NotCo, the Chilean food technology company making plant-based milk and meat replacements, has confirmed the close of a new $85 million round of funding to take the company’s products into the U.S. market.
The announcement confirms earlier reporting from TechCrunch that the company had raised new capital, but according to people with knowledge of the investment, the valuation for the company is roughly $300 million, and not the $250 million TechCrunch previously reported.
The funding came from new investors, including the consumer-focused private equity firm L Catterton Partners, Twitter co-founder Biz Stone’s Future Positive investment firm and the giant venture capital firm General Catalyst. Previous investors Kaszek Ventures, The Craftory, Bezos Expeditions (the personal investment firm for Amazon founder, Jeff Bezos), Endeavor Catalyst, IndieBio, Humbolt Capital and Maya Capital all followed on in this round.
NotCo makes a hamburger substitute that’s currently being marketed at Burger King and Papa John’s restaurants in Chile as part of its NotBurger and NotMeat brands, and it has a line of dairy products including NotIceCream, NotMayo and NotMilk.
Both markets are not small, with milk alone being a multi-billion-dollar category that NotCo chief executive Matias Muchnick believes his company can dominate in both Latin America and the US. That trajectory will put it on a collision course with well-funded competitors like Perfect Day, which raised $300 million in financing earlier this year and launched a new consumer brand subsidiary, the Urgent Company, for products made with its milk substitutes.
For longtime investors in the company, like Kaszek Ventures managing partner Nicolas Szekasy, the new financing for NotCo validates his firm’s early faith that a company from Santiago, Chile could compete in some of the world’s largest consumer markets.
“We continue to actively support the company since its early days with a strong conviction of the potential that NotCo has to be the leading global player in the food-tech space. In this uncertain time, consumers have amplified their appetite for the plant-based world,” said Szekasy in a statement. “In parallel, COVID has allowed us to see that meat production is not only environmentally harmful and inefficient, but also that its supply chain is fragile. So we are happy to witness an inflection point where plant-based products are becoming an increasing proportion of a new normal, once they can actually taste amazing like we see NotCo crafting.”
Joining the company to help with its international expansion plans are a clutch of seasoned executives from large multi-national food brands. Flavia Buchmann, a former executive at Coca-Cola overseeing the company’s Sprite brand, has been tapped as the company’s new chief marketing officer. Former Danone executives Luis Silva and Catriel Giuliano are taking the reins as heads of global business development and research and development, respectively. And Jose Menendez a former banker at Jeffries and executive at Tapad, is now NotCo’s global chief operating officer.
A flood of venture capital dollars have come into the food space since NotCo first burst on the scene, and many of these deals are operating at the intersection of novel biomanufacturing technologies and food science. But NotCo’s take on food tech is more akin to Beyond Meat than Impossible Foods or Perfect Day.
The company isn’t making biologically engineered foods, it’s taking its taxonomy of existing foods and determining which combinations of plant ingredients will most closely mimic all aspects of the animal products they’re replacing.
So a closer analogy would be companies like Just or the newly funded Climax Foods. Muchnick said the difference is in where these companies are spending their time. Instead of focusing on a protein that can act as one replacement for casein or the carbohydrate lactose, NotCo is trying to replicate the whole product — the entire sensorial panel of a particular food.
“Flavors, taste, smell, color and the interaction between all of them and the molecular components in food,” said Muchnick. “It’s not just the concept of how limited we are to replicating products and how limited to using AI to address other challenges in the food industry.”
For Muchnick, the biggest opportunity for NotCo is dairy. While the company has plans to introduce a number of new products, including a chicken replacement, to complement its line of NotBurger and NotMeat products, it’s really the dairy business where the company wants to land and expand.
It’s looking to cut a deal with a large quick-service restaurant, along with deals for an online channel and a direct to consumer play.
As it grows, consumers can expect to see the company’s brands recede into the background as Muchnick looks to focus on supplying products to other vendors.
“We partnered upstream and downstream,” Muchnick said. The company works with suppliers, including Ingredion, ADM and Cargill and downstream has product partners that will incorporate its milk substitute into other products.
“What we want is to be the catalyst of change with many other companies. Why don’t we become the enabler. We’re becoming the Intel inside of other products.”
At that scale, the company would be a prime candidate for public investors, and if Muchnick has his way the company will get there. “We are aiming to have a $300 million company by 2024 with 70% of that business in the U.S.,” he said.