Beer, Lab Meat and Climate Chaos

Hi everyone Um right well we all know that um uh That uh Uh Agriculture here we are we're Agriculture The way that farming is done is really Now widely accepted to be quite Unsustainable so there's a newer new Interest in approaches such as Regenerative farming sustainable Agriculture obviously and so now there Are startups such as Berkeley East and Uh to s2g Ventures Back to Future meat And these are developing new ways to Deliver the same or better food and Drinks without wreaking havoc on the Planet so we'll now hear from Charles Denby who's co-founder and CEO of Barclay yeast and Monica varman who's Partner at G2 and Matthew Walker who's Managing director at food and Agriculture at s2g ventures and joining Them to moderate is Harry Weber senior Climate writer for TechCrunch Round of Applause everyone [Applause] [Music] Thank you [Music] Now Check check can you hear me Check I think everyone but me I'm gonna Go grab what there we go all right all

Right we're good we did it Um yeah so we're talking about Sustainable agriculture today and uh the I think the tagline for the event was uh Was it a beer lab meat and climate chaos Uh which is probably like the most I Don't know it's like how do I make this Enticing but I don't know if that helped I'm not sure Um The point though is that some of the Most important aspects of life Uh involve agriculture I you know coffee Which I cannot live without beer which Admittedly gives me a tummy ache but I Do really really respect beer just you Know it just doesn't suit quite right For me Um and then like food I love Korean Barbecue that's what I wrote down on my Nope no cards for one of the most Wonderful things in life so Um Yeah I I'd like to start with lab meat Obviously we just had someone on stage Talking about that and and someone who Didn't agree with the term but I think It's still it's kind of a it's still Kind of in the lab in a way it's still Under development and so I'm gonna call It that anyways Um and specifically for Matthew just Because sgg is backed uh two companies I Believe in in when it comes to

Cultivated Meats as well as Um as well as beyond meat which is uh The the vegetarian side of the equation Um Have you had lab meat or have you had a Cultured meat yes I have yes what'd you What do you think Um I I thought it was remarkable and That it was produced Um in a lab in a reactor but I also I Think this is a good thing it's not Terribly remarkable that it tastes just Like meat because it's meat and I think That's what These companies are going for is to make A product that really meets the bar for Taste affordability nutrition sure and It can be a true analog without having Some of the well most of the negative Externalities that we associate with Kfos and and traditional animal-based Meat production So yes I've had it I've very much Enjoyed it because I very much enjoy Meat and it is meat cool cool anyone in The audience have have you had any uh Cultured or lab Meats how All right more than I was expecting That's cool that's cool Um I haven't seen it anywhere because This year has been a year where there's Been like huge moments of regulatory Approval uh some adventurous restaurants Embracing the idea

Um but what do you think is the hold up In in more of the audience getting there I'm just curious what your thoughts are On you know is it is it like a reg is it Still a regulatory issue or is it is it More I think it's a little bit you know It depends on the company right but it's Great to see that a couple of companies Have received their approvals from FDA And USDA so they can produce and sell in The United States Um you know cell-based meat has been for Sale in Singapore and in small volumes I Mean Sputnik is up you know this is a Product that people have taken to Market And I think that's great for the Industry I think for a while You know there was this binary risk of Will anybody ever be able to produce This will they ever be able to get a Regulatory approval and the answer is Yes to both of those but I think you Know directly to answer your question The challenge I think is scale And production capacities and if you Think about Land-based or traditional animal-based Meat we have all of this Ranch Land I Think it's something like 70 of all Arable land goes into meat production in Some way shape or form and Um you know those are massive National Assets that you know we have Brazil Other places in the world certain places

Have uh but if we're going to be doing Lab meat cell based meat whatever you Want to call it yeah yeah um that stuff Has to be produced in a facility and Those facilities are are you know very Expensive and I think you know the Bottleneck right now will be who can Actually produce the most meat at the Most affordable price with the lowest Cost of capital uh in their facility Obviously it has to taste great but I Think the next wave is those companies That are able to produce the stuff at Scale in an affordable Manner and it Still remains to be seen who wins that Game I think you know there's a couple Of Front Runners a couple that we like In our portfolio but it still remains to Be seen Monica I'm curious um I don't think you've backed any Uh How come so we backed our firm spun out Of Kleiner Perkins I'm a G2 Venture Partners we have about a billion in Assets under management and have been Investing in climate tech for over a Decade Um at Kleiner we did invest in beyond Meat which of course is one of the Pioneers of plant-based food and that Has been a long journey but it's really Great to see Um how at this point 20 percent of U.S

