Private equity-backed The Craftory, a $300 million sustainability-focused investment vehicle, has led a $30 million funding round for NotCo, a Chilean company using artificial intelligence to develop plant-based dairy alternatives.
The Craftory provided 60 percent of capital extended to NotCo in the round, which was announced last week and is its first investment since launching in mid-2018. The firm was joined in the investment by Latin America-focused venture capital firm Kaszek Ventures; IndieBio, a life-sciences accelerator in San Francisco and Bezos Expeditions, Amazon founder Jeff Bezos’ family office.
Established in 2015, NotCo currently offers a mayonnaise alternative derived primarily from chickpeas. The company describes its production process as utilizing artificial intelligence to analyze molecular structures of plant-based ingredients in order to create unique combinations of taste, color and texture.
The $30 million in capital will be used to support development of new products, including yogurt and milk alternatives NotCo expects will reach the market this year, and expand into new markets, including Mexico.
“People were knocking at NotCo’s door, a lot of them; venture capital, big multi-nationals, big funds from Silicon Valley, all of the big names,” The Craftory co-founder Elio Leoni Sceti told Agri Investor. “Bezos was clearly a name that both the company and ourselves thought was good to add to the list because it offers a number of obvious benefits in terms of distribution and access.”
In May, Spice Private Equity committed $60 million to The Craftory on behalf of GI Investments, a publicly-listed Brazilian private equity firm. Sceti, who is himself an investor in The Craftory, said the remainder of the vehicle’s $300 million was provided by three family offices that do not include Bezos Expeditions
Sceti, who described decades of experience in brand-building across industries, said The Craftory’s strategy is shaped by a “seismic shift” in consumers’ relationship to established brands, a phenomenon he has observed over the past five years. Whereas large brands have historically focused primarily on encouraging consumption, Sceti said, more recently those established brands increasingly have found themselves confronted with upstarts highlighting the consequences of that consumption.
Similarly to how LVMH was created as an investment vehicle focused on consumers’ demonstrated preferences in luxury, Sceti said, The Craftory was established to focus on building brands that are primarily purpose-driven and clear about the consequences of consumption.
“The difference between a sustainable new brand and non-sustainable new brand is actually the purpose and how important it is in the their [the company’s] ranking,” Sceti explained.
Sceti downplayed any risk of brand backlash led by traditional agricultural producers such as that which followed Bud Light’s recent Superbowl commercial highlighting that it does not use high-fructose corn syrup.
“It’s a plant-based company and will always be plant-based,” Sceti said. “The sympathy of the farmers and the agricultural community that is involved in traditional farming of animals is not relevant to their goals. What is relevant to their goals is that they respond to the consumer desire for taste delivered through non-animal farming; that is their mission. There are plenty of other companies that have a different mission to deliver animal protein, but not NotCo.”