Ep. 175 - Raising Capital for Alt-Protein in the Midst of the Winter

SHOW NOTES

Recently Alex Shandrovsky had me as a guest on his show, the Investment Climate Podcast to talk about The Better Meat Co.’s recent funding round. When it came out, more than one Business for Good listener heard it and told me they thought it would make a good episode to release to our audience too, so this episode is simply the conversation Alex and I had for his podcast.

If you’ve been following the alternative protein sector (and the broader biotech sector), you’ve likely seen the wave of challenges that fermentation, cultivated, and plant-based startups have faced over the past few years. As recent AgFunder News reporting confirms, ag and food tech investment is at a decade-long low. One active food tech VC even declared that foodtech investing is “maybe as bad as it’s ever been.”

Some days, building a startup in our sector can feel like being a player in Squid Game—with about the same odds of survival.

While layoffs, bankruptcies, shutdowns, and cash-free acquisitions have been rampant in our sector lately, BMC has never conducted layoffs. Instead we’ve always been very frugal, and we tightened our belt even further in the past year, all while continuing to make important progress toward our aspirations of slashing humanity’s footprint on the planet. This has been true in the midst of the three-year litigation we endured, the collapse of our bank and subsequent (temporary) loss of all funds, the painfully wintry investment climate for alt-protein, and other seemingly innumerable challenges. Our ethic of frugality will certainly continue in this new era of scaleup for our company. 

This financing is hardly the end of our story. Receiving investor dollars isn’t our goal; it’s solely a means to the end of building a profitable business that will help put a dent in the number of animals raised for food. Raising a round is akin to having someone provide the clothes, tents, and food you’ll need to climb Everest…but you still need to actually go climb the mountain—hardly a guaranteed outcome. 

I’ve often said these days that we’ve shifted from what felt like a Sispyphean feat of fundraising to now merely a Herculean feat of scaling.

Nearly all startups fail. The vast majority never see their seventh birthday, which BMC recently celebrated. Our company is still far from successful, but we now have a real chance to birth into the world a novel crop that can help feed humanity without frying the planet. We will judiciously use these new funds to work hard to finally let the Rhiza River flow. 

Alex and I discuss the story of how this funding round came about, and where we may be going from here.

DISCUSSED IN THIS EPISODE

MORE ABOUT Paul Shapiro

See here for more about Paul Shapiro.

TRANSCRIPT

Paul Shapiro: Hello friend. Welcome to episode 175 of the Business for Good Podcast. You know, when I concluded a book tour in 2018 for my book Clean Meat, I was thinking about how much value I saw in spotlighting cool companies working to make the world a better place. The book helped companies profile and it raised capital and attract talent.

And even today I still hear from people who either started their own alternative protein companies or join them because of reading Clean. Meet. So when that tour was over, I was thinking about how I could continue spotlighting companies working to solve serious social problems. And while I contemplated writing another book, I ultimately chose to launch this podcast as a way to showcase companies working on all types of pressing issues, not just alternative meets.

So for the past 170. Four episodes from 2018 through the present. This show has given a voice to scores of entrepreneurs, inventors, and authors working on scaling solutions to vexing problems that are animating their lives. From nuclear waste to animal free proteins, biodegradable plastics to climate solutions, and more.

Being in a position to tell the stories of such impressive people has been extremely gratifying. I usually have tried to avoid using this. Podcast is a platform to promote my own company The Better Meat Co. Though of course, sometimes that experience is actually relevant to the conversations we're having on the show, but this episode will be a different one as the Better.

Meat Co is indeed the focus. We recently raised a fundraising round in a very wintry venture capital climate, and this has sparked a lot of interest from folks wondering just how we did it. Recently, Alex Chand Brosky had me on as a guest for his show, the Investor Climate Podcast, to talk about this. And when it came out, more than one business for good listener heard it and told me they thought it would make a good episode to release to our audience too.

So. Ask and ye shall receive. This episode is simply the conversation Alex and I had for his podcast. Now, if you've been following the alternative protein sector or the broader biotech sector, you've likely seen the wave of challenges that fermentation cultivated and plant-based startups have faced over the past few years as recent ag funder news reporting confirms AG and food tech investment in this.

