Sundial Foods CEO on the real value of foodtech accelerators
Alt-protein chicken wing start-up founder Jessica Schwabach outlines her time with Nestlé’s R&D Accelerator and IndieBio’s latest cohort
Emerging from her university degree course with a newly established foodtech business, Sundial Foods founder Jessica Schwabach was presented with the opportunity to join Nestlé’s vast R&D Accelerator network and fast-track Sundial’s go to market strategy. The FMCG giant then expressed interest in the start-up’s novel chicken wing product and offered up a strategic partnership to launch it in 40 US grocery stores under the Nestlé Garden Gourmet brand. The Switzerland-based food group also participated in Sundial’s $4 million Seed round in November 2021, to help fund the start-up’s US foodservice launch in coming months.
Many food industry folk question the real value of accelerators funded or operated by major players in the sector as start-ups can be led on by the promise of investment that ultimately does not come to fruition once its time within the corporate accelerator comes to a close. But Schwabach insists the opportunity to work with Nestlé provided Sundial with the necessary boost to present a product to investors.
Speaking to NutritionInvestor, Schwabach details her experiences in establishing and growing the Sundial business while at UC Berkeley and leveraging Nestlé’s testing, production and distribution processes to commercialise Sundial’s first product range and seek outside funding from industry investors.
How did Sundial Foods come about?
It all started out of UC Berkeley while I was in sophomore year of my undergraduate degree in molecular biology and hoping to go to medical school, I was vegan and randomly signed up for a class called the Alternative Meats Challenge Lab. My co-founder was in the last year of her PhD in plant-microbial biology and was hoping to go into academia and become a professor one day. She was not vegan but the professor emailed her and asked her to join and provide some guidance to the younger undergrads in the class in terms of plant science.
We got randomly assigned to a group project as part of that class and we fell in love with the space. It was our professor Ricardo San Martin that encouraged us to start the business. UC Berkeley provided us with a huge amount of support in terms of entrepreneurship. They have incubator and accelerator programmes, free legal services and a lot of encouragement from the professors and staff for helping students balance workload and starting a company.
The idea for Sundial Foods really came from some of the issues we were exploring in the class, one of the main ones being the dryness of plant-based meats. we thought that the easiest way to solve the problem of dryness was to wrap plant-based meat in some kind of casing so that when a consumer interacts with it and cooks it, moisture doesn’t physically leave the product as quickly.
The reason it became an actual plant-based skin was because we tried to figure out how we could actually implement this kind of wrapper casing in a product and make it taste really good and another big gap in the plant-based meats industry was whole cuts of meat, so we started to explore what kind of whole cuts we could use to emphasise the skin element of the product.
We also started to explore what underlying technology we would need to generate these whole cuts. We considered the industry standard process of high-moisture extrusion but soon realised it wasn’t the optimal process for creating whole cuts of meat because it would be the first step in a very long list of processes and assembly including different binders and additives if we wanted to generate muscle bundles and layers within the meat.
We spent the summer of 2019 trying to figure out a new meat production process for plant-based whole cuts. We wanted to achieve a cheaper, faster, better approach than extrusion. It’s really energy intensive and the end product is often not that healthy for the consumer.
We started by looking at different plant ingredients while other foodtech manufacturers were focusing on the functionality of protein isolates. We have to be able to use the other parts of plants if we want to create a cohesive 3D structure, We started working with chickpeas and realised we were able to get a very fine, fibrous texture that we thought was similar to chicken.
Do you think the same ingredients and development process can be extended into other meat alternative options as well?
We think the process can be used for creating a lot of different kinds of meat textures. We’ve done some very rudimentary experiments just because we don’t have the people power to really flesh out our technology right now. We can create a very fine and flaky seafood texture and we’ve tried experimenting with thicker and denser meats.
We’re likely not going to recreate steak or beef burgers because we feel that a lot of companies are working on this area. We have considered pork but we’ll have to see what direction it goes in. For now the plan is to stick with chicken for the next two years because it’s a really fun product and something we think consumers are going to enjoy a lot. Other poultry products are the logical next step.
How did you progress the business once you left university?
