Latin America’s leading competitor in the vegan food market, the Not Company ( or the NotCo), will soon be worth $250 million after it closes on its recent $85 million round of funding. This recent round of funding has come forth due to its recent series of successes. How is this Santiago based company looking forward to starting a food revolution from Chile?
With the increasing globalization and industrialization of food, the threats of malnutrition, resource scarcity, and pollution have gone up manifold, and new generation technology investors are looking forward to capitalizing on these problems. In the recent 5 years, venture capitalists have invested over $9 billion to over 2000 deals across the world which seeks to replace or supplement traditional methods of growing, manufacturing processing, and distribution of food in the world. The not Company may seem like an unlikely contender in this market, but it is the CEO ( Matias Muchnick) and two co-founders of this Santiago based company, who are plotting to bring the potential benefits of this food revolution to Chile and to the world, eventually.
How the dream team of The Not Company came into being?
The Not Company is Muchnick’s second endeavor in the food industry, Eggless being his first. When Muchnick previously launched eggless, which sold plant-based dressing and a plant-based mayonnaise, it was revealed to him that how inefficient and underdeveloped was the research in this field. Hoping to tackle this problem, Muchnick ventured out to the University of California, Berkeley. After that, he recruited the two other co-founders, Karim Pichara, an astrophysicist from Harvard and Pablo Zamora, from the University of California, who was researching on plant genomics. With the dream team being formed, the three founders came back to their home country Chile to kick start their business. Distancing themselves from the Silicon valley helped them draw recruits and it was cheaper with an equally strong talent pool. And coming back to Chile also played well into their first strategic objective, i.e., to get control over the Latin American market and bring in healthier options for the consumers.
Low-cost food depriving us of proper nutrition.
To understand the problem of malnutrition at present, we need to look at the emerging fortunes of companies like Nestle, Pepsico, General Mills, and other fast-food chains like McDonald’s and KFC. These companies have undertaken business models designed to attract people from a low-income group and their products are really cheap, not just affordable. That kind of diet eventually kills our health. And research articles are there to back this claim. A study from The New England Journal of Medicine is bearing out the claim that more or less 10% of the world’s population is obese. Over 600 million adults and over 100 million children are suffering from obesity.
Lack of Nutrition or malnutrition is not the only problem. An industrial food business is responsible for massive deforestation as these companies give out huge incentives to the suppliers encouraging large scale farming which is eventually destroying our forest land. The surging demand for meat in these fast-food chains is increasing the scale of factory farming of animals which is increasing global warming.
The Not Company’s road map and the software behind the scenes.
Muchnick’s company is amongst those creative problem solvers who are trying to solve these problems with something which is cost-effective and does not harm the environment as drastically as these do. The Not company launched in 2015, they have been developing an array of new products. The initial plan of the company was to be a research, development license arm for food companies that offer healthy options in place of the existing ones.
The initial years were concentrated on feverish experimentation,- chocolate, milk, mayonnaise, meat replacements, etc. Finally, they decided to follow the footsteps of Hampton Creek and launch their mayonnaise. It was only wise for them to venture out with mayonnaise at first because Chile is the third-largest market for mayonnaise in the world. Plus, compared to other products on the company’s road map, mayonnaise was the easy one, to begin with. The NotCo managed to take control over 10% of Chile’s mayo market. The product lined up next was a milk replacement, followed by ice cream by 2019. With 2020 online, the Not Company launched its hamburgers, and the next product on the map is a chicken meat substitute.
Behind the scenes is “Guiseppe’’ the machine learning software finding the links between animal and plant proteins. “Guiseppe”, the ground-breaking software, was developed by the other two co-founders- Pichara and Zamora. Working across seven separate databases with seven different approaches, the software has a lot of parameters to look into. The food and ingredients are described by molecular data. The contents of the food are analyzed using spectral imaging and a range of data is collected for things like the texture, palate, aftertaste, acidity, and tanginess.
The bright future of the NotCo.
With a well-defined product road map, The Not Company has already spread over Latin America, not just Chile. In its latest blockbuster deal, which was signed with the Burger King, The NotCo is supplying plant-based burgers. The company’s approach to protein formulation is paying off in this deal with burger King.
The NotCo is now selling 48 sandwiches per store per day in the locations where it is supplying its burgers. NotCo’s burger can also be bought in grocery stores across Argentina and Chile. Though the sales outperform Impossible Foods, it has not reached the break-even point. By 2021 it has a target to generate positive cash flow. With new products and positive growth in sales, it is quite obvious that the investors have taken note. Animal product alternative market is a huge growth category for venture capitalists. L Catterton Partners, a consumer brand-focused private equity firm, and Future Positive, backed by Biz stone, were the financers in the latest round of funding.
Behind all these is the change in taste of consumers and their care for the environments. Animal agriculture adversely affects the climate and it is the second most man-made contributor to greenhouse gases. The 70 billion animals raised every year for human consumption heavily contribute to deforestation, pollution, and biodiversity loss. They curb one-third of the world’s habitable surface area and consume 16% of the world’s freshwater supply. People are growing their interest in plant-based diets to reduce these environmental hazards and alone Americans can reduce 1911 pounds of Carbon dioxide emission if they were to replace beef with a plant-based substitute.