Sector is at a decade long. Low. One active food tech vc even declared last month that food tech investing is quote, maybe as bad as it has ever been. Some days. Building a startup in our sector can feel like being a player in Squid game with about the same odds of survival. While layoffs, bankruptcies, shutdowns and cash free acquisitions have been rampant in our sector lately, better Meco has never conducted layoffs.

Instead, we've always been very frugal and we tightened our belt even further in the past year, all while continuing to make important progress toward our aspiration of slashing humanities footprint on the planet. This has been true in the midst of the three year long IP litigation that we endured, the collapse of our bank and subsequent, but temporary loss of all of our funds, the painfully bad investment climate for our alternative protein and other seemingly innumerable challenges we've faced along the way.

Our ethic of UG will certainly continue in this new era of scale up for our company, but this financing that we just closed is hardly the end. Of our story. Receiving investor dollars isn't our goal. It's solely a means to the end of building a profitable business that will help put a dent in the number of animals who are used for food.

Raising around is akin to having somebody provide the clothes and tents and food you're going to need to climb Everest. But you still have to actually go climb the mountain. It's hardly a guaranteed outcome. I've often heard it said these days that we have shifted from what felt like a Sisyphean feat from fundraising to now merely being a Herculean feat of scaling.

Nearly all startups fail. The vast majority never see their seventh birthday, which better Miko recently celebrated. Our company is still far from successful, but we now have a real chance to birth into the world, a novel crop that can help feed humanity without frying the planet. We will judiciously use these funds to work hard to finally let the rise up Myprotein River that we have been dreaming about flow.

Alex and I discussed the story of how this funding round came about and where we may be going from here. So without further delay, I'm gonna turn it over to the Investor Climate Podcast so you can hear the conversation. Alex and I recently had.

We're highly transparent. We do not mask any bad things. We never wanted to be a board meeting where we're just merely informing the board of what we're doing and that's it. It is not our duty merely to inform them. We want to solicit their ideas like they are there, not just to govern the company.

They're there to help guide what we are doing.

Alex Shandrovsky: It's not 2021 anymore. Record High food tech IPOs have crashed and cheap. Interest free money has become very expensive. Everything is different in the Investment climate podcast. We interview climate tech founders have recently raised and VCs who are deploying today.

Each conversation is met to give us the tools to succeed. Greetings,

Paul Shapiro: Paul Shapiro, CEO of the Better

Alex Shandrovsky: Miko.

Paul Shapiro: Great to have you here.

Alex Shandrovsky: It's a pleasure. And I have to say that Paul, you made my little daughter's day. She's nine years old. You just gave her the, the tour of the Protein Wonka Paul Shapiro factory.

So her day has been made. So thank you so much for that.

Paul Shapiro: I love taking kids on tour through our facility 'cause it really is like a Willy Wonka of protein to a kid or even to most adults. It's just a bunch of tanks and tubes. But still, it's a bunch of cool tanks and tubes and they get to see how we turn microbes into meat.

And it's a fun time.

Alex Shandrovsky: Congrats. And you have, you just turned, you have done incredible, the impossible, maybe impossible might guess to get sued. So we're not gonna use the word impossible in this podcast, but you have done something very special. You have actually raised money in this space. Congratulations for doing the beyond.

Paul Shapiro: Thanks, Alex. I appreciate that. In short, I think about. This as like a famine type period, right? Yep. And there's so many companies who are really great companies, really good technology, good people, smart people. And they're not, they just can't make it work. 'cause there's not enough interest from investors out there for our sector anymore.

And it's a real problem. And I see every week it's like a parade of horrible news, whether it's bankruptcies, layoffs, shutdowns, cash re acquisitions and more. And I'm very grateful that the better Meco was able to partner with investors who really believe in our company and give us a chance at success here.

The fundraising is not the goal. We are happy to have the funds that we need in order to succeed, but the fundraising is not the success. The fundraising is the means to the goal of building a profitable company that can make the dent in the world from a sustainability perspective that I started this company in 2018 to make.

