Lever VC Report Navigates Cultivated Meat Risks: ‘It Is Especially Important to Scrutinize’
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Lever VC has released its “Cultivated Meat Scientific Benchmarks” white paper in an effort to bolster investor understanding and confidence in the cultivated meat sector.
The investment firm Lever VC, notable for its ventures in alternative protein companies, says the white paper release is intended to enhance transparency and rigor within the rapidly expanding cultivated meat industry.
This move was aimed at empowering other investors, who may lack internal technical or scientific expertise, to validate the claims of startups in this rapidly growing sector. “Cultivated Meat Scientific Benchmarks” was created by Lever VC’s scientific and technical team and details key technical milestones that companies in the industry are expected to achieve at various fundraising stages.
“We use these benchmarks to more quantitatively evaluate cultivated meat companies and identify areas where they lack progress or where certain metrics may be overly optimistic and require additional claim-vetting,” Lever VC’s lead scientific advisor, Jonathan Avesar, said in a statement. “We supplement our overall scientific analysis with these quantitative benchmarks that allow us to compare progress between companies, which aids in our evaluation of the risk/reward profile.”
According to Avesar, the benchmarks also serve toward understanding if certain metrics may be “overly optimistic” and require additional claim vetting.
Jasmin Kern, a scientific associate at Lever VC, says that’s especially true for very early-stage companies “where cell mass quantities are extremely low and access to analytical tools is limited, rigorous scientific diligence is essential to validate a viable investment opportunity,” she said. “It is especially important to scrutinize any assumptions made by start-ups and to verify the sources they are based on since they play a key role in the projections and models that inform decision-making.”
In the wake of public scandals that unveiled inflated technological capacities of celebrated startups across venture-backed sectors, maintaining investor confidence has become a pressing issue. Lever cites the disgraced Elizabeth Holmes’ company Theranos as a cautionary tale.
Such instances, dubbed “vaporware” incidents, have led to concerns about a similar situation unfolding within the cultivated meat industry. Consequently, rigorous investor diligence is crucial in warding off similar outcomes, a task that may seem daunting to those unfamiliar with the intricate cultivated meat and dairy startup landscape.
To date there have been no known attempts in the cultivated meat sector to defraud investors, but according to Nick Cooney, managing partner at Lever VC, there are risks in the nascent indsutry.
“My candid view is that if you made a Venn diagram of companies that have received meaningful funding and companies that have what it takes to succeed, I think there’s only modest overlap between those two,” Cooney told AgFunder News. “A lot of investors in the category — including many of those writing really big checks — do not have the scientific or technical expertise in the category, based on a set of data from across the category, to help them make the smartest decisions.”
Cultivated meat market
The paper comes as Lever VC is currently raising a $250 million Fund II and as the cultivated meat sector continues to move toward widespread regulatory approval.
The cultivated meat market is a burgeoning industry, recently achieving significant milestones. Two U.S. companies, Eat Just and Upside Foods, received “no questions” letters from the FDA since last November, moving them closer to full approval and adding to the legitimacy of the sector.
According to recent data from the think tank The Good Food Institute, the cultivated meat sector saw nearly $900 million in funding last year with 679 investors funding the industry — up 19 percent over 2021.
“Just as the world is changing how energy is produced, we need to change how meat is made,” GFI said in its report.