AUGUST 2024LIFE SCIENCES REVIEW92. Brand Proliferation ­ You could probably lay this one at the feet of the VCs funding all these start-ups, but the founders need to share in the humble pie buffet. There is no reason for the market to "need" thirteen (I'm hyperbolizing) brands of plant-based chicken nuggets. I cannot think of thirteen ways to differentiate that product besides color of the packaging and the name. At some point, the market went crazy for brands thinking the next one would be better than all the ones that came before it. Now we are faced with a hypercompetitive market where startups are fighting a marketing war with global conglomerates and the race for eyeballs is off and running. Zero brand loyalty allows consumers to change brands weekly chasing the best deal and companies end up spending as much on marketing as they do on raw materials.3. Identity Crisis ­ I should have put this one first. Companies that make plant-based alternatives to meat, please hear me. You are food companies, and not technology companies. You will never grow revenue like a technology company. Stop taking unrealistic valuations that doom you to future flat or down rounds of financings. What should be equity rounds that are turning into high-yield debt instruments with 2x liquidation preferences and stack crushing seniority clauses?I believe the challenges the plant-based food sector is facing means we are faced with equally great opportunities for investment. There is an incredible opportunity to invest in the infrastructure to support the production of plant-based protein products. Ingredient solutions and texturizing technologies that improve the mouthfeel of these products will lead to consumer satisfaction and revenue growth.And then there's affordability and the inspiration of this piece, Back to Basics. Founders and VCs need to return to the fundamentals of making food and investing, respectively. Gross margins should not be things we expect to expand in the future. They need to be present now. Scale alone is not enough to create compelling margins. Scale should be the thing that expands margins. And to my fellow investors, let's return to our basics. Pragmatism is not something to shun in projecting the growth of companies, but should be embraced as sanity returns to capital deployment. Pragmatism is not something to shun in projecting the growth of companies, but should be embraced as sanity returns to capital deployment
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