We got through 2019 without having to raise outside capital because we started by relying pretty heavily on university resources, particularly cost reductions and access to free legal advice. But then in 2020 we joined an accelerator programme in Switzerland through Nestlé and that gave us a lot of support. We were based in their research facility which can fit up to 700 people and operates huge pilot plants, culinary kitchens and all sorts of labs. It was a very educational year for us, we were able to run trials and understand how scalable our process really was.
In early 2021 we joined the biotech accelerator IndieBio. After using the four or five months that we were in their programme to strengthen our business and figure out exactly what direction we were going in we started to think about raising capital. This was in the summer of last year. The reason behind the fundraise was to set up our first pre-industrial production facility and get the product launched on the US market.
Our plan is to have the chicken wings commercially available at a dozen Bay Area restaurants by next spring. Beyond that we plan to launch in two more food service locations across California and get ready for the retail launch of the wings and two other chicken wholecuts. We’re planning to raise our Series A in early 2023 and that will also be around the time that we do our retail launch.
Why enter foodservice ahead of retail?
Americans consume about two thirds of wings out of foodservice locations, but it’s really that social shareable setting where it’s surrounded by positive experiences like watching sports or hanging out with your friends and trying a bunch of different flavours. That’s really what we wanted to emphasise.
Can you provide a deeper insight into your time at the Nestlé accelerator?
The Nestlé accelerator was a really interesting programme and a unique one. My co-founder and I coming from very scientific backgrounds and we were missing significant entrepreneurial and food industry experience. What we were able to get from Nestlé was a really intensive crash course surrounded by the best people in the industry for quality and food safety, packaging and distribution.
The best part of the programme was the speed it provided us for developing the product and our food business. There are so many roadblocks for small start-ups, from trying to ship something from another country to convincing a supplier to take your very small volume order. For Nestlé these are just minor headwinds and being part of that ecosystem really helped us move quickly. We walked through the door at Nestlé with a small-scale bench-top prototype for a product to having it readily available in 40 grocery stores within a few months. We really couldn’t have done it without their pre-existing infrastructure and expertise and it’s the reason that we’re still working with Nestlé. Throughout the collaboration, we saw a lot of interest from them in our product as well as mutual interest in working together. It’s an interesting relationship that’s developing.
The IndieBio accelerator programme targeted very different areas because although it has quite a lot of food companies to work through, it’s very much a biotech accelerator. And they were really wonderful with coaching us to become much stronger entrepreneurs. I think this was a more typical Silicon Valley start-up experience. They were also able to connect us with investors and understood exactly what we would need to push the company forward as a whole, beyond just launching a food product.
What do you think it was about Sundial Foods that encouraged Nestlé to invest beyond the accelerator programme?
I can’t speak for Nestlé, but they were already collaborating with our university and that’s how we met them. Our professor was in the early days of building the alt-meat programme at Berkeley in spring 2019 and Nestlé had a representative that was essentially a talent scout and she would attend our classes and watch the students work on different projects. She stayed in touch with a lot of the folks that chose to pursue the alt-meat space and reached out to us. I believe we joined the accelerator because the product was very unusual and something they were interested in.
What will be the main focus for your Series A raise next year?
The main focus is the retail launch and what’s behind that will be a larger manufacturing facility. Right now we’re working with Rutgers University where we have a small production facility where we’re able to operate our line. By the end of 2023 we want to be operating a much larger facility and we’re already on the hunt for that. Funding will also go towards R&D on future products we plan to launch. Although this is something that, because our team is so small, we put on hold over the past few months as we really focused on the initial product line. We really want to get that up and running again early next year and we’re looking at different research collaborations that we can contribute to as well.
We know which whole cut we’re going to produce next although we know there are a lot of roadblocks in producing it. We can get the skin pretty accurate but there are certain aspects that are missing, where a lot of research is needed. As far as working with other companies in the space, we’ve spoken to a few before about us providing the plant-based skin and them providing some kind of meat substitute? There’s definitely some interesting opportunities there but we’re not sure exactly what yet.
Do you have any plans to expand beyond the US in future?
Not within the next two years, but hopefully after that we will.