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Eat Just

Plant and cell based animal alternative products
Pre-IPO
Medium risk

Agri-FoodTech investments in 2019-2020

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Investment Idea Details
About the company

Founded in 2011, San Francisco-based Eat Just is the only company in the world that develops animal alternative products in two diverse formats — both plant-based and cell-based. On the plant-based side, Eat Just is known for its mung bean-based egg substitute called "Just Egg" that comes in bottles and looks like beaten fresh eggs. It also produces a mayonnaise-like product without eggs.

To date, Eat Just claims to have sold the plant-based equivalent of 100 million chicken eggs. The product is sold in more than 20,000 retail outlets and 1,000 food service locations, including Amazon Fresh and Instamart. The company’s eggs are also on offer in Dicos, a fast-food chain in China. Just Egg products began rolling out in Canada earlier this year. The company is also focused on expanding in Asia, Europe, and the Middle East.

In addition to plant-based egg substitutes, Eat Just has been developing artificial meat from animal muscle and fat cells since 2016. Late last year, it received approval from Singapore to sell its lab-grown chicken meat, the world's first regulatory approval for the so-called clean meat that does not come from slaughtered animals.

The company ranked No. 21 on last year’s CNBC Disruptor 50 list.

Market Opportunities

In the first quarter of 2021, venture funding for foodtech companies rose to a record $10.1 billion, up 122.3% from the previous quarter.

Eat Just’s both lines of business have a great outlook and are fueled by a boom in demand among consumers and investors alike. According to market research firm SPINS, U.S. retail sales of plant-based food rose 11% last year to $5 billion, with the faux egg market nearly tripling. The plant-based food market is expected to grow at a CAGR of nearly 12% and to reach $74.2 billion by 2027.

The inability of conventional farming to meet the increased demand on agriculture and the needs of the global population is one of the main drivers of growth. This has become even more evident during the pandemic when production and supply chains experienced disruptions. Reducing greenhouse gas emissions in agriculture, which is a major source of the carbon footprint, can also be a key factor for the development of plant-based alternatives.

Funding for cell-based meat companies skyrocketed in 2020. According to the Good Food Institute, more than $360 million was invested in the segment last year — 72% of all of the funding cell-based meat as a whole has ever received.

While there is no published regulatory approval process for cell-based meat in the United States yet, companies in the space seem confident that it could become finalized as soon as 2021. This offers huge prospects for companies that have been working with regulators so that they could quickly have products on the market.

The global market for cell-based meat is estimated to reach $140 billion by 2030.

Risks

In the plant-based egg segment, Eat Just commands more than 99% of the market. Its rivals include Israeli startup Zero Egg, whose eggs are suitable for all baking applications, while Just Egg's products are not suited for this.

The meat substitute market is more competitive. Here Eat just competes not only with cell-based meat developers, including Memphis Meats or Mosa Meat, but also with plant-based meat makers, including Beyond Meat and Impossible Foods. And while the latter are rapidly growing in the global market, gradually reducing the cost of production, cell-based substitute developers will need time to scale up their technology and reduce operating costs.

Eat Just’s lab-grown meat was the world's first to receive regulatory approval for sale in Singapore. While companies in the industry expect regulatory approval for cell-based meat in the United States in the near future, there’s yet no published information confirming that. If the approval process in the U.S., as well as in other countries, drags on, it could dampen investor enthusiasm and reduce funding in this segment.

Financials and Valuation

Since 2011 the San Francisco-based company has raised nearly $800 million in 12 funding rounds from 32 investors, including Vulcan Capital, Khosla Ventures, and Charlesbank Capital Partners. Eat Just has raised $200 million in a new round of funding this March. The funding was led by the Qatar Investment Authority, the sovereign wealth fund of the state of Qatar.

Eat Just’s current value in the private market is $1.5 billion, trading at $26,4 per share. Its last round in March 2021 valued the company at $1.35 billion. The company hasn’t disclosed its revenue financials, but CEO Josh Tetrick said that achieving operating profitability is expected later this year and entering public markets sometime after is a strong option. Eat Just’s multiple options through which it can enter public markets go beyond traditional IPO and include the SPAC mergers route and direct listings.

By comparison, the capitalization of Beyond Meat (BYND), a leading plant-based meat maker that went public in May 2019, is $7.6 billion. BYND shares soared 163% on its first trading day, though the company hasn’t reached the breakeven point either at the time of the offering or to date. This high valuation shows investors' positive attitude toward alternative food producers. Eat Just is a leading plant-based egg producer and on the verge of breaking even, so by the time it goes public its valuation could compare to Beyond Meat's current valuation. The potential return on investment is more than 200%.

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