The Future of the Bioeconomy Episode 4: Fueling the Future of Food

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  Speaker 1:
  Hello everyone and welcome to our video series on the Future of the Bioeconomy. I’m Drew Wandzilak, an investor here at Alumni Ventures with Catherine Tubb, the director of research at Synthesis Capital. Hello Catherine, thanks for joining us today.

  Speaker 2:
  Hi Drew, really happy to be here. Thank you for the invitation.

  Speaker 1:
  Yes, of course. A lot of great research and insight on this space, so we wouldn’t have a full bioeconomy deep dive here without your perspective. I think a great starting point for us would be to tell us a little bit more about yourself—your background, what led you to Synthesis, and maybe a little background on how Synthesis Capital operates and what you guys are looking at.

  Speaker 2:
  Sure. Starting with me, I did a PhD in organic chemistry and then went through a traditional finance trajectory, starting off in equity research where I actually started looking—probably unsurprisingly—at chemical companies. That really started exposing me in particular to agricultural chemical companies. By that I mean crop protection and fertilizer companies like K+S, Ciera, BASF, Bayer, Monsanto, and Syngenta at the time.

  That really got me interested in the space because these companies were very much talking about the future of food, but there were very few of them. There were six at the time for crop protection chemicals; now there are four big companies controlling the supply of a really important part of the agricultural supply chain. I was struck by how opaque that industry was.

  That led me to work at RethinkX, a disruptive technology think tank, specifically looking at the future of food and applying their disruptive technology framework to food and how it could be disrupted in the future.

  Through that work, I met the founders of Synthesis. They invited me to be the director of research at Synthesis, which I was very excited to take on. Synthesis is a large alternative protein-focused VC fund with about $300 million USD from a range of different investors—from institutional investors to family offices—investing purely in alternative proteins and that supply chain.

  It was born out of the fact that the founders had been investing in the space for years and felt there was a big hole in terms of Series A and B funding—people able to lead those rounds with the necessary knowledge. As we’re starting to see some of these companies grow, we need more experienced capital in the space.

  We are definitely focused on investing in the supply chain. We’re not going to invest in another Beyond or Impossible. It’s about thinking through the nuts and bolts of what this new industry will look like in the future and how we’ll really help it get to where it needs to be in 10 years’ time.

  Speaker 1:
  That’s great, and I’m glad you actually brought up Beyond and Impossible because I think that’s an interesting place to start. We won’t talk about those two that much, but for the general audience, that’s what people think of when they think about the future of food and alternative proteins.

  It might be helpful to take a step back and ask: why should people care about the future of food? Why are we striving for these advancements in food? What’s wrong with our food system right now that requires someone like Synthesis to step in and support this entire supply chain of alternative proteins around the future of food?

  Speaker 2:
  Yeah, weirdly, how I came into it and how RethinkX thinks about it is not really about what needs to be done to the food system. It’s more of a technology disruption-focused story.

  If you flip the switch and think about it as having a load of really interesting technologies that are coming down in cost and improving in capability—many of the underlying technologies driving the bioeconomy, from synthetic biology to computer engineering—that are enabling us to understand and program biology in a way that becomes scalable, you start to see what’s possible.

  If these technologies get cheaper and better, what does that enable us to do, make, and achieve? That’s the starting point of our food disruption story.

  Everything from precision fermentation or recombinant protein production, where you can program microorganisms to produce any protein you want—not just pharmaceuticals but also food proteins—to cultivated meat: if those technologies come down in cost, they become much more efficient.

  That’s really what it’s about. The efficiency of our current food system is as good as it’s ever going to get. Biology allows us to potentially make it 10 times more efficient.

  Speaker 1:
  I think that’s super interesting because often when you talk about the future of food and alternative proteins, the first point people bring up is environmental. I think that’s part of it, but you touched on efficiency and how we can have more efficient food supply chains. How much does the environmental piece factor in? Because that’s a huge point people make, but it wasn’t a big part of your explanation.

  Speaker 2:
  Efficiency definitely ties into the environment. When I talk about efficiency, I think about cost as well as inputs and outputs. Environmental impact is measured largely by those factors.

  If you can produce food with fewer inputs and outputs, it’s not only cheaper theoretically, but it also has a much better environmental profile. While the technology isn’t yet scaled up, the expectation is that we’ll use much less land, water, and feed than we do today.

  Think about a cow versus chickens: cows are much less feed-efficient. The amount of land, feed, and time you need to raise a cow is huge. If we can improve on that and make nature better—or build on what nature is already doing—that’s where the efficiency gains come in.

  Environmental benefits are definitely part of the story and one reason why we’re seeing increased focus on this space.

  Speaker 1:
  Another piece of this is that when we talk about the bioeconomy, even within the context of food, people picture fermentation happening in a lab. In many cases, it is biology in a lab, but the original input still usually happens in an agricultural setting.

