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CULT Food Science advisor: Should we question meat industry’s early investment in cell-ag?

Rob Harris discusses the legacy meat industry’s entry into cell-ag, considering whether their intentions for the growing category are good or bad
Rob Harris also outlines CULT Food Science’s public listing and plans to engage retail investors

Tyson Foods and JBS’ surprising early investment in the cellular-agriculture space last last year resulted in a resounding cheer from across the burgeoning food tech category. “Finally,” the space collectively thought, “we are being recognised as the future of food production and going mainstream.”

Certainly, the interest from legacy meat producers is a significant step in the right direction, but the early investment is curious when considering the lack of innovation among legacy corporations like these. 

Rob Harris, advisor for cell-ag investment vehicle CULT Food Science has questioned the intentions of ‘big meat’ in the cultivated meat space, considering whether the plan could be to overthrow start-ups’ valuable developments. 

Elsewhere, CULT Food Science this week commenced trading on the Canadian Securities Exchange. Harris details the firm’s intentions for engaging retail investors and providing them an entry into the highly sought out category. 

What’s the ethos behind CULT Food Science any why did you decided to go public?

CULT Food Science was born out of a pretty simple idea allowing the democratisation of ownership into the cellular agriculture space. What I mean by that is, if you’re not an accredited investor, it is incredibly difficult to participate in many of these start-up raises right now in any meaningful way. 

That’s why we decided to explore ways to align a vehicle that allows retail investors, who are largely that Gen Z and Millennial age group, to support this industry. It fits with their values and their consumer wants and needs, yet they’re locked out from a meaningful standpoint in sharing in the upside of the growth of the environment. CULT Food Science decided to do the heavy lifting to go public and allow people backdoor access to own a part these start-ups. 

In terms of our investment mandate, It’s pretty broad, and we left it that way intentionally. When people hear cellular agriculture, they think of the heavy-hitters like Eat Just or Upside, and those are phenomenal core players in the space but the reality is cellular agriculture is much broader through the the lens that we use to look at it. We see it as disrupting any aspect of the food industry that is unsustainable or maybe environmentally damaging. 

To give you an example, one important start-up in our portfolio is MeliBio, which is actually synthesising honey. Some people might think we only invest in chicken or beef proteins and that’s not the case, we’re investing in many different verticals within the sector.

What is your communication with retail investors like? Is there significant interest in cell-ag and has it become mainstream among this investor class?

From my personal perspective, I get pinged a few times a week on LinkedIn by people just randomly saying they are excited to see us go public. There is an appetite. I believe, fundamentally, we as an industry excluded the retail investor because they weren’t a meaningful part of the narrative to begin.

Initially the focus was securing interest from billionaires and celebrities to help companies land a Seed round. We’re flipping that on its head now and we’re working hard to make retail investors aware that they have an opportunity to invest in this space. I think a lot of them are aware of this concept of cellular agriculture. It takes time to build that base up, but there has to be an incentive  and I think this is the first real North American instrument to allow that to happen.

Sure. I think maybe also, what’s interesting is that people don’t generally understand the timeline, and that we’re really at a point where this is coming to fruition, and it’s being commercialised, and it’s only going to move more quickly. Almost can’t remember where I was going with this point. 

Do you think there’s enough education around this?

I would say probably not enough right now. I think it’s a growing initiative. There are some very tremendous nonprofit organisations doing phenomenal work in the space as their mandate is to educate. I think we’re coming up against that first roadblock, which is out of sight, out of mind.

But with Singapore moving for commercial licensing for sales and facilities being actively built in the US, we’re getting to that point where we’re right at the cusp of someone being able to walk into a store and be pick up a cultivated meat product. 

Precision fermentation and producing lab-grown dairy proteins was a significant area of investment in 2021, where do you see this space going in 2022 and beyond? 

As a human race, we have a deeper understanding of how to manipulate yeast than we do of any other process in the cell-ag experience so I think it’s natural to see precision fermentation in dairy be one of the first big upticks in terms of funding initiatives. Perfect day and General Mills are already live with their products. And what an incredible partnership for a start-up to land when it was not long ago considered an early incubating company. 

I think that space has a lot of room to grow and will continue to accelerate. I think it’s easier to pitch to early investors because manufacturers can scale more easily and at a smaller stage than those producing meat. You can also look at it as many different subsets within the category. Who’s helping scaling protein production? And who’s working on the infrastructure aspect  or developing cell lines that go further upstream? And who’s developing a growth medium that actually brings down the cost of production? 

Do you expect any significant movements in terms of regulation or commercialisation of cell-ag this year? We saw the FDA in the US request commentary on cell-based meat back in September of last year which seemed to be an interesting move towards possible regulation, what do you think will be the outcome of that initiative?

I think in the classic American way, the FDA will deal with it when they are forced to deal with it, and I think that’s because of the innovators in the space and the investors behind them. A good example of that is Upside Foods just opened a multi-million dollar production facility in the US. That facility is basically idle as it’s not legally allowed to produce anything, but the company took a calculated risk and I think they have the capital and the investor base to say “FDA, now make your move, what are you going to do about it?” 

I think ultimately, the FDA reacts when it has to and I think it’s being forced to the table now with its policy. It makes it easier that another country (Singapore) has already embraced this technology and will have some data to leverage. I think the FDA will make some significant strides this year. I feel like they’re more concerned about the wording behind cell-ag than anything else. We saw in the alternative meat market, the meat industry rallied against the use of the word meat. It was the same with milk, right? Brands had to spell the word milk different, or products had to be very widely disclosed that it is plant milk. 

Because this factory farming initiative is just so ingrained in the US and has such political push up in the White House via lobby interest, the meat industry is going to be very compelled to make sure that whatever policy comes out, doesn’t sound similar to what they’re doing. For example, cultured meat will not be able to be marketed as chicken or beef. The challenge is going to be in the softer initiatives around how to market these products and are they considered GMO or non-GMO? 

What’s the significance of major meat producers Tyson and JBS now investing in the cultivated meat space?

This is incredibly interesting. From a business perspective, very rarely do we see established historic industry invest early in disruptive technology as it is higher risk. It’s not typically within their appetite to deploy capital early on, they usually wait. They have no problem doing seven to 10 figure acquisitions when they see that the technology is ripe and ready to be acquired. So to see these guys jump in this early is incredibly exciting. But there are some big conflicting incentives and significant capital at play here. 

On the one hand they may believe they need to invest in this early because they can’t miss out on what might be the future food production. However, they have billions of dollars in legacy infrastructure that is on a time limit now. I think it’s very clever on their behalf, they’re going to get very early data on how quickly the cell-ag category is coming to fruition and how they need to react. 

We don’t want to see these companies mothball start-ups or take them out of play, because they see this is too disruptive too quickly and they feel the need to slow down the progress being made. My hope is that they take the opposite approach and openly embrace this movement, making it their mission to integrate it into their current infrastructure in a meaningful way to bring scale from day one.

What are your plans for future investments and adding to your portfolio in the next year?

I think 2022 can be extremely exciting for CULT we’ve just gone live with our public listing and that has opened up some additional capital that will be redeployed back into the ecosystem. Because we’re in line with the market, total investment in the space is growing very exponentially. We were doing $366 million in 2020 and in December 2021 alone, we booked more capital than we did in the whole year of 2020. That just shows you the pace at which this is accelerating. 

I also think 2022 could be an interesting year from an execution standpoint. 2023 really is when a lot of this technology will not necessarily commercialise, but it will hit a critical tipping point. Answers will be provided for the questions are we cost effective? Can we compete with traditional models? And do we have to start in a high value niche market and work our way down to the more consumer friendly? 

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