Nicole Junkermann | NJF Capital

Foodtech investment vehicle founder on the challenges of cultured meat and why foodtech is better suited to VC investment over private equity

Nicole Junkermann is the founder and principal of private investment vehicle NJF Holdings which funds disruptive businesses across various industry-defining technologies.

Its venture capital arm NJF Capital oversees a portfolio of 40-plus companies in healthtech, fintech, foodtech and deeptech primarily across Europe and the US.

NJF’s latest investment in the foodtech space is egg-replacement start-up Eat Just which recently secured $170 million in new funding for its cell-based meat division GOOD Meat.

Here, Junkermann discusses NJF Capital’s investment approach and why she thinks the foodtech sector is more suited to venture capital investment over private equity, due to its high-risk nature.

What attracted you to the foodtech sector?

Firstly, and generally, I am a strong advocate for technology being one of the best ways to improve people’s lives and address pressing social challenges, and foodtech is a sector that is primed to have such positive impacts in a variety of ways.

It is clear that plant-based proteins, for example, are more health and climate-friendly than traditional protein products. [These are] two factors that are becoming increasingly important to consumers given the ongoing Covid-19 pandemic and the urgency of the climate crisis.

Secondly, as an investor I see the market opportunity is huge in this space. For example, the plant-based meat market alone has significant growth potential of up to $85 billion by 2030, an $80 billion increase from 2018.  

Egg-replacement developer Eat Just is NFJ Capital’s latest investment and the second CPG company in your portfolio, while your first was Aloha three years ago. What happened at the time to pause your investments in the sector?

We’re really pleased that Eat Just is our latest investment in the foodtech sector but we do have additional portfolio companies in this exciting space. Spoon Guru, for example, is a London-based company which has developed an intuitive search and discovery application for healthy foods.  They use the latest advancements in AI technology to personalise food discovery for consumers whatever their dietary needs, lifestyle choices, or health objectives.

In the face of the ongoing Covid-19 pandemic, the Spoon Guru app also adapted quickly in developing a solution to encourage people to boost their immune system through nutrition.

It wasn’t that we paused investing in the sector, we have evaluated many opportunities in this sector across Europe and the US throughout the last few years, and are proud to be selective in the entrepreneurs we invest in. It is long-term partnerships with the entrepreneurs which we are looking to create.

What sort of growth companies are you looking at in food and beverage?

We are currently having discussions with food and drink companies to identify any that potentially align with our investment profile, but our focus on foodtech investment is driven primarily by our venture capital arm.

Foodtech in general is a sector more suited to venture capital than private equity – many companies developing cultivated meat, for example, remain high-risk venture rather than the more established companies traditionally seen in private equity.

You have in the past flagged sustainability issues around the mass-production of lab-grown meat. Are you still unconvinced about the growth potential of this sector?

What I hoped to highlight in [a recent Medium blog] post was some of the lingering perceptions around cultured meat which people should be aware of, rather than making a prediction about the persistency of this viewpoint in the future.

At NJF we certainly see cultured meat as an area of huge growth potential in the coming years, and our existing work with Josh Tetrick at Eat Just shows our commitment to the field.

I do think that there are certain specific challenges related to successfully marketing cultured meat products to consumers, given the novel technology involved. In the same Medium article, I went on to explain that there are other uniquely positive qualities of cultured meat that will help it overcome existing perceptions if marketed correctly.

These include the more traditional textures and structure of ‘prime cuts’ of cultured meat, which I think will ultimately mark out cultured meat as the preferred meat alternative for otherwise hesitant consumers.

How many people work in your team and what support do you have to make investment decisions?

At NJF Capital we feel that our varied specialisms within early-stage tech investments gives us a solid foundation from which to assess start-ups, as well as a proven track record that entrepreneurs can trust when approaching us for investment.

Our core team conducts their own research on market trends and industry changes while working alongside our many partner funds and external specialists. In the case of both the foodtech and agritech sectors specifically, we have three trusted experts that provide due diligence and portfolio advice.

The strengths and specialisms of different team members allow us to produce in-depth analysis into the commercial, regulatory and financial viability of each investment prospect, before deciding on a final investment proposition.