  You talked about your background with Monsanto and chemicals, and you see a lot of people here coming from oil and gas or agriculture. Can you touch more on those inputs and what’s happened historically? Even with precision fermentation and alternative proteins, there’s still an input required that we, as people of the world, need to support. What does that currently look like?

  Speaker 2:
  Something we think about a lot is the feedstock for this new industry that’s going to grow. Any biological substance is made of basic elements like carbon, oxygen, nitrogen, and phosphorus.

  Where do we get our carbon source? Animals get theirs from the ground through plants. For fermentation, you’ll be using simpler carbon sources like glucose. We’ve thought a lot about glucose production—where it will come from and whether there will be enough for the future bioeconomy.

  We’ve written a lot about that. Other feedstocks could include carbon dioxide; there are microorganisms that use CO₂ as feedstock. Leveraging gases as possible feedstock sources in the future is an interesting area.

  In the US, a lot of crops go to feed animals or fuel. If you take corn, about 80% of it goes to fuel or animal feed. Theoretically, a significant portion of that corn could be switched to feedstock for this new bioeconomy.

  Will it be enough? Probably not on its own. But if you leverage other sources as well—and assuming biofuel use decreases and animal agriculture declines—that would help meet future feedstock demands.

  Speaker 1:
  And the connection there—corn to that simple glucose that is largely used as the feedstock, right? You made the point that we’re putting a lot of our corn, at least in the US, into feeding animals that could eventually shift over to some of these alternative proteins. But there’s still that gap there.

  Is the path forward you see filling that gap with corn, which is a widely grown product? Or you also mentioned some alternatives—what do those alternatives look like, and are they realistic options to support the growing needs of what we’re seeing in food?

  Speaker 2:
  Yeah, if we think further out, the immediate feedstock all these microorganisms use is definitely glucose. You can get glucose from a lot of different crops, but generally it comes from corn.

  Then also, as I mentioned, carbon dioxide—what are called C1 feedstocks. If you can extract carbon from the air and turn it into food, that’s a bit of a holy grail, and there are definitely a lot of companies in that space.

  Another aspect would be residue feedstocks from other industrial processes. Whether it’s food production, vegetable washing, or many other processes, can we recycle that feedstock and make use of it?

  That starts leading toward a much more circular economy than we have now. I’d say those are the three main areas we think will provide feedstock.

  The thing with crop feedstock is if you’re not using as much land to feed animals, it frees up a lot of that crop. And remember, it’s a much more efficient process—you don’t need nearly as much land as you do to feed animals.

  So there’s definitely a lot of white space and headroom there. We’re not at that point yet, but I think those three key aspects will be really important for the future food system.

  Speaker 1:
  Yeah, absolutely. And there are some interesting points there as we think about how the industry is transforming.

  One of the pieces I’ve talked about with others is that you’re dealing with a lot of legacy, longtime corporations with any of this—whether it’s in food or agriculture, there’s a lot of crossover.

  What is it going to take from a market perspective for corporations to get behind this trend? Or is it already happening to a large degree, and we’re just a few years away from having a world that has really efficient food production? I’d love your thoughts on that.

  Speaker 2:
  I think we’re a lot closer than people think, but there’s still a lot to do.

  From studying disruption and how it happens, you generally see a few key drivers pushing it forward. If you look at it now and think, “There are all these massive legacy companies and big political tailwinds supporting the incumbent agriculture system—how are we ever going to overcome that?”

  From a purely technological perspective—because the technology isn’t there yet—if the technology improves, the products improve, and they get cheaper, that’s when disruption happens.

  Most plant-based options on the market aren’t good enough yet. They’re not good enough for a rational consumer to switch—that’s how we define a mass-market, meat-eating consumer. The products aren’t there yet from a technology or cost perspective.

  But if they get there—where a rational consumer says yes—then the whole system changes, and mass-market adoption happens.

  I also think there’s too much focus on the end consumer. We believe this disruption will be much more ingredient- or B2B-led.

  If you think about big corporations—many are in the middle of the supply chain. They’re not farmers. Big food processors and food companies view inputs essentially as costs.

  If those inputs are cheaper and have less environmental impact, it’s an easy win. Imagine food companies switching to palm oil not made on a farm—it’s a marketing opportunity and a cost saving.

  But to get there, we have to prove our commercial scale and reach the right technology level. That’s the barrier right now.

  For example, about 10% of cheese in the US is eaten on pizza. You don’t have to persuade pizza eaters—you have to persuade the companies making the pizzas to use alternative cheese. That’s how I see it, which is a bit different from how some others frame it.

  Speaker 1:
  Sure. That approach realistically takes some responsibility off consumers, which makes sense. There are many places in the supply chain where decisions are made that are really important for this industry to move forward.