So the best analogy I have for it is imagine if you're, you need a role, a boulder up a hill, and then somebody comes and they give you the shoes and the gloves that you're gonna need in order to do this. But you still have to roll the boulder up the hill yourself. Yeah. And so we're grateful to have the equipment that we need, and we still have to execute and make this happen.

So it's a, it's a wonderful relief to have raised this capital. And now it's time to execute.

Alex Shandrovsky: Oh, congratulations on getting the equipment you need. And tell us how did you meet your lead investor and put this cap table together?

Paul Shapiro: The two lead investors were co-leads, which was Future Ventures. Mm-hmm. Steve JSON and Resilience Reserve, which is a fund that is run by Rob Reed and his business partner, Chris Anderson, and the HQs of those funds.

The HQ for Future Ventures is in Silicon Valley, Uhhuh, and Rob Reed does also live in Northern California, but his business partner Chris Anderson, who runs the TED conferences like TED Talks, he's in New York. Okay, got it. So both

Alex Shandrovsky: US based. Funds? Yes.

Paul Shapiro: Yeah, they're both US based. We did have international investors, including some from Central America, but it was mostly us.

And to answer your question, Bruce Friedrich from the Good Food Institute many years ago, probably around 2021. Introduced me to Rob Reed, who he had met at a conference, and Rob is this extremely smart guy. He was a Fulbright scholar. He lived in Egypt and speaks Arabic, and he had a big success as the founder of Rhapsody, which was like Spotify before Spotify.

And as then became a New York Times bestselling novelist. Like he's a very polymathic guy. And I really enjoyed talking with him and learning from him, and so invited him to our factory here and told him what we were doing, and he then invited, he then introduced me to Steve Json, who is far more of a household name in the venture capital world.

Steve is well known for. He was on the board of Tesla for a while. He is still on the board of SpaceX. He has been an early investor in everything from Skype to Hotmail to SpaceX and Tesla and so many other companies. And so he has. Done quite well and is a really stellar track record for picking winning companies.

And so I got to know both of them and I'm very grateful that that opportunity arose. And then fast forward to now, and so when was

Alex Shandrovsky: the first meeting?

Paul Shapiro: 2021.

Alex Shandrovsky: So we're talking about a relationship that was about three years before they wrote a check.

Paul Shapiro: They did do a convertible note, which was smaller than what we just did, but they did a convertible note at the end of 2021 Uhhuh, and then they made their series a investment in 2025.

Alex Shandrovsky: Gotcha. So essentially it was like, was it, what did you say? It was the angel or They actually did through their funds.

Paul Shapiro: No, no, they did it through their funds.

Alex Shandrovsky: Got,

Paul Shapiro: so they were

Alex Shandrovsky: on the cap table?

Paul Shapiro: They were on the, they were, I would say creditors as convertible note holders. Sure. Not technically on the cap table, but they were creditors of the company at that point.

Alex Shandrovsky: And then. It took three years and then they made the decision to, when you guys opened up the fundraiser, okay, we wanna come and lead this.

Paul Shapiro: Yeah, that's true. But I would say they had been open to leading it prior had we been capable of doing so. The fact of the matter is, I just wanna be blunt. There were three years where we were involved in a IP litigation that made our company very difficult for investors to fund.

We were involved in an IP litigation where the judge in the end ruled that all of the patents that were in dispute belonged to us. So it was a great outcome for us, but it didn't, the great outcome, legally speaking, didn't change the fact that for three years there were a lot of folks who just didn't want to invest in our company because we were embroiled in this litigation.

Now it doesn't, some of the people didn't wanna invest because. They weren't sure what the outcome of the litigation would be, but most people just said, we don't want our money going to attorneys. Like even if you win, you still have to pay these attorneys all this money, and we don't want our money going to attorneys.

We want it to go into building. And so once that case was resolved, it was like taking an anchor off of our ship and we could start moving forward again. But we tried hard to raise money during that time, but it proved not possible. And then

Alex Shandrovsky: when was the resolve? When was the case resolved?

Paul Shapiro: In the middle of 2024.

Alex Shandrovsky: Okay. And then how long did it take you from the closing of that case to actually secure the colleagues?

