Meatless Farm lifts the lid on its oversubscribed crowdfunding campaign as founder Morten Toft Bech considers future exit strategies, including an independent online IPO
Tired of the traditional investment model and seeking to gain a unique insight into its consumers, UK plant-based foods manufacturer Meatless Farm initiated a crowdfunding campaign in June offering retailer investors a stake in the business for as little as £10. As a convertible round, the company does not have to agree a valuation and any investments made via the round will be converted into shares issued at a later date.
“In six hours, we got 3,500 investors that have invested over £3 million when the round opened up and that means a lot more than raising say £15 million from an institutional investor that does this for a living,” founder and chief executive of Meatless Farm Morten Toft Bech tells NutritionInvestor just over a month after the campaign was launched.
Established in 2016, Meatless Farm has raised upwards of £38 million in private capital since. And as it seeks to bring more of its supply chain in-house and fund additional global expansion in the coming months, Toft Bech wanted give consumers some of the power that institutional investors typically gain from funding growing companies.
“I just love that we are starting to get much more power on the entrepreneurial side; you can even do an IPO without going through a major investment bank now,” says Toft Bech as he reflects on his previous career in finance. “The [stock] exchanges are opening up and online platforms are giving so many opportunities that we can communicate, under the right disclaimers, to consumers directly, who can then invest.”
The campaign has proved a valuable marketing exercise for the Leeds-based business in exploring levels of market penetration in various geographical markets. “Primarily it’s a European crowd,” says the Danish founder. “There’s quite a lot of Spanish investors because of the Real Madrid partnership we have, but at the same time Meatless Farm is a known brand in the UK so that’s where the majority of the investment has come in from.”
In addition to the Crowdcube campaign, the company has raised an additional £15 million from institutional investors, with the whole round likely to close at somewhere between £18 million and £20 million in the next week or so.
Once it closes, Toft Bech has ambitious plans to open a second manufacturing plant in the Netherlands to produce the plant-based protein HMA to reduce any bottlenecks in the firm’s supply chain and enable it to sell the product separately to other food companies.
“Everything goes back to the raw material and being able to manipulate it, and having that ability to control your own ingredients is really important because you can modify the product to reach a particular desired finished texture,” group technical director Karl Williams explains.
Over the past five years, innovation at Meatless Farm has largely focused on reducing the long list of ingredients included in its early-stage products. The original mince offering has seen its ingredients list cut from 21 to 11 without compromising quality, Williams says.
Next on the agenda is considering how to improve the nutritional content of the product portfolio, to meet growing consumer demand for clean-ingredients. “We’re looking at whether we want to actually put vitamins into our products. B12 would be one that we would look at in particular,” Williams notes.
Elsewhere, plans for new products are in motion, with a Meatless Farm plant-based chicken alternative hitting the shelves imminently. Further down the line, the foodtech firm is considering plant-based ready meals and a range of new flavourings to integrate into its products.
The next big thing
As the company continues to scale, Toft Bech is eyeing suitable M&A opportunities, particularly in R&D and product innovation. He suggests the company has already nailed branding and marketing, and with the vast saturation of companies in the market as new brands flood the space, there’s a greater need for new and novel ideas.
“Rather than brands, I’m more interested in what’s really going on deep down in the engine room of R&D in the food industry,” says the founder. “What I do see a need for is much more plant-based innovation. We can’t develop the brand and generate sales and expand globally and then at the same time focus on all the plant-based innovation.”
He concedes there are new areas of interest that are not yet on his product development road map and any future M&A efforts would seek to explore those. “There are some other areas we need to invest in. Maybe cell-based is the way to look at what’s going to happen here. Does it make sense to create a brand around cell-based or does it make sense to partner up with Meatless Farm and make a hybrid product, for example?” he notes.
“If you’re a small start-up with an innovative product you might benefit from being part of Meatless Farm and our broader distribution [network], just as Meatless Farm would maybe benefit from becoming part of something like a large FMCG with all the distribution channels we need. That’s just the pecking order of how to how to globalise a business.”
An additional capital raise is on the cards within the next six months. Toft Bech believes up to £75 million in new funding is needed to support the ongoing vertical integration of Meatless Farm’s supply chain. He is also considering potential exit strategies to take the company into its next stage of growth. Following on from the success of the crowdfunding campaign, a potential IPO via the London Stock Exchange is on Toft Bech’s mind.
“I’m not saying that this is what we will do, but I like the idea of doing an IPO of Meatless Farm where we go directly to the consumer. There’s something very democratic about that approach,” he grins.
More immediate work is being done on geographical expansion, which has slowed since Covid-19 restrictions limited travel. Toft Bech is keen to increase the distribution of Meatless Farm products in the US. At present, it has deals with Amazon-owned retailer Whole Foods and national fast-food chain Nathan’s.
“This is a good platform to build upon further QSR (quick service restaurant) expansion. For next year the US is definitely on the radar, but we need [industry trade shows] Expo West and East to open up so we can go out and meet people,” Toft Bech adds.
Elsewhere in Spain, brand awareness is increasing thanks to a marketing deal with Real Madrid Football Club, but the company has yet to establish a distribution network on the Iberian Peninsula. Spain is certainly a tough market to crack as meat is somewhat ingrained into Spanish culture and the government has made no effort to encourage consumers to reduce their meat consumption.
Toft Bech says the same is true of France, where the adaptation rate for alternative proteins is slower than the likes of Germany and the UK.
As the Crowdcube campaign nears its closure, Toft Bech reflects on the plant-based meat maker’s operational growth in the past few years. Headcount currently sits at around 125, with the majority based in Meatless Farm’s UK offices.
“It’s no longer this little start-up where I know everybody and their birthday. The bigger we get, the more impact we can have,” says Toft Bech. “The real achievement is to get mainstream recognition because then that means the environmental impact of what we’re doing becomes meaningful,” he concludes.
Date published: 27 July 2021