The brands and funds shaping the healthy eating and sustainable food industry in Chile
By Murielle Gonzalez
Scientists and entrepreneurs lead the food revolution under way in Chile – and this is driven by public policies and funds as well as domestic private and foreign investment. Founders and venture capital fund managers in the country canvassed for this report say food innovation in agrifoodtech is snowballing. They forecast new brands made in Chile will make the headlines in the years to come thanks to products and solutions developed in-house to solve the world’s most pressing challenge – feeding the ever-growing global population with food that tastes delicious and is healthier for people and the planet.
NotCo and Protera are beacons of the foodtech potential in Chile. These start-ups are now known the world over for the products and technology they created. The former is a business-to-consumer company producing plant-based burgers, dairy-free mayonnaise and milk using recipes put together by an artificial intelligence-driven algorithm. The business is valued at $300 million, has attracted 11 investors to date, and raised $115 million from the world’s top global funds, including The Craftory, Bezos Expedition, IndieBio, and SOSV. Notco products are sold in Chile, Argentina, Brazil, and the US – and plans for global expansion continues apace.
Protera is a business-to-business foodtech company, designing and developing new proteins to replace chemical ingredients, enabling food manufacturers to access a wide range of natural and sustainable solutions, from extending shelf life to improving the taste and texture of food products. In June, Protera closed a $5.6 million Series A funding round led by European life sciences venture capital fund Sofinnova Partners and existing investor SOSV.
But to what extent are these two companies a reflection of the food innovation ecosystem in Chile? And what is the investment climate in the country? Entrepreneurs, public servants, and fund managers in Chile answer these questions in this report.
Eduardo Zavala, co-founder of fermentation-based food ingredients producer Done Properly, says the Chilean consumer has become the Latin American benchmark in the adoption of a healthy diet. “Since 2016, this trend has been strongly driven by pioneering public policies that seek to transversally improve the products that Chileans consume,” he says.
Zavala argues that such is the impact of this trend that more than 200,000 products in the Chilean market have been reformulated towards a healthier version.
“Companies in the market now see how the consumer is empowered, demanding better food in retail and foodservice,” says Zavala. “I think Chile has taken on the mission to transform the food industry at a regional level and there are several countries that are following in its footsteps on the public and private fronts.”
Priyanka Srinivas, founder of The Green Live Co, concurs. She explains the healthy eating trend came about as a response to the highly processed food available in the market. India-born Srivinas is a former retail executive who launched a foodtech company in Chile to seize the opportunity arising from early signs of a consumer shift.
“[I found in Chile] increasing awareness in people to seek wholesome and nutritious food,” she says, noting consumption of plant-based choices has been growing at between 10% and 15% over the past few years. “[There’s also] an increasing number of flexitarians, and great governmental policy towards advertising ‘black labels’ on the packaging of unhealthy products. There’s good access to quality raw ingredients, too.”
Srinivas spent 12 years in retail management, including as a senior manager role for space planning at US giant Target. “I started The Live Green Co in Chile because it is a good pilot market – it behaves similar to the US. It has free trade agreements with many countries, and provides good government support for entrepreneurship via grants with organisations such as StartUp Chile, Pro Chile, Invest Chile, and Transforma Alimentos.”
Cristián Sagal, investment promotion officer at Invest Chile, concurs and notes the health-conscious trend is also under way in the drinks category. “We are seeing beverages in the market with added prebiotics and probiotics and less chemical additives in its formulation,” he explains.
Funding and policies
Sagal argues public policies combined with the support of emerging venture capital funds in Chile and foreign investment have paved the way for agrifoodtech innovation to take off. “The foodtech space is developing fuelled by the advantages of endemic raw ingredients and the scientific know-how,” he says.
Chile has been on the mission to attract foreign investment – and agriculture and the food and drinks industry are two prime verticals for it.