Paul Shapiro: So Future Ventures and Resilience Reserve were interested in. Co-leading, but it was a very wintry environment by this time. So keep in mind when the litigation began, it was the, it was as hot as it could be.

Yes. In the world of food tech venture capital, right? Yeah. So we missed the party.

Alex Shandrovsky: Yes.

Paul Shapiro: And by the time that. Hot summer was over. It was now a very cold winter. Yeah. And so valuations were way down. Companies were doing layoffs, going under, going bankrupt and so on. And so it was a, took some time for us to put together the strategy that was necessary in order to have a real plan because we knew that we couldn't raise as much capital.

If you look at some of the other mycelium companies, nature's Fine, which had raised like half a billion dollars. Media had raised nearly half a billion dollars. You're talking about, uh, myco Tech, which has raised hundreds of millions of dollars. No matter what we did, we were gonna have dramatically less money.

Yes. And so we were trying to operate on a shoestring. Now keep in mind, during this time we had never done layoffs. Like we were still running the company based on the pre-seed, the seed and the convertible note that we had raised. And we had tried to keep advancing in the form of regulatory approvals and the form of technology improvements, patents.

And we were, during that time, we had not one, not two, not three, but six different patents granted to us during that time. So we were just, we kept churning out. Value for the company. But in the end, by the time that we began fundraising without the litigation over us, it was just a very different environment.

Yeah, a very different environment. And the round took months. It took from the time that we opened the round until the two was really closer to six.

Alex Shandrovsky: Which is still given the environment and the old guests I have is pretty a testament to you. How did you build that relationship for such an extensive period of time where you had your internal investors or creditors make digital to come in?

Because I've, I've seen a lot of tourists. Yeah. The individuals you have and the captain not necessarily, are not seen as just an ag food tech investor. They make bets around a lot of places. Yeah. So what, what was about. Besides just feeding the mycelium, what was the thing that you felt that you did correctly around building conviction?

Yeah. From your internal investors, because a lot of internal investors, like they say, Hey, that was good. I appreciate, I'm not gonna throw bad money. No good money after bad money.

Paul Shapiro: Yeah, definitely. There's a lot of people that say that. So feel a few things with a really early stage company. People were betting on the jockey, not the horse.

So they just, the founder, they have trust in the founder or the founding team. In our case, we'd already been around for seven years. So they knew more about the horse, right? We already had a technology, we had patents, we had regulatory approvals. We had customers, like there was already some bit of a horse.

Mm-hmm. And so I, I don't feel like I, it's really appropriate for me to say, oh yeah, I did something right. But I'll tell you what we did do. These were really key investors for us who we involved on eight. Very regular basis attending every board meeting that we put out, doing calls like they were active, involved, active in helping make suggestions, constructive criticism, guidance for us and so on.

And so it's not like these are folks who invested in us or did a convertible note in us. And then a few years later, we went back to 'em and said, Hey, here's all the progress we made. These are folks who are intimately involved and knowledgeable about our business and know everything about hiring decisions to the struggles that we were facing, to the celebratory moments that we had, like they were a part of this company.

Me,

Alex Shandrovsky: were they board members?

Paul Shapiro: Both of 'em? No, neither one of them was a board member. Okay.

Alex Shandrovsky: So I think, but we invited them to every board meeting. So just, uh, for our listeners to be prepared, I think in the next 10 minutes will just be about managing board or non-active, not board member investors. Just be prepared.

That's where this train is moving towards that direction. Okay. Tell us about how did you get a non. Board member to be involved in the board member kind of capacity, right? Mm-hmm. Or in that level of participation. That's really interesting to me. Very curious.

Paul Shapiro: Yeah. As people who had invested through a convertible note, I think they had an interest in what we were doing.

So a lot of people who would like to attend board meetings but don't have the capacity to do in their case, we welcome them to the board meetings because we viewed them as such a critical part of our company just because of their convertible note and because. We were anticipating or hoping that they would be follow on investors or even lead investors with us in the future.

So I wanted them to be highly familiar with what we were doing so they could make an informed decision about whatever they wanted to do moving forward. Now. Is it maybe a little bit abnormal to have folks attending our board meetings who aren't board members? Maybe, but people have board observers all the time.

