Kristen Rocca | Unovis Asset Management
The senior associate of the venture capital firm that invests in the alternative protein space discusses market trends and investment opportunities in novel products with the potential to help shift consumer eating habits in a new direction
By Murielle Gonzalez
Investing in the alternative protein space requires knowledge of food manufacturing processes and business acumen – and Kristen Rocca has a good deal of both. The senior associate at Unovis Asset Management is originally from Canada, where she studied chemical engineering and specialised in polymer materials and manufacturing. Rocca has worked in the energy and pharmaceutical sectors and spent about a year leading product development efforts on extrusion – a technology now essential in making food.
Her career is multifaceted yet always connected with the fundamentals of food innovation and venture capital. Rocca moved into sustainability consulting and in parallel worked for a non-profit animal advocacy organisation. She completed an MBA at IESE Business School in Barcelona, where she met Giuseppe Scionti, the founder and chief executive of 3D-printed food pioneer Novameat. “I ended up working with Giuseppe through my MBA and then stayed on board for my summer internship until this past September,” she explains. “It was great because I was able to help Novameat build some of the fundamental strategies for going to market.” Rocca was even more fortunate because New Crop Capital, the alternative protein fund managed by Unovis, had just been the lead investor in a funding round for the company. That summer she joined the Unovis team in the Netherlands.
Today, Rocca works with Unovis’s managing partner Kim Odhner to carry out due diligence and look after investment opportunities across Europe and Asia. She was involved in the fundraising activity that resulted in the launch of Unovis’s second fund – New Crop Alternative Protein II (NCAP II) with a target of €150 million.
Unovis Asset Management – a champion of alternative protein
Unovis has been investing in the alternative protein space since 2015. Founding partner Chris Kerr started the firm as he established New Crop Capital. Kerr, who co-founded plant-based seafood pioneer Gathered Foods – the maker of Good Catch – had been investing in the alternative protein sector since 2007.
“New Crop Capital is really about displacing animals from the centre plate, and putting great alternatives into the market,” says Rocca, noting the decision to launch a second fund came about two years ago. “We have a strong track record. Chris and our team led many early investments that help shape the sector. If you look at the valuations today, there’s a lot of growth.”
Unovis has completed 41 investments through the New Crop Capital fund – Beyond Meat is among its notable exits. The fund is an early investor in cell-based meat producers Mosa Meat and Memphis Meat, and invested in mycelium pioneer Atlast. The team at Unovis went to India and invested in Good Dot. Then it looked at New Zealand and invested in Sunfed, thus helping the alternative protein category take off around the world.
“The first fund was about exploring whitespaces, and more high-risk investments because it was about driving capital into new areas,” says Rocca, noting the new fund is more about a ‘picks-and-shovels’ play – investing in the companies that provide the services or tools needed to create a product, alongside investing in the companies that offer the final product itself.
“Now we want to take some of our promising investments from the first fund, go deeper and help them scale,” says Rocca. “And we won’t look as frequently at the science side of the cultivated sector because we believe there are enough companies tackling this aspect. What we need now are the picks-and-shovels – growth factors and scaffolding, fat replacement. We just did an investment in a company called Matrix Meats, which is focused on scaffolding, for example.”
To the point
What are the main differences between the funds?
The mandate of both funds is very similar in that they invest in direct replacements of animal protein, but the structure and approach are different. New Crop Capital was an ever-green fund from a single LP, investing in early-stage start-ups. It was more high-risk because it was about driving investment into new areas and really starting to help grow the alternative protein sector. The NCAP II is a multi-LP fund for early-stage companies and scale-ups.
The geographical focus is also different. New Crop Capital invested everywhere. The new fund will focus on North America and Europe, cross-pollinating technologies and products between the two continents. We would look at Israel and Asia as well, where appropriate.
What are the pros and cons of being a specialist investor?
Being a specialist in alternative proteins means that we understand this sector very well. It means that we’re very well connected to support our portfolio companies. So whether it’s manufacturing challenges, or market expansion plans or flavour ingredient issues – whatever it is, we are in a great position to help these companies go from point A to B.
We are pretty hands-on investors in a really helpful way. We want to understand how we can help companies scale up and what kind of value can we bring. If we can’t bring value to these companies, it’s likely we won’t invest.
Wanting to take on companies disrupting conventional animal agriculture gives us the opportunity to look at things like packaging, or other climate change initiatives, but we have to stay focused on the mandate.
How do you assess prospective companies?
We want to see traction in the market, IP or defensibility of the technology, and competitive advantage. I like to understand what problem they’re trying to solve, and why now is the right time to solve that problem. Some companies don’t cover this in their pitch decks, but it’s really important to understand what gap the business is trying to fill in the market.
What are the challenges in the sector?
One of the biggest challenges in the sector is around the infrastructure. Start-ups have these great ideas, but are they going to build their own facilities? Or are they going to use contract manufacturers? And there’s a lack of contract manufacturers with the necessary skill set.
Another challenge is price parity – these products are fairly expensive because companies haven’t reached scale.
What investment opportunities do you see in the alternative protein space?
The cultivated meat sector is probably 10 years or so from being broadly commercialised, but today we see more of a hybrid approach where plant-based innovation is supporting cell-based technology.
Products launching on the market today, such as Aleph Farms rib-eye steak and Novameat’s latest prototype, are comprised of both plant-based and cell-based materials, and as the cultivated sector further commercialises, we expect the ratio of cell-based inputs to increase.
We also see a big opportunity in fats to provide the juicy flavour you get in conventional meat. And the ‘holy grail’ is whole muscle cut meat. We have Novameat in our portfolio, producing 3D printing steaks, and Atlast is using mycelium to make bacon, and it’s going to explore whole cuts as well.
Some of your portfolio companies compete in the same category – how do you make sure you don’t shoot yourself in the foot?
If you look at our portfolio, each company is tackling different challenges, and each of them is looking at different geographies.
We’ve seen the vulnerability of the food system, and we know it needs to change. Look at eggs – there are billions and billions of eggs eaten a year, and one single company isn’t going to tackle that problem on its own. There’s a lot of disruption that needs to happen, and the world is a very big place. The more solutions out there, the more shift we’re going to have in consumer eating habits.
What new technologies are on your radar?
What’s really important is to give consumers a great culinary experience. A lot of these products are hitting on the taste and texture to match the conventional animal product. Now the shift in the market is towards health and nutrition, and that’s where novel proteins come in – new technologies are producing proteins with very similar amino acids profile to meat, which becomes an opportunity to introduce more nutrition into these products.
I think we’ll see healthier products and more everyday replacements as well. So you’ll have cleaner labelled products – and we’ve got Abbott’s Butcher, for example.
Rocca says precision fermentation is an exciting new technology focus area, to which the alternative protein sector is increasingly turning because it allows companies to scale up quickly with high yields at lower price point product once at scale. “For example, Unovis invested in The Protein Brewery, which has designed a robust process that allows for various inputs to result in the same output protein,” she says, noting this technology will enable the company to operate fermentation facilities in any part of the world.
For Rocca, start-ups in the alternative protein space have done a great job in tackling the unstructured form of meat products – sausages, burgers, and mince – which is the reason Unovis is now focused on the white spaces within the category. “We need melting cheese, fats, and whole cut meats. I think there’s a lot to tackle, the sector is well on the way, but there’s so much more that we need to do,” she concludes.