  Speaker 2:
  Exactly—and part of the problem is consumers feel their choices are being taken away. But thinking about disruption this way makes for a much more compelling story when you think about who you actually need to persuade.

  Speaker 1:
  You mentioned barriers earlier, and it’s a compelling story. People hear this and think, “Great—more efficient food supply chains, environmental benefits, carbon from the air to create food—the holy grail.”

  All of these things are super compelling. When thinking about the barriers and looking ahead to the next decade, what are you most concerned about in terms of getting to price parity and adoption? And what are you most optimistic about over the next decade?

  Speaker 2:
  I’m pretty optimistic overall. The ecosystem has changed so much—since 2016–2018, when there were only a handful of companies, we’ve seen an explosion across the supply chain.

  It’s not just proving we can program a microorganism to produce milk protein or make cultivated meat. We’re now asking, “Can we commercialize this? What parts of the supply chain need to be built out?”

  The industry is moving, but not as fast as I’d like. Regulation and commercialization are slow, and these are capital-intensive processes.

  Unlike SaaS, you can’t scale this up overnight. You need capital to build plants.

  Looking at EV supply chains, we saw a huge buy-in from government and industry, but that came after showing the technology was de-risked. To de-risk technology, you need capital to build out plants, and you still need the tech to be cheaper and better.

  From a high level, things are moving in the right direction. But focusing on specific elements—scale-up, regulation, costs, capabilities—makes it feel like a much bigger task.

  We think adoption will follow an S-curve: slow at first, then rapid. What could act as brakes are regulation, scale-up, and commercialization.

  Many people are working with governments, but this feels like a switch—it’ll either happen or it won’t. When it happens is the stressful part because it’s out of our control.

  Speaker 1:
  That makes sense. With so many catalysts or barriers that could influence adoption, is there a point or a part of this you zero in on that could be a major unlock?

  From your EV comparison, is it regulation, government funding, large corporations signing big capital investments—what’s the piece that, if we had a magic wand, you’d solve first?

  Speaker 2:
  I think it’s that “Tesla moment” that EVs had.

  What I mean is someone came into the market and said, “We can produce a premium sports car with a really long-range battery, and people want to buy it.”

  For context, EVs have been around for a hundred years—40% of cars in the US in 1900 were electric. But battery issues persisted, and automakers had almost dismissed EVs entirely.

  Then suddenly, someone showed it could be done. That moment forced everyone else to race to catch up.

  Speaker 2:
  And I kind of see that as similar. I’m not saying we want a premium car out there for alternative proteins, but I’m saying it’s almost the proof of a company saying, “Hey look, we’ve commercialized this, we can produce it, and here it is on your plate—and people will eat it.”

  I think that’s almost the key moment we need. Once you can show that, I think government support and industry funding will follow. For me, it’s very much that kind of tech milestone that needs to be achieved.

  Speaker 1:
  I think that’s—no, sorry, go ahead.

  Speaker 2:
  And also I think what’s more interesting about food is that there are a few different technologies at play in how we could produce food—from light fermentation to cultivated meat to plant-based and even single-cell fermentation, like mycoprotein.

  So there are a number of different technologies working in tandem. How they come together to produce really interesting food is something that I think will make the next five years quite fascinating.

  Speaker 1:
  It is incredible. I love the comparison with the EV market, and I’ll be excited to read or watch what comes out of that analysis on delivering the Tesla moment. That’s something that, in VC, as generalists, we hear all the time in other industries.

  Any prediction on your end for what that Tesla moment would look like for alternative protein?

  Speaker 2:
  Yeah, the interesting one—my battery’s running low now—but the most immediate thing happening in the next year or so is perhaps cultivated meat scale-up.

  I think that could be a moment: if Upside’s facility can start producing this product at scale, that could be significant. But I don’t want to say, “Hey, that’s the Tesla moment,” because it almost feels too obvious.

  A Tesla moment may need to be something a bit more out of left field. But that’s certainly a big milestone people are watching.

  To be honest, many companies are more aware of this space than people think. A lot of them have corporate venture capital arms, so they’re tuned in. They’re just waiting for the technology to be de-risked.

  I do think once that happens, we could see a lot of cash coming into the market across multiple technologies.

  With EVs, we saw a similar tipping point: the Inflation Reduction Act and infrastructure funding put in more capital in 10 years than we’d seen in the previous 30 for EVs and their supply chains.

  The money will come—it’s just about getting to that tipping point.

  Speaker 1:
  I think that’s a really great point—that in many industries, and especially here, money is almost waiting on the sidelines for technology to catch up.

  So it’s not always corporations’ fault that they’re not adopting alternative proteins as fast as some people want. With any new tech, new biology, new hardware, it takes time. I think that’s a really nuanced and important point.