We never granted official board observer status, but we let 'em in on everything they were. We knew that these folks were gonna be owners of our company at some point. They're gonna be on the cap table at some point in a substantial way. I came to highly rely on their advice and their guidance. These are folks, there are some board members who may be less active or more active than others.

These are folks who are very intimately involved in helping craft the strategy for the company, and I'm really appreciative of that because we are really great at inventing technology. We're really great at patenting that technology and helping to scale it to where we have so far. But there are many areas that we have deficiencies in, and these are folks who have started companies or been intimately involved with other companies for a long time, and they have a lot of expertise and a lot of experience to offer.

So I've been grateful for that, to be honest with you. Okay. The people who are attending

Alex Shandrovsky: the board meeting from those companies, was it an associate, was it No. Was it actually Steve? Yeah. Yes. Okay. So I think this is also very interesting 'cause I see there's so many musical chairs. In vc that the person who's on your board even Yeah, he, they've already jumped ship to a different fund, so it become just.

Not valuable. So I wanna probably, that's important to understand from our, for our listeners, the people who were those playing in those seats, they stayed in those seats for four years.

Paul Shapiro: That's exactly right. Wow. Yeah. And that's probably

Alex Shandrovsky: part of the secret of why they had the level of conviction around.

Paul Shapiro: I think so, and Steve has now joined our board of directors.

So in this round he, somebody who had been on the board for five years cycled off and Steve is now sitting in that seat, and I'm grateful for that. It's hard to think of somebody I'd rather have in in that seat, because Steve JSON is a legend when it comes to venture capital and building startups. So his inputs are highly valuable and highly valued.

I remember asking him one time when I was talking to him for my own podcast, the Business for Good podcast, and I interviewed Steve and I asked him, what percentage of companies that pitch you do you end up funding? And he said it was definitely less than 1%. And those are horrible odds. They're really horrible odds.

And so I feel like I got very lucky because he is, is such a smart guy. It's really interesting. I like talking to people and learning about their interests. Yeah. And learning about what makes them tick. And this is a guy who, you know. Has so many different interests and so many different topics. There are some people who are a great expert in one or two things, but this guy knows so much about so many different things.

I always like talking to him and learning whether it's about meteors or whether it's about the Soviet aerospace program or whether it's about alternative protein. 'cause he's invested also in, he led the now upside foods are then Memphis meats round when they did that as well. So anyway, the point is I really like getting to know people and what their interests are, and helps me become a more well-rounded person to have other interests too, because I'm way more uni focused in what I'm doing.

I think

Alex Shandrovsky: you have every. New learning informs other decisions. Yeah. It's not just a single focus, especially being in a co, you have so many different plates that you're spinning.

Paul Shapiro: Oh yeah, for sure. My wife jokes with me. I don't really like to look at any news that I don't think is highly relevant to the better miko.

So there's all this news happening in the world, I think, does this impact the better Meco in some way? And if not, I'm like, just tune it out.

Alex Shandrovsky: I would say that's. Probably a very healthy approach for many of us at this point, even if you're not the CEO of the better Miko. Yeah. Anything about that, those board meetings of how you manage them, that we can learn from Anything there that you say, look, this was the structure of how we typically did things.

Yeah. This is how we, we approach transparency. This is how we approached Sure. Feedback gathering from them.

Paul Shapiro: We're highly transparent, right? We do not mask any bad things. There's always bad things happening. Right. It's always funny. I always think. Whenever you see companies in the news, like if it's some celebratory piece for them, there's always things that are happening that are very tough for them.

And if it's a scandal piece for them, there's always something really good for them. They're out here in rally. It's rarely as good or as bad as you see in the news. Yeah. Now all of that said. The trap that I have found with some other companies with whom I'm spoken about board meetings is we never wanted to be a board meeting where we're just merely informing the board of what we're doing and that's it.

It is not our duty merely to inform them. We want to solicit their ideas, right? Sure. Like they are there not just to govern the company, they're there to help. Guide what we are doing. It's not enough for them to be like, okay, we've looked at the books and there's no embezzlement going on, but we wanna make sure that they are giving us their ideas on what we could do.

