Written by Lionel Artusio-Payot, managing partner of Zebra Impact Ventures
When we think of farming, a herd of grazing cows might spring to mind, perhaps with fields of crops in the background. But this is old-school farming. To get an image of future farming, you have to think small. The future of farming involves micro-organisms, soil health and alternative protein sources.
Novel protein sources form the backbone of the alternative nutrition industry, which is dedicated to developing foods that are as attractive as today’s mainstream animal proteins but without the heavy environmental toll. The focus is on plant, insect and algae-based meat and dairy substitutes, alongside precision fermentation techniques, such as cell agriculture.
Why the need for change? Two reasons. First, the global population is forecast to reach 10 billion people by 2050, meaning we will need to produce 56% more food than current levels with every person needing around 50 grams of protein per day. Second, the environmental cost of traditional meat and dairy farming is the single biggest contributor to environmental destruction and is accelerating climate change. Analysis suggests it will be impossible for a population of 10 billion to consume the amount and type of protein typical to a Western diet and meet the 2015 Paris Climate Agreement targets. Alternative proteins offer a more sustainable way to feed the world.
The alternative protein market had an estimated valuation of USD 76 billion in 2023 and is projected to reach USD 423 billion by 2033 with a compound annual growth rate of 19%. In short, we are at the beginning of a global food revolution with significant investment potential.
Alternative nutrition is one of three major investment themes that comprise our sustainable agrifood tech strategy, alongside ‘precision farming’ and ‘waste circularity’. It is currently the most mature food-system transformation example with an end consumer base already comfortable with the concept of plant-based foods that offer similar textures and tastes to traditional animal proteins. To maximise our investment edge, we focus on alternative nutrition companies that are closer to the farming and production end of the industry – B2B – rather than the consumer end of the market, to improve portfolio resilience and reduce volatility.
For example, regarding insect nutrition we are particularly interested in opportunities in the animal feed and pet food sector. The increasing use of insect feed has been shown to strengthen animals’ immune systems and advance health by lowering the need for antibiotics. This trend has the support of large corporations, but also presents early-stage challenges. For example, in the aquafeed sector, the availability of a variety of year-round alternatives, such as fish, shellfish and aquatic plants, could limit the sales of insect feed. The application of government regulations regarding animal health and product quality also raises questions for insect feed producers. As a novel industry, the requirement for efficient supply chains to deliver products in fresh condition currently limits the capacity of insect feed wholesalers around the world. We are closely monitoring the industry for the emergence of robust and viable business models that go beyond promising approaches.