How involved are you in the day-to-day business of your portfolio companies?

This is a question that can only be answered on a company-by-company basis, but our general approach at NJF is to provide support to entrepreneurs as and when they need it. We trust the entrepreneurs and founders running our portfolio companies to do what they do best.

As someone who was an entrepreneur for 10 years before I transitioned into investing, I recognise that the greatest successes often materialise when entrepreneurs are given freedom and flexibility to run their businesses without excessive intervention.

There are some companies which we are more involved in than others however, an example being Paris-based Owkin where I hold a position on the board.

Besides alternative protein, what sort of consumer trends in food, drink and nutrition are you considering from an investment perspective?

I believe that the mainstream adoption of vertical farming practices across the developed and developing world is one of the most significant imminent trends within the foodtech sector. Vertical farming provides controlled environments which allow for at-scale development of nutritionally enhanced produce, a key factor for consumers that are becoming more invested in the nutritional value of their diets.

This will also be a vital step towards a more sustainable future, as it dramatically reduces agricultural input and allows for more resilient and specialised production. Vertical farming facilities offer an opportunity for more urban food production, which will reduce demands on rural arable land and help with food security in large urban centres. I believe that this new model of agriculture, nutritional optimisation and reliable distribution will be widely adopted across the developed world in the next decade, with substantial expansion in developing nations coming shortly after.

What’s your take on investing based on diversity and inclusion criteria?

As a female entrepreneur and investor, I am committed to ensuring that there are equal opportunities for female-founded businesses within the world of investment but it is clear that there is still much to be done.

Recent figures show that women-led start-ups received just 2.3% of venture capital funding in 2020, and equivalent figures for other minority groups show similar issues of unequal opportunity and representation within the business sector. Key to increasing diversity within investment is developing an inclusive ecosystem that facilitates equality of opportunity and recognition of talent, regardless of gender, race or background.

At NJF we are proud to have a higher-than-average proportion of women-founded businesses in our portfolio. For example, Elvie, founded by Tania Boler, is a leading femtech company which has developed the world’s first silent wearable breast pump, an innovative product making a tangible difference to the lives of women across the world.  

Why is disruptive technology at the heart of your investment focus?

I believe that there are many industries ripe for digitisation and disruption through technology – in fact many have been for several years, if not decades. By targeting ground-breaking technology in my portfolio, we aim to capitalise on such disruption, particularly at the early stages of product development.

Identifying innovative and disruptive technology has been a constant theme throughout my career, not only as an investor but also as an entrepreneur.

 My first business venture, a company which I co-founded while still writing my university thesis, came from spotting that the sports and gaming industry was well-positioned for disruption through technology.  So, while I have worked and invested in different sectors and geographies, disruptive technology has never been far from my focus.

Are you strictly an early-stage investor or stage-agnostic?

As an investor, investing from my own resources is a great advantage as it provides me the flexibility to choose the right investments, and the best time to make them, without any external pressures.  This means that while we generally have a Series A/A+ focus, we can be stage agnostic and invest in the right entrepreneurs to build long term relationships with founders and management that have real potential to disrupt and redefine their industries. When I invest I’m investing in the entrepreneurs themselves.

I should point out that, generally, the earlier stage an investment the higher the risk. That said, we are very fortunate to have a high percentage of ‘unicorns’ within our Series A/A+ portfolio of companies, so we’re really pleased with the portfolio as it stands.

What sort of business models and technologies are you looking to invest in within the agtech space?

I think one of the most disruptive areas that will emerge within agtech is the onset of carbon sequestration as an alternative source of revenue for farmers. This will be vital in reducing the pressure on year-round crop yields for traditional farms and will allow more regenerative practices to flourish.

The carbon sequestration business model requires technology in the form of soil sensors and storage on a centralised database, but the major disruption brought by this approach will be farmers having the opportunity to earn money without having to harvest produce as cover crops can be used to boost carbon sequestration and earn farmers money through carbon credits.

Given the top-down push from governments around the world to improve soil health, I believe this shift in business model for smaller farmers will help align their output and profit those larger landowners to create a more sustainable business model moving forward.