  Speaker 2:
  Right. It’s that valley of death, and we’re basically about to enter it with alternative proteins.

  The good news is we’ll start seeing strong companies rise to the top—which the space needs.

  You mentioned Beyond and Impossible at the start; I think we’ve seen a lot of startups that aren’t necessarily technologically differentiated.

  We want to see technological differentiation in our companies, for sure.

  Speaker 1:
  That’s a great point.

  The last thing here: you talk about the future of food—that’s what you focus on most of the time. The audience for this includes everyone: some in the food industry, others who might not even know about Impossible or Beyond, or that’s their only exposure to the future of food.

  What’s one or two things you’d say to those people? Whether it’s a misconception, something they can do personally, or something exciting or compelling about this whole sector and why they should be excited?

  Speaker 2:
  I always say to people: let’s move away from this discussion of “what if” to “let’s assume it happens.”

  You can look through history—my favorite example is artificial ice disrupting natural ice. Spoiler alert: we all have artificial ice now.

  If you move away from the immediate “ick factor”—because food is subjective and emotional; we make those choices three times a day or more—and think about what happens if the technology gets better, cheaper, and more efficient, what does that mean?

  There are endless possibilities—not just for food, but for the entire bioeconomy.

  Food might even be one of the harder problems to solve from a cost perspective, but there are many other applications—materials, cosmetics, household products—that will also be transformed.

  Changing the framework to “what happens if” helps us imagine what the future looks like: a decentralized food supply with huge geopolitical implications.

  If every region can produce its own food, that changes global dynamics. Combine that with decentralized energy systems like solar, and you start seeing massive impacts that interconnect.

  These disruptions don’t happen in silos. If you support renewable energy or autonomous vehicles, this will be part of that transformation as well.

  So I’d say: if you feel that “ick factor,” try to step over it. Reframe the question, because it’s coming—and we should be preparing for when it happens, not resisting and then being caught off guard when it does.

  Speaker 1:
  “What happens if” instead of “what if”—I love it. It’s much more exciting and optimistic to think about the possibilities of what happens if.

  Speaker 2:
  Exactly. There will be implications and choices to make when this does happen. If we put processes and investments in place now, we’ll be in a much better position than if we just resist it, complain about it, and then have it happen anyway.

  Speaker 1:
  Absolutely. Catherine, this was fantastic. Is there anything we didn’t touch on that you were hoping we would, or any information you want to share?

  Speaker 2:
  I mean, the only thing is, I’m not sure if I mentioned—I definitely am not convinced. I definitely don’t think the consumer has as much to do with this as perhaps other companies and people think.

  I think the consumer gets a lot of attention because we are all consumers of food, and I would say we all have as many opinions about food as we do about parenting or what we’re doing.

  It’s hard to remember that those decisions are not necessarily made that much at a consumer level. What we’re eating is generally a curated choice of food—unless you’re lucky enough to go to your local farm or something.

  So we have to think about it more from a business and corporate level.

  Speaker 1:
  I’ll ask about that because—and this isn’t your job, this isn’t necessarily my job—but for someone who listened to this whole thing and went, “Oh my goodness, Catherine really fired me up about alternative proteins. I believe this is the future,” and they’re already in the “what happens if” mode, but then they hear you say the decisions aren’t really made at the consumer level—which I understand—what can the individual do to participate in the advancement of the industry?

  Speaker 2:
  They have to keep showing up at the supermarket and trying these new plant-based products.

  That’s the other thing: they’re constantly changing. We make these decisions three times a day. The big difference between buying a car and buying food is that with food, we have the ability to keep trying these products.

  We can really see how much better and cheaper these products keep getting.

  So I would say: keep showing up, keep trying brands. If you don’t like it, maybe next week it tastes different. Don’t dismiss things because you didn’t like them once—maybe that’s the best way to do it.

  Keep trying. I try plenty of plant-based food that I don’t like. I still can’t stand a piece of tofu, to be honest. I’m probably the most discerning customer out there. But yeah—

  Speaker 1:
  That’s good, okay.

  Speaker 2:
  And trying products.

  Speaker 1:
  That’s right—keep trying stuff, have a “what happens if” perspective. I think that leads into trying things, understanding your appetite, critiquing, and sharing your excitement.

  That will drive things forward, at least at a personal level.

  Well, this was great, Catherine. I appreciate you taking the time to join us. Super informative, super entertaining, and I think people will really enjoy it.

  Speaker 2:
  Great, my pleasure Drew. And if anyone wants to contact me, my details can be found on the Synthesis Capital website.

  Feel free to read some of my musings and reach out.

  Speaker 1:
  Yes, please read her musings—some of them were the impetus for this entire series. They’re worth checking out, and we’ll make sure to include links in the post here as well.

  Alright, thanks Catherine.

  Speaker 2:
  Thanks Drew.