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It’s been predicted that the plant-based food market will be worth an estimated $74.2 billion[1] by 2027. We’re not talking about your mother’s tofu anymore – plant protein foods come in considerable variety and are not solely consumed by people who maintain an animal-free diet. In fact, it is said that 89% of consumers who eat meat and dairy alternative products are not vegan or vegetarian. And it’s not just the alternative food market that’s seeing an uptick. Agritech businesses that are disrupting the norms for materials and farming have stepped into the spotlight too.
Planting seeds of sustainability
While investors have been eager to connect with disrupters in this space for years, 2020 saw some of the biggest gains, with stock market listings growing eight-fold to $31Bn[2]. The prediction for 2021 is that this trend will only increase. Current demand for sustainable innovations will be furthered by Special Purpose Acquisition Companies (SPAC) interested in buying targets in this industry and taking them public.
Venture capitalist and early stage investment has already been dwarfed by public market capital raising. Since its debut in 2019, Beyond Meat’s share price is more than five times the original list, and several similar companies are eager to follow suit.
Canadian agritech and alternative food companies were busy during 2020. Regina’s Above Food (another company that markets and processes plant-based meat alternatives) has seen surging sales, shipping to 300 customers in 35 countries, and achieving $127 million in revenue. In January of 2021, Maple Leaf Foods announced its intention to purchase a US $100 million processing plant in Indianapolis. The plant will provide an initial capacity for production of 4.5 million kilograms of the plant protein tempeh.
More than dollar value
Plant protein and agritech companies share more in common than just sector growth. This is a market characterized by shared values too:
– Increasing the physical health of consumers
– Reducing or improving packaging materials
– Sustainable growth practices in farming
– Climate change mitigation
– Decreased consumption of natural resources
Many people see involvement in this industry as an opportunity to “put their money where their mouths are” in more ways than one. But what exactly are investors looking for when choosing an individual company? Let’s take a closer look.
Key ingredients for investors
There are many lessons that can be learned from earlier emerging markets like cannabis regarding which practices lead to long-term success.
Financial controls
Financial reporting should be a point of particular focus and concern. A meticulous commitment to the accuracy of reporting and the maintenance of compliance are crucial for sustainable long-term business growth. While it’s never too late to begin, early attention to financial controls and the establishment of a proper corporate structure will both attract investment and mitigate headaches down the road.
Experienced leadership
Many emerging industries are characterized by a strong sense of entrepreneurship, with founders also taking on the role of CEO. While there’s so much heart behind this move, it’s not uncommon for businesses to need more experienced leadership as a company transitions from a small private business to a publicly traded company. Business operations, governance, management, and finance are all areas that benefit from the skill of a seasoned expert.
Focus on profitability
Sustainable business growth requires continuous attention to the bottom line. Simply building revenue isn’t enough; profitable revenue needs to become the focus. Shifting this mindset and then taking actionable steps to maintain an upward climb to greater profitability is critical to success in this industry.
Expert advice
Entrepreneurial drive is often the lifeblood of a new venture. When the dynamism of that drive is combined with the seasoned wisdom of a trusted advisor, a company becomes unstoppable. The willingness to seek counsel on strategy, structuring, financial reporting and governance is often the “secret sauce” that elevates a company into the next phase of the business life cycle.
Aligned and connected
As experts in the growth of emerging industries, the team at Zeifmans is uniquely equipped to assist plant protein and agritech companies in accessing the capital they need to foster future growth, while developing the corporate infrastructure necessary for sustainability. Not only does our team offer guidance on corporate structuring, financial compliance, and IPO prep, but our clients also gain access to our global network of connections through our association with Nexia International.
As you look to the future of your business, allow Zeifmans to be your trusted partner in growth and success. Contact our team today to start the conversation.
[1] Baystreet.ca, “The plant-based food boom is creating $74.2 billion market opportunity”, https://www.baystreet.ca/stockstowatch/8469/The-Plant-Based-Food-Boom-is-Creating-a-742-Billion-Market-Opportunity
[2] The Finance Info, “Food and agritech companies race to tap public markets”, https://thefinanceinfo.com/2021/03/13/food-and-agritech-companies-race-to-tap-public-markets/
