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Meet the vegan-aires: Alt-meat frenzy boosts tech, food fortunes

Beyond Meat’s dizzying IPO has minted a new elite of plant-based power players.

Beyond Meat’s dizzying initial public offering has minted a new elite of plant-based power players.

The company’s six largest shareholders — which include names associated with Twitter, McDonald’s, Honest Tea and the Pritzker family — haven’t sold shares since the May 1 stock-market debut. That’s proved a profitable decision, as they’ve added a combined $1.6 billion to the value of their holdings since the start of the month.

And there’s no sign of slowing down. The bulls are in control this week, and the faux-meat maker’s value is quickly approaching the $7.3 billion market capitalisation of traditional meat supplier Pilgrim’s Pride Corp.

With the second-best performing IPO in the US this year after Shockwave Medical, Beyond Meat’s success is another sign that veggie burgers, particularly highly engineered varieties that imitate the taste of meat, are becoming more acceptable to the masses.

Consumers in developed nations are increasingly scaling back on meat consumption, mainly citing reasons related to health, the environment and animal welfare. The alternative meat industry could be worth more than $34 billion by 2030, with an annual growth rate over the next decade of 40% possible, according to TD Asset Management.

While even late-stage investors that participated in funding rounds just before the IPO made enviable profits, early investors garnered the most returns, said Nick Cooney, founder and managing partner at Lever VC, which invests in early-stage companies in the alternative protein sector.

Cooney was part of a team that invested in Beyond Meat in 2015 when the company was valued at just $145 million. It’s market value was about $5.6 billion on Thursday.

“We see huge potential, seeing the way the industry is trending, certainly in the US but in other markets as well,” Cooney said of the alternative-protein sector.

Silicon Valley players Kleiner Perkins and Twitter Inc. co-founder Evan Williams’ investment arm, Obvious Ventures, are the top shareholders. After that are two Chicago-based funds: one that’s part of the Pritzker family dynasty and another headed by former McDonald’s chief executive officer Donald Thompson. They’re followed by Beyond Meat founder Ethan Brown and Executive Chairman Seth Goldman, who also founded Honest Tea.

Other big winners, aside from Beyond Meat executives, include another Twitter co-founder, Christopher Isaac “Biz” Stone, and former General Mills executive and pastry chef Bernhard Van Lengerich, who is invested as an individual and through his charity, Seeding the Future. They’re directors on Beyond’s board, like other top shareholders.

Evan Williams’ bet on veggie burgers is currently bigger than the bet on his own company. The stake in Beyond Meat held by Obvious Ventures, his investment arm, is now valued at $414 million. That’s $10 million more than the stake Williams still owns in Twitter, according to calculations by the Bloomberg Billionaires Index.

Tyson Foods missed out on the upswing, having sold its 6.5% stake before the listing as it sought to develop its own competing products. Assuming it was sold at the IPO price, it would have received about $100 million for its holding. That stake is now worth about $260 million more today.

A rally doesn’t last forever, though, and short bets are also surging. This week it was among the top 20 most-shorted US companies, with nearly half of shares available for trading sold short.

© 2019 Bloomberg L.P
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It is a great concept, for the environment, but what investors need to realize is that to be of consequence it must scale up 1000 fold and when it has (which scale is massively capital intensive = dilutive), it will be another low margin food business.

It cannot under any reality, scale up to material size and deliver tech margins (40%) with the associated tech valuations.

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