Ripple Foods nets $65m from Goldman Sachs, Euclidian, Fall Line

Co-founder Neil Renninger tells Agri Investor of a surge of investor interest in food-tech that has seen lines between private equity and venture capital blur.

California-based dairy alternative provider Ripple Foods has secured $65 million in a Series C funding round led by Euclidian Capital, a family office connected to Renaissance Technologies founder James Simons.

The round saw Euclidian joined by Goldman Sachs, Fall Line Capital, S2G Ventures and others. The infusion of capital brings Ripple’s total funding $110 million.

Ripple offers non-dairy milk, half-and-half and yogurt alternatives derived from “Ripptein”, which is the result of a proprietary process that extracts protein from yellow peas. Its products are already available in 10,000 locations in the US and Canada, including at Kroger, Whole Foods and Target.

“Ripple Foods is at the helm of shaping the future of food and re-inventing how we use plant proteins to make dairy alternatives,” said Kathy Elsesser, Goldman Sachs global chairwoman of the consumer, retail and healthcare groups.

‘Very clean protein’

Ripple co-founder Neil Renninger told Agri Investor that while existing alternative protein offerings tend to taste like the material from which they are derived, Ripple’s proprietary purification process results in “very clean protein that we can then go formulate with.” Renninger said Ripple extracts fat from sunflowers and algae to improve the texture of its half-and-half substitute product.

Ripple’s protein extraction process is “feedstock agnostic” and the company uses pea protein because it is the most developed plant protein source, other than soy, according to Renninger. Currently, Ripple has contracted producers in the US and Canada and Renninger said part of the motivation for bringing on Fall Line Capital as an investor was to continue drawing on that firm’s expertise in production agriculture.

However, production agriculture is not a particular focus for Ripple given the possibility of applying Ripple’s extraction process to other sources of protein.

“Rather than trying to find the right cultivar or right location to grow the crop, you end up with a much more robust system if you have a process that can handle any feedstock variability,” Renninger said. “We shied away from looking at the problem from the ag side and really focused on solving the problem from the process side.”

Hybrid models

Since Ripple’s formation in 2014, Renninger said there had been an increase in investor interest in the alternative protein subsector and an evolution in the way investment firms approached the opportunities within it.

“You are seeing more hybrid models out there, both venture going more into PE and PE going more into venture. Those lines are getting blurred a little bit,” Renninger said. “Growth equity and private equity are still looking for good solid business that have reasonable revenue and that have a path to profitability. Those types of opportunities in the food tech space are really few and far between.”

“Venture is going more into PE and PE is going more into venture. Those lines are getting blurred a little bit”
Neil Renninger

Given the important role Renninger believes alternative proteins can play in meeting the world’s protein supply challenges, he said he welcomed any investment into the sector. Amid the surge of interest in food tech, Renninger added that some investors may have unrealistic expectations about how quickly certain corners of the market are likely to develop.

“If you look at some of these cellular-agriculture plays, I think it’s really important that there’s investment in those places, but the time horizon for real impact isn’t next year or the year after. The time horizon is probably a decade from now. That doesn’t mean that there shouldn’t be investment in them, it just means the time horizon is a little further out than some people would have you think.”