Alt proteins are recognized by investors as an increasingly important environmental, social and corporate governance industry.
According to a new analysis from The Good Food Institute (GFI), investor interest in alternative proteins is still high over the long term, in spite of difficult macroeconomic and market conditions that slowed investment growth last year. Over the past decade, the alt-protein industry has experienced dramatic growth in investor activity, with a total of $14.2 billion invested worldwide. Despite a high variance, investment in alt proteins has doubled on average year over year.
Amid the challenging market conditions mentioned above, alt-protein investment decelerated over the past year, alongside a 35% decline in overall global venture funding, with investments falling from $5.1 billion in 2021 to $2.9 billion in 2022. Investments returned to pre-pandemic levels when capital almost tripled between 2019 and 2020. Investment continued to surge in 2021 with record-breaking venture funding across most sectors. Even with this recalibration, 2022 investment still far exceeded the $1.1 billion raised in 2019, which is widely considered alt proteins’ “breakout” year.
Investment deceleration could continue to affect the alt-protein category in the next few years amid an uncertain market environment: A GFI-led survey of investors now active in or entering the alt-protein space found that those who slowed their alt-protein investment activity in 2022 did so mainly because of broad market and economic conditions.
Investor optimism remains strong, however, with alt proteins recognized as an increasingly important environmental, social and corporate governance (ESG) industry. Ninety-nine percent of respondents to the GFI survey, which was conducted last December, said that they’re optimistic about the long-term potential of the industry, and 87% said that they expected to invest in alt-protein companies or funds in 2023. ESG is important for 94% of the investors surveyed, with 72% considering ESG “critical” or “very important.” Further, 80% of investors who invest on behalf of an ESG or impact fund said that alt proteins are part of their funds’ core mandates.
As a result of its research, which is set forth in greater detail in a recent blog post on its website, GFI believes that the emerging alt-protein industry offers plenty of untapped opportunities.
“As companies continue to develop new technologies, as well as scale and optimize production to improve the taste and affordability of products, sales will accelerate and spur additional investment – particularly when macroeconomic and market conditions normalize,” noted Sharyn Murray, investor engagement manager at Washington, D.C.-based GFI.