange in September 2019, and at the time of writing, it held $26.8 million from 268 holdings including Apple, Facebook and Microsoft.
Plenty to be done
Smith is excited to see Beyond’s portfolio growing and diversifying, and notes there is still plenty to be done in the alternative category.
For example, she foresees opportunities in sandwiches, particularly in the cold end of the spectrum. “We can certainly have many more brands because people have different preferences, and they don’t want to go into supermarkets and just find one thing on the shelves. Consumers want to see there is a lot of choices so they can find their favourite.”
Smith says cheese represents a massive opportunity as well as yoghurt. The latter is somewhat hindered by production facilities in Europe and that’s an area that needs to be addressed.
“[Manufacturing] is generally an issue in terms of the scaling up for these companies,” she says. For Smith, the time has come to retrofitting some manufacturing sites from existing meat production so they are able to process plant-based matter. “Industrialisation is a very interesting opportunity,” she says.
“Leather is an enormous industry as well as wool, and I’ve been looking at a cellular plant-based alternative with same properties for clothing or accessories”
Looking ahead, Smith is turning her sight to materials. “Leather is an enormous industry as well as wool, and I’ve been looking at a cellular plant-based alternative with same properties for clothing or accessories,” she explains.
Smith anticipates that the ever-growing demand for plant-based food and drink alternative will lead to creating by-products that until now have relied on the animal source.
“If the food is changing, the side products are going to be in short supply, so it makes sense to build that supply chain now,” she concludes.
A life in finance
Smith has spent most of her career in finance and investment banking. She held roles at Chase Manhattan, the bank that became part of JP Morgan, and UBS. In 1999 Smith established her own investment consulting firm, which she ran for five years before joining Albourne Partners in 2004.
At Beyond Investing, Smith is joined by Lee Coates, OBE. Coates is a UK financial advisor at Ethical Investors and founder of Cruelty Free Super in Australia.
The third pillar in Beyond Investing is Larry Abele of Auriel Investors, an FCA-regulated asset management firm in London.
A charismatic person, Smith has held a private pilot’s license since 1993 and enjoys writing songs. She confesses there is one that she hopes to use one day as a charity record to save animals.