And some of them are from the food industry. They might have potential customers. Some of them know a lot of other investors who. We could be talking with or they might have ideas of something that we should be looking into that we hadn't thought about. Some other technology or some other optimization that we had never considered and, and so I always want to try to mine their brains for what they can do to help.

I joke about our board. I said, ask not what we can do for the board. Ask what the board can do for the better because these are people who are literally invested in our success. They're betting on us person. That was

Alex Shandrovsky: bet. Space. Really appreciated that. That's that line that was very well placed. Yeah.

Paul Shapiro: So these, they're literally betting on our success.

But imagine if you went to a football game and you could bet on the outcome, but you could also help the players, right? Like you, that is what I think our investors can do, is not just bet on us to get the job done. But to help us get the job done after betting on us. And so I want, I always try to make sure that there is, are ways that we can solicit the board's input and active participation in the company.

Alex Shandrovsky: Is there a way that you have done that well? Is there a process? 'cause I, I've seen speaking to some friends when we talk crap about VCs of board members in the back of the room as any founders sometimes does. They'll be like, has no idea about this industry. Like they have No, there's really very little they can contribute Except, except capital.

Right? Capital or they, their whole model is based on software investments. So like they, they're looking at us as what's the cost of acquisition or what's, like, it's just different industries. Yeah. It's definitely way different with.

Paul Shapiro: Food. And there were a lot of these people who you referred to earlier in this conversation, Alex as Tous, who came and went, right?

Yeah. And they were folks who didn't really understand food And valuations got sky high. And these aren't software companies, right? They're not gonna be the it. It is highly unlikely that we're gonna have the growth tr trajectory of some of these software companies. 'cause we were. Building things that require atoms to be assembled and to make stuff.

Yes. You're not in the

Alex Shandrovsky: world of

Paul Shapiro: zero

Alex Shandrovsky: ones, right? Yeah, exactly. At least not yet until AI has fixed that problem. That would be

Paul Shapiro: awesome. I would be thrilled for that to, but, but in short, I, I do find that there are some people who are less familiar with what we're doing, and I always joke. That nothing instills confidence as much as ignorance.

When you don't know a lot about a topic, you usually have very firm opinions on it, and then the more people learn about a topic, the more nuanced it becomes, and there aren't really black and white answers often. And I wanna make sure that our investors, especially our board members, are extremely informed on what we're doing so that they can not only comprehend what we're doing, but can offer good input.

So it's very easy to offer. If you don't know much about a topic, you can offer suggestions that are uninformed, but I feel like it's our obligation to make sure that they're informed on what we're doing and they have a real sense. And so we'll do board meetings where half an hour is devoted merely to a technical display of what we're doing, helping them explain what does it mean to go from a batch fermentation to a continuous fermentation.

A lot of people don't understand that. They have no clue even what I'm talking about. Yeah, let alone the importance of it. And I'll give you an example on this part alone. So Corn, Q-U-O-R-N runs a continuous fermentation. They're selling my mycelium in KFC in Britain right now. Like it's cheap enough to be on the menu at KFC.

That's 'cause they can do. A continuous fermentation. If you're running a batch fermentation, it's so much less efficient. Like your cogs are just gonna be out of whack. You can't really do it. And this is why so much bi bioreactor space is devoted to much higher value item, let's say like monoclonal antibodies or something like that, whereas we're, we want to use bioreactors to make commodity foods.

So instead of a hundred dollars a kilo, you needed, uh, five bucks a kilo or 10 bucks a kilo. Right? It's a very different model. You just can't do it with batch. You have to go continuous. There's not another way that, to my knowledge, there's not another way. And a lot of people, including investors in this space, probably don't have a great comprehension of this topic, but it's a huge technological hurdle to overcome.

And so that's the example of something that we would do to help our investors understand this. Yeah,

Alex Shandrovsky: no, so I love that. To our listeners, just to hear what we are hearing here is you gotta make sure that you're educating your investors part of the. Part of the board meeting potential is about educating.

So they get informed around the challenges that you're facing.

Paul Shapiro: Yeah, and I want them to be informed so they can offer their good suggestions. Yeah. It's like informing them is not merely to inform them, although that's not a good cause, but the informing is so they can actually offer good ideas. Or maybe they'll say, oh yeah, I know somebody who I think could help with that.

