Protein Startups Still Gobble Up Capital, Even As Investors Move Away From Alt-Meat

If your vision of a protein-rich diet looks highly carnivorous, you haven’t been following startup funding trends.

Who needs meat when there are animal-free egg whites and energy bars with 75% protein? Or how about high-protein chickpeas, and even Kardashian-approved protein-enhanced popcorn?

Those were some of the top funding recipients from our latest Crunchbase data dive around startups developing alternative protein sources and protein-rich foods. While investors have mostly abandoned the once-hot lab-grown meat space, data shows there’s still a hearty appetite for other approaches to satiating protein demand.

Investors are writing some big checks as well. The 28 companies in our sample list of recently funded protein-focused startups have collectively raised more than $2 billion to date.

And why not? While weight loss fads come and go, consumers’ love of high-protein diets has demonstrated considerable longevity. The Atkins Diet, a low-carb approach to eating that was introduced in the ’70s, hit its zenith of popularity in the early 2000s. More recently, we’ve seen the growth of paleo and keto diets, as well as the rise of weight trainers and fitness influencers who’ve helped make protein powder sales quite profitable.

Yes, but …

The trouble with heavier protein consumption, however, is that the most familiar sources — animal products — are both ethically problematic and limited in scalability. That’s particularly true for some of the more popular sources, like beef and wild-caught seafood.

If it’s simply the protein one is after, the thinking goes, there ought to be many more sustainable options. Preferably, they should also come in appealing packages and taste good.

That seems to be the mindset among many of the recently funded crop of protein-minded startups. Overall, there appears to be a shift away from the notion of plant-based meat, and an embrace of form factors that don’t resemble more carnivorous alternatives.

Take NuCicer, a startup that claims consumers have been involuntarily consuming the “white bread of chickpeas.” The Davis, California-based company is working on breeding chickpeas that have 75% more protein than the current standard, as well as other nutritional and taste advantages.

Or consider Khloud, the popcorn brand founded by Khloe Kardashian. With 7 grams of protein per serving, it’s not exactly a high-protein food. However, that’s still roughly 2x or 3x what you’d get from a typical packaged popcorn serving.

Big protein, small package

Startups are also stuffing more protein into familiar packaged goods.

This year’s top funding recipient in the space — energy bar maker David — is the poster child for this tactic. It’s managed to stuff 28 grams of protein into a single 150-calorie bar. The New York-based company markets sweet-tooth flavors like cake batter and chocolate chip cookie dough, which currently retail for about $40 per dozen.

Demand for protein-rich snacks isn’t just driving U.S. startup activity. Mumbai, India-based The Whole Truth, for instance, closed a $15 million Series C this year to scale a product lineup that features snack bars made with whey protein. And out of São Paulo, Mais Mu raised fresh financing for its lineup of protein drinks and bars.

Sustainable protein sources

In addition to consumer packaged goods startups, funding is also flowing to companies working on high-protein ingredients.

The animal-free dairy space is one that’s been around awhile. The best-known member of this cohort, Berkeley, California-based Perfect Day, has raised more than $800 million to date, including $90 million last year, to produce animal-free dairy protein.

Ingredients derived from obscure plants are also generating some interest. In this area, Plantible Foods landed an investment this year from the Chipotle Mexican Grill restaurant chain to commercialize plant-based protein from the aquatic plant Lemna.

Egg substitutes are also a big deal, as we explored a few months ago amid widespread egg shortages and price hikes. Onego Bio, which makes egg protein powder through fermentation, is among the most heavily capitalized, with more than $70 million in known funding to date, including its most recent round last year.

Supply, meet demand

It helps their desirability that protein startups are addressing two areas of demand. The first is the global need for more scalable, affordable protein sources in a time in which much of the global population isn’t getting enough of this essential macronutrient.

The second is meeting demand for extra protein from people who aren’t undernourished but want more protein in their diet for fitness, health or weight loss goals. This can translate into consuming close to 2 grams of protein daily for each kilogram of body weight — more than twice the level recommended to meet basic health needs.

Not all of this excess supply will come from startups, as evidenced by the raft of longstanding dairy producers ramping up whey protein production. But if our protein-guzzling habits are to continue long-term, it’s clear startups will also have a big role to play.

Related Crunchbase query:

• Protein-Related Funded Startups

Related reading:

• Food Tech Funding Stays Lean While Buyers Show Appetite For M&A

Illustration: Dom Guzman