“Multiple incentives are in place in Chile to attract foreign investments,” says Sagal. “For example, the R&D law states that 65% of R&D investments can be considered an operational expense while 35% goes as a fiscal credit applied directly to the first category tax of 27%. Companies are also exempt from paying VAT when importing capital to projects over $5 million.”
Sagal says Chile’s Economic Development Agency Corfo also manages subsidies that foreign companies can apply for.
Sebastian Pillado, director of ProChile in Spain, agrees with Sagal about the positive climate for investments in Chile, noting the country is one of the main recipients of foreign direct investment (FDI) in the region.
“Chile is an open country, integrated into the global economy, with 29 free-trade agreements in force, and treaties to avoid double taxation and protection of investments,” says Pillado. He argues these policies allow the country to trade under preferential conditions with the whole world and to grant institutional guarantees to foreign investors while ensuring equal treatment with domestics. “Prospects for FDI growth in Chile have been and will continue to be very favourable,” he says.
Corfo and StartUp Chile are government-backed initiatives investing in and supporting early-stage companies and Transforma Alimentos is a programme set up with public-private funds to promote top-tier challenger brands in the food, beverage, ingredients and technology sectors.
Transforma Alimentos issued a catalogue of 46 start-ups, which have been selected for their capacity to disrupt categories while providing nutritious and sustainable options to consumers – from seed to fork.
The catalogue includes The Live Green Co; upcycled salmon skin crackers Williwaw Foods; algae-based burger Quelp; nano encapsulated curcumin functional drink Matchtune; seaweed pasta Nün; and Delsantek, a patent-protected monofilament, bi-colour and photo-selective mesh that avoids sunburn in fruit species and the consequent loss of profitability.
Go to NutritionInvestor‘s top start-ups to watch.
Venture capital investments
“Venture capital in Chile is in its infancy, but growing,” says Andres Meirovich, managing partner of Genesis Ventures and president of the Chilean Venture Capital Association.
In an opinion piece written for the financial newspaper Diario Financiero, Meirovich explained that three years ago, 100% of the venture capital in the country was from Chilean investors and high-net-worth individuals with little experience in innovation.
“That base has become very diverse and today we have countless different players,” he wrote, noting the strategy of promoting Chile as a regional hub has been reflected in the exponential increase in foreign investors, which are using the country as an investment platform in Latin America. “Today there are French, German, Israeli, British, Argentine, Mexican and US contributors in local funds. This was unthinkable a few years ago.”
Meirovich recognises that Chilean investors have now diversified and that corporate venture capital and family offices are cropping up. Heralds of these developments are The Wind Fund, the corporate venture capital arm of Chilean energy and forestry company Copec, and Ideas Impact VC, the venture capital fund of the Ibáñez Atkinson family.
Andres Pesce, chief executive at Ideas concurs. He recognises that Chile has done well in supporting early-stage companies with public funds, but argues now is the time for venture capital to enter the scene and support companies at later stages.
Ideas has invested in AgroUrbana, a vertical farming company based in Chile – and the first of its kind in Latin America. The start-up closed a $1 million seed round in July, bringing the total capital raised to $1.5 million.
The fund also invested in Foodology, a ghost kitchen business in Colombia.
“Venture capital in Chile is in the process of maturing,” says Cristobal Silva, principal at Ideas. “There are more and more funds coming to market, and this creates a healthy competition to improve value propositions for entrepreneurs and investors,” he adds.
Silva notes funds have started to specialise in sectors or stages to differentiate themselves and add more value to the ecosystem. “I’m very optimistic about the evolving landscape of venture capital in Chile,” he says. “As it matures, the venture capital ecosystem will unleash innovation and create quality jobs.”
Srinivas’ The Live Green Co. is a portfolio company of Fondo Alerce, the foodtech venture capital fund of Endurance Investments, a fund management firm with more than 10 years in the Chilean market, specialising in alternative assets.