They might introduce us to somebody who could be an unlock for something. Yeah. So that's always on my mind

Alex Shandrovsky: from a tangential historical experience. I'll just say my first job was actually a professional, was a rabbi. Oh, interesting. And there's no worse example sometimes than a clergy man. And being able to be fully confident in something without having any information, rabbi.

Priest, what should I do with my life? Lemme tell you exactly. Should I know nothing about you. So you wanna tell me about continuous fermentation processes and not have no idea what that means? Yeah. So that's a little problem. Last couple of questions we have. Again, this could be, I feel like this has to just be a part one of part two, the series B.

When we get there, a few quick, just quick fire questions. I think the listeners would just like to understand in terms of the way you looked at handling some objections. 'cause I hear a big objection. Hey Paul, look. It's great. I'm sorry about this lawsuit, but honestly, look, this is where we're at, 25. Your competitors have raised 25 x than you.

Yeah. Like it's very, Paul, I appreciate what you're doing, but it's over the part the music has stopped. How do you, how did you argue for saying, oh, even with this round, we can still win? Compared to companies have raised more and seemingly. Are not doing well.

Paul Shapiro: Okay. First and foremost, we're not trying to create a CPG brand to create the latest plant-based product.

Okay. We are an ingredient that we sell largely to meat companies so that they can reduce their cogs and improve their nutrition. And so this is categorically different from what others are doing. Yeah. We create a dry shelf stable ingredient, no cold chain needed, and we can ship it all over the world very inexpensively, and the user simply hydrates it and adds it to their meat.

Meat prices are skyrocketing right now. Beef is at an all time high, and the reality for us is that we can compete at scale, we can compete on cost. With beef prices. And so for us, we're not relying on somebody walking into Burger King and choosing an impossible whopper instead of a conventional whopper.

Our goal is to become 20% of that conventional whopper. That's the goal, right? And we believe that we have a path to doing just that. And that's a very different proposition than saying, Hey, I want to try to compete with Beyond Meat and Impossible Foods and others. And was that the strategy of 2018? Yes.

That's very impressive. That's very impressive. When I started this company, the idea was an ingredients company that would sell to meat companies who could use our product to use fewer animals. We started selling in 2019 to Purdue Farms, the chicken company. That does Purdue Chicken Plus, that's a product that's 50% chicken, 50% plant-based, and we've been selling to them through 2025.

So we are firmly enmeshed in the world of hybrid meat, right? This is en enhancing Meat has been our game now. At the same time, we're quite happy to sell our product to alternative meat companies too. As an example, Oshi, the Israeli plant-based salmon company, uses our R Myprotein as an ingredient in their plant-based salmon, and we're thrilled to do that.

I'd love to sell to impossible and beyond. Also, as a matter of fact. But the addressable market of meat is orders of magnitude larger than the addressable market of clamp based meat. And so I think about that example I just mentioned. You walk into Burger King right now, you have a choice. Impossible Whopper or conventional whopper.

And according to news articles, the bestselling Impossible for Impossible. The bestselling stores are about 2%. So let's just say 2% of people are switching from the conventional to the impossible. Now, imagine that if in addition to selling the impossible. Whopper, they made the conventional whopper 20%.

Yeah. Mi myprotein. Now all of a sudden you have literally 10 times more volume and mission impact as just offering the plant-based option. People think about enhanced meat as a half step, but in this case it's a much bigger step. You're actually reducing. Demand for animals far more than merely offering the plant-based option.

Now, of course, we should offer the plant-based option. Needless to say, there needs to be more, not less of that. But we also should take note that meat demand is rising, not falling meat. Demand is going up in China, up in India, up in Brazil. All the places gonna matter the most in the future. Meat demand is going up, not down, and we gotta do something.

And hybridizing meat with myprotein is, as far as I can tell, the best idea.

Alex Shandrovsky: And so much to talk about here, but to our listeners, I'll just make a note here. Maybe you have 32nd viewpoint on this. That was a very unconventional approach in 2019. Oh yeah. We were, you probably took a lot flack for that from your community because for if, for the people who understand Paul's.

