Impossible Foods, the privately-held plant-based protein producer, has recently been adapting aspects of its business strategy, probably in preparation for an upcoming public listing.
About Impossible Foods
The company’s core technology centers around combining natural ingredients like fats, amino acids and vitamins, in order to deliver the texture and aroma of conventional meat and dairy products. Impossible distributes its products both to consumers through retail grocery outlets and directly to restaurants through food-service distribution channels.
Unidentified sources quoted in a recent Reuters report indicated that the Silicon Valley-based company is exploring going public, either through an initial public offering (IPO) in the next 12 months or a merger with a special purpose acquisition company (SPAC).
According to SharesPost, the total funds raised to date is $1.5B in ten rounds since 2011, with a post-money valuation of about $4B in August 2020. A projected $10B valuation, as suggested by Reuters’ source, would be more than twice what Impossible was worth in that last private round.
This valuation may be compared with competitor Beyond Meat (Nasdaq: BYND), which has a market cap of more than $8B, more than four times its 2019 IPO pricing.
International Capital Raise
From its origins at Stanford University in 2011, Impossible Foods raised $6.5M from SiliconValley-based Khosla Ventures in its original Series A investment. More recently, the company has attracted several key global investors, including Seoul-based Mirae Asset Global Investments, Hong Kong-based Sailing Capital and Singapore-based Temasek Holdings. This reflects an increased emphasis by Impossible Foods on the Asian market for its products.
The company also counts several celebrities among its investors, including Bill Gates, Trevor Noah, Serena Williams, and rapper Shawn Carter (Jay-Z). These highly-visible links are likely to become important, as the firm raises its market profile in anticipation of a public listing.
In February 2021, Impossible Foods announced 20% price cuts, with the goal of eventually undercutting the shelf prices of conventional ground beef. Then, earlier this month, the company debuted its first range of national TV spot advertising in the US. This raises the brand recognition of its flagship product, the Impossible Burger, which is now carried by several national retailers, including Walmart, Kroger, and Trader Joe’s.
Another significant contributing factor in this strategy is the decision to hire Steve Turner in as the company’s chief experience officer, a new role reporting directly to Dr. Pat Brown, the CEO and founder of Impossible Foods. Turner was previously executive creative director at Apple (Nasdaq: AAPL), where he managed the launches of many iconic products, including the iPod and iPhone, during his eleven years with the tech giant. In his new position at Impossible Foods, he oversees all aspects of the startup’s global marketing and customer experience.
Impossible Foods’ fund-raising strategy reflects a common pattern among successful Silicon Valley companies, where early-stage investors like Khosla Ventures participate again in later rounds, as the business expands. (Khosla has adopted a similar strategy in other Linqto-listed ventures like ThoughtSpot and Rubrik.)
Regional Investors (APAC and Beyond)
The company exhibited a smart strategy in attracting investor interest from the APAC region as part of its move to expand into that market space. The Series E round in 2019 raised almost $500M from prestigious investment firms like Singapore’s venerable Temasek Holdings, which has had numerous successful exits for almost fifty years. That funding round boosted Impossible Foods’ valuation from $700M to over $2B.
Then, just a year later, two additional rounds of funding in 2020, including investments from Mirae Asset Global in S. Korea, raised Impossible’s valuation again to $3.7B, which further emphasizes the high level of Asian venture funds’ interest in the plant-based food sector.
In addition to expanding the global market presence for Impossible Foods, the 2020 funding round is being used to significantly expand the company’s research and development into plant-based protein products. The stated goal is to replace many animal-derived foods, which are regarded as a major source of greenhouse gas emissions and damaging climate change.
By way of context, this week’s IPO filing by Oatly, the Swedish vegan dairy-related products company, draws additional attention to the global consumer market potential for plant-based foods. Oatly has chosen to list on the US Nasdaq exchange, with the option of a second listing in Hong Kong in the near future. This reflects the fact that China Resources, the Chinese state-owned conglomerate, holds a thirty percent share of Oatly, as well as the company’s increased emphasis on expanding the Asian market for its products. Oatly, which is also backed by The Blackstone Group, is projecting a market valuation of $10B; other investors include celebrities rapper Jay-Z and TV host Oprah Winfrey.
Food & Beverage Industry Trends
Recent changes in the overall fast-food market provide confirmation of increased consumer interest in food products that are both healthier and more environmentally-friendly. In January 2021 for example, Beyond Meat agreed a partnership deal with Taco Bell to create a new plant-based protein product. For Taco Bell, which is owned by Yum Brands (NASDAQ: YUM), this will be the brand’s first steps into this space. More recently, other Yum companies, including KFC and Pizza Hut, announced similar distribution agreements for vegetarian offerings on their menus. In November 2020, McDonald’s announced a new suite of McPlant products, which mirrors Impossible Foods’ earlier deal with Burger King to introduce the ‘Impossible Whopper’ vegetarian burger.
All in all, these venture investor strategies and global market trends should augur well for the future prospects for Impossible Foods.
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Sen, Anirban, and Joshua Franklin. “Exclusive: Impossible Foods in Talks to List on the Stock Market — Sources.” Reuters, Thomson Reuters, 8 Apr. 2021, www.reuters.com/.
SharesPost, 2021, app.sharespost.com/issuers/impossible-foods.
Swartz, Jon. “Impossible Foods Debuts First National TV Ads.” MarketWatch, MarketWatch, 6 Apr. 2021, www.marketwatch.com/.
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Kasumov, A & Terazono, E. “Oatly IPO Prospectus Warns Over China Link”, Financial Times, 21 April 2021, p8.