“In 2016 we launched our first venture capital fund, which seeks to support technology-driven start-ups,” explains Pablo Fernandez, the fund’s general manager. He notes agrifoodtech is one of the most important areas of investment in the fund.
Like most funds in Chile, Alerce is supported by Corfo among other limited partners. There are $16 million of assets under management, and the mandate is to invest in early-stage companies with cheque size starting at $250,000 with up to $2 million to deploy in follow-on investments.
The outlook for venture capital investment is positive. Ideas’ Silva argues that Latin America and Chile have specific advantages over the rest of the world, particularly in regards to agriculture, food and technology developments as well as human capital and low business set-up costs.
NutritionInvestor‘s top 10 Chilean companies to watch
Founded at the beginning of last year, Done Properly is scaling-up its fermentation technology. The company produces mycoprotein and is also commercialising Rise, an ingredient that claims to reduce by up to 40% the use of salt in food products, naturally. Two more ingredients are in the pipeline.
The company is targeting global ingredients manufacturers and has secured commercial agreements with major food companies in Latina America.
The Live Green Co.
A foodtech company, The Live Green Co. uses technology to research and develop next-generation plant-based foods with a focus on clean label, functional ingredients, sustainable production and packaging.
The company partners with local SMEs for sourcing, production, logistics, and distribution while its team focuses on building the technology, marketing and sales.
Products are sold in 200 point-of-sales in Chile, including gourmet shops and Jumbo, the Whole Foods equivalent in Chile.
By end of this year, products will also be available in Peru via retail, and in the US through Amazon.
The company prepares to launch what it claims to be the world’s cleanest ice-cream – an additive-free, guilt-free and plastic-free product created in Chile from fair-trade suppliers.
Nün. A female-led start-up, Nün produces a range of pasta elaborated with a blend of grains, legumes and Chilean seaweed, harvested in a sustainable way and collected by coastal communities.
Products are available in Chile, the US and Japan, and plans are under way to expand further in Asia.
Kai Food. Founded by four female dietitians, Kai Food produces 100% natural seasonings made from herbs and spices delivering a combination of flavour and health.
PolyNatural. PolyNatural produces Shel-Life, a coating developed to address fruit waste. The coating is a 100% plant-based emulsion manufactured with natural extracts, lipids and plant polymers that form a covering on the fruit. Upon application, fruits remain fresh for longer by preventing dehydration and the growth of microorganism.
Seed investors in the business include Endurance Investments, CLIN, and The Yield Lab.
Williwaw Food. Williwaw Food produces Salmon Cracklet, a range of oven-baked salmon skin snacks. Its raw ingredient is sustainably sourced from upcycling by-products from certified and accredited suppliers in Patagonia. Salmon Cracklet is transformed into delicious, protein-packed, gluten- and carb-free snacks with no chemical products.
Quelp. Durvifoods manufactures Quelp, a range of burgers and meatballs made with Chilean seaweed – more than 50% of the product is seaweed. Both products have a high nutritional value, are soy- and gluten-free and come in recyclable packaging.
Matchetune. Matchetune is a nutrition company producing Nanofix, a functional drink that contains nano-encapsulated curcumin for maximum absorption. Its formula was created by scientists from the University of Chile. Nanofix is high in Vitamin E, does not contain sugar, and is low in calories. It carries anti-inflammatory and antioxidant ingredients.
Choriza Pow. Choriza Pow is a vegetable chorizo-like sausage with the same flavour as its traditional counterpart, but high in protein, only half of the fat, and cholesterol-free. In addition, the technology behind the product allows it to replicate the taste and texture of meat, saving 70% of water compared to the traditional chorizo.
Benexia. Benexia produces and commercialises chia ingredients, 100% natural, gluten-free and free of additives for the food and supplements industry. Produced in the northern city of Arica, the ingredients are high in protein, soluble and insoluble fibre, antioxidants and Omega-3. The company claims these are the first chia protein and fibre extracts produced in the world.
Date published: 17 December 2020