Paul is, was, will be a prominent member of a very active community, I think. I believe you still are vegan.

Paul Shapiro: I'm not

Alex Shandrovsky: sure if you are.

Paul Shapiro: I am, yeah. I've been a vegan for about 32 years and I'd be thrilled if more people wanted to eat that way. But I'm also a pragmatist and I recognize again that meat demand is going up not down people.

People like to live in a bubble and think that the world is going the way that they want it to. In reality, it is going in the opposite way, right? Meat demand is up. It's at an all time high end. The, in the United States right now, we have more per capita meat demand than ever before in all of the country's history, and these are stark facts, but they matter because they are reality.

So I'll ask, A lot

Alex Shandrovsky: of entrepreneurs are driven by values, right? And I think you, am I right to say that there's certain members of your community or they gave you a lot a hard time for taking this position, or am I right? Oh,

Paul Shapiro: no, you're absolutely right. I had people criticizing me in podcasts and blogs unfriending me on Facebook over this.

I saw one person who I used to be friends with, this is back in 2018, called me. It was like something like a sellout or something like that, who, this is a guy who I was friends with. And my view is that what is sewing out is actually doing less. Like I believe that this is a bigger step, like it actually does more up for the mission.

And if somebody has a better idea of how to quickly reduce demand for animals, I'm ears. I would love it. What we're doing is very hard, right? It's like deep. It is deep biotechnology. It's CapEx intensive. I would be overjoyed if there were some way that we could get people to. Desire to eat more. B and rice burritos and lentil soup and hummus wraps.

I eat that way myself, and I would be thrilled if others wanted to, but I wish it weren't true. But meat demand is going up, and meat demand is going up for a number of reasons. Like one is per capita meat demand is going up because humans are eating more meat. Also pet keeping has gone up a lot and nearly all pets eat meat.

And then there's also a lot more food waste, which is also means more of meat demand. So there's a lot of ways that meat demand is going up and we have a path to helping ameliorate some of it. Last

Alex Shandrovsky: two fire. Question one is, any recommendations on how you view valuations in this round? Anything you can tell our listeners?

This is how I saw it. Yeah, I was looking at the following factors. This is how you know I was, I decided to price things in a way that could be beneficial to our listeners.

Paul Shapiro: Sure. I'm not going to reveal any secrets that people don't already know. Valuations are way down across the space and the realities that you should take the investment.

Rather than risk oblivion, and I always joke about the hor d'oeuvres theory of fundraising, which is when you're at a party and a waiter or waitress comes out of the kitchen with that tray of stuffed mushrooms, when is the best time to take the mushrooms every time they pass you? Because they may not be back, right?

You think, oh, there's an endless stream of mushroom Zack in that kitchen. There may not be. And so my recommendation is in this environment, it's not 2021. This is an environment where. The amount of startup mortality is just sky high. And so I would highly advise startups to not be valuation sensitive and to take the stuff mushrooms where they can get them

Alex Shandrovsky: as we are about to give you our stuff.

Mushrooms. 'cause you have given us so much. I asked this last question, how can we. Awesome listeners, as a community members support the Better Meat Company's mission. What can we do to support you at this stage of the game? How can we pass on some of theirs your way?

Paul Shapiro: Oh, that's so good, Alex. We spent a lot of time working to sell shares in the company.

Now we're working to sell the rise of Myprotein as we scale up. The use of funds in this round is to scale up and we're gonna be making a lot of mycelium. And so we're already now looking at pre-selling some of that capacity. And so if you're with a company that wants to reserve your spot on that list to get some of the myprotein that we're gonna be offering, which is.

Highly meat, like dry and shelf, stable, delicious, nutritious. It's really a super ingredient. Get in touch with us. We're at Better meat.co. We'd love to hear from you and see how we can help you to improve your own products, whether they be animal-based meats or whether they're plant-based meats, or even if they're baked goods.

'cause our MyUM can be used very well in that format too.

Alex Shandrovsky: Amazing. Thank you so much for this conversation and really looking forward to seeing your success and speaking to you for the series B. I'm grateful to you, Alex, for all you're doing to advance the sector as well. Thank you.