Synthesis Capital, a food-focused venture firm, has closed its first fund at $300 million as strategic corporate investors show an appetite for more nature-friendly food technology investments, reports affiliate title New Private Markets.
The fund closed above its $250 million target. It is anchored by CPT Capital, the VC arm of private equity veteran Jeremy Coller’s family office, and Société Familiale d’Investissements, a multifamily office with a large stake in brewing giant Anheuser-Busch InBev. Trusts associated with the Sainsbury family, the founders of the UK supermarket chain, are also investors, according to a statement from Synthesis. “These strategic investors will be very helpful to our start-ups. Bringing these brand names alongside us, and being able to leverage their backgrounds, networks and expertise, and support our start-ups, was a big draw for us,” said Synthesis co-founder and managing partner Costa Yiannoulis.
Other investors include asset manager Nuveen, Credit Suisse’s £318 million ($399 million; €374 billion) Climate Innovation Fund; the Children’s Investment Fund Foundation; Dynamic Loop Capital, the venture investment arm of Ronald Cohen’s family office; DisruptAD, the venture platform of Abu Dhabi’s state-backed investor, ADQ; The Nest; Chinese venture firm Heyi Holdings; IKEA Foundation’s investment arm Interogo Holding; and the Tsai family office.
Yiannoulis was an investment director at CPT Capital from 2016 to 2020. He constructed CPT’s food technology portfolio with Synthesis co-founder Rosie Wardle, Yiannoulis told New Private Markets. “I’ve seen this space emerge and evolve over the last eight years. We were very early investors in Beyond Meat, Impossible Foods, Perfect Day – these companies that are now the frontrunners in this space,” said Yiannoulis.
Beyond Meat, for example, was valued at $1.5 billion at IPO in May 2019, and valued at $13 billion in August 2019, Forbes reported.
“Since Beyond Meat’s IPO, we’ve seen lots more capital mobilize in this space,” Yiannoulis said. “It was a catalyst, showing capital markets more broadly that there is an opportunity here from climate and sustainability perspectives and from a financial returns perspective. This money was looking for a home and looking for experienced managers.”
Yiannoulis, Wardle and David Welch co-founded Synthesis in 2021 to meet this demand.
Synthesis will invest in companies with the potential to disrupt animal-reliant and environmentally degrading food production systems with more sustainable alternatives. These include the plant-based meat alternatives – an already-proven sector with Beyond Meat; fermented proteins to replace dairy; and cultivated meat, which involves growing animal cells in labs.
The trick to finding scalable companies is to select those with unique technologies and intellectual property rights, said Yiannoulis: “We’re not going to be doing the next plant-based chicken brand, of which there are a hundred on the supermarket shelf. We’re focusing upstream in the value chain. Our first company in the plant-based space is Redefine Meat, a 3D printing platform to scale plant-based steak production. That’s a technology play. I think fermentation companies will be the next wave in the market, and then cultivated meat.”
It is difficult to measure and control the potential climate impact of venture-stage companies “because this industry is so nascent” and its growth and role in the market cannot be foreseen, said Yiannoulis. “The assumption is that all of these companies and technologies are going to do some kind of good.”
But Synthesis plans to implement sustainable principles in portfolio companies on acquisition, such as helping them select the right supply chains early on, conduct lifecycle analyses of their supply chains and products, and understand their climate impact, said Yiannoulis. “I don’t think there’s enough data yet to say whether the most sustainable startups in this space will also generate the best returns, but it will certainly be a multiplier. The differentiator will come in a few years’ time when these companies reach IPO or exit stage, and the acquirers of those companies will be looking for which ones are the most sustainable. People will scrutinize the sustainability of the supply chains and the efficiencies of these companies much more.”