Households have tried plant-based food And so it's been really great to see That journey and that transformation That said even though 20 of households Have purchased plant-based food it's Still sort of plateauing at about one One and a half percent of uh market Share of all meat sales on a dollar Basis and it just it just hasn't become Quite as large of a market I think as as We were hoping to see and also has Become less differentiated over time you Know a lot of these companies is we're Doing truly revolutionary things 10 Years ago now of course it's a much more Uh de-rest did not as venturable Category so that's plant-based we've Been talking about cultivated Mead which Of course there is much more technical Risk it's a much harder problem to solve Much more of like a venture Sort of profile The challenge there has been cost so to Matthew's point with scale we haven't Yet seen companies have a realistic Near-term path to being within strike Zone of traditional protein and for us The stage at which we invest is Typically when companies have five to Ten million in Revenue they have a path To a reasonable unit economics and Frankly no one in the cultivated meat Space is there yet the areas within Cultivated meat we're most excited about

Have been Seafood it's a slightly Less challenging technical problem to Solve because you don't have to try to Recreate the muscle texture of a steak And then also you're competing against An expensive product which could be you Know Say Sushi which is a lot easier Than competing against Tyson and making Cheap chicken breasts so we are keeping An eye out on seafood and watching the Cost curves there Quite frankly it's been a maturity thing For us the the sector just isn't at the Stage where we want to invest I just didn't expect you to say Seafood As an easier option I I can see why is There a specific type of seafood that You're keeping an eye on I'd say like Seafood that's sushi grade that could be Sold into those channels and compete Against those products Have you tried lab meat I have not personally actually I've uh The closest I've gotten has been Black Sheep foods and some of the companies That are like plant-based 2.0 which is Which are really excellent but I haven't Tried upside or any of the emerging lab Companies I'm excited though I mean I would just be clear it would Happily try it it has not been placed in Front of me Maybe I should be doing a little more Effort putting a little more effort in

To seek it out and obviously it's Tackling some really big issues I mean Factory farming is a huge problem it's Sort of like what we were talking about Earlier on the fast fashion panel I was On it's about There's an education piece uh there's Cost piece and it is just difficult to Sum up just quite how complex it is Charles Um Real quick just give give us like 20 Second explanation of what you do just So the audience has yeah some context Great yeah so um Berkeley East we make Ordinary yeast extraordinary ordinary Yeast is used in a whole range of Different things uh one of the ones that We focus the most on is beer brewing and What it does is basically transforms These agricultural inputs into the thing You know and love like beer and uh what We we use bioengineering to improve Those processes so uh you know the the Yeast is making the delicious flavors Sometimes it's making some not so Delicious flavors so we use Bioengineering to affect more of the Flavors you want and less of the flavors That you don't want and there's some Interesting applications that that have Great sustainability implications that I'm happy to talk about and and some of Those things I mean just just so

Everyone has an example giving imbuing Beer with a sort of hoppy taste requires Growing or at least traditionally Requires growing a ton of hops drying Those hops transporting them big carbon Footprint there so it's a sustainability Issue and you've modified yeast to have That hoppy taste without the Hops you've Also done that with sort of like Tropical fruits for those who like those Kind of beers if I drank beer that's Kind of beer I would be drinking Um as you could probably tell just by Looking at me Um uh so anyways just a self-deprecating Moment but so you you're modifying yeast Um and you're doing it with the Sustainability Focus I'm curious though The people who are sustainability minded Might be Uncomfortable with modified foods or you Know there's been a lot of talk about uh There's been a lot of fears around GMOs And then also it does seem like maybe we Don't quite we're not quite so scared About GMOs anymore so I'm curious Are you afraid of scaring off the very People who would probably be lining up For your yeah your yeast that's a great Question and it is very much a mixed bag Um and what we found is that one of the The key um I think one of the things That worked against GMOs in the early Days was that the value that was created

Was for the producer not for the Consumer what we're doing is we're Creating we're using GMO if you will We're using you know bioengineering to Create benefits for the users we talked About you know replace you know using Less hops so it's a more sustainable so That is something for the consumer it Also is more of the flavor you like less The ones that you don't like so that's Another value that we give and then even Beyond that you know one of the Applications that I'm really excited About is we can create yeast that make That reduces the production of ethanol So you can actually make delicious Tasting non-alcoholic beer I mean what If you're if for those that are familiar With what the current offerings are in The grocery store there's definitely a Really significant value prop there for The customer so I think when GMOs are Used for are really targeting uh Benefits for the customers they're much More likely to be accepted by the public Do you have a Target in mind or any Thoughts on the time frame it'll take You to get like a super sustainable uh Non-alcoholic beer onto the market yeah I think it's definitely coming in 2024. Okay okay well speaking of time frames I'm curious for the VCS on the panel uh Are you thinking like how patient How patient are you because I didn't

Think you'd say 2024 I thought I was Kind of betting on like 2025 2026 or Something like that but Does it require extra patience and for For Founders in this space do they have To seek out patient VCS to uh get Um We're more patient than we ever thought We needed I I This is a tough Tech space I think you Know when you think about Venture Capital you think about the information Technologies or you know digital Technologies the ability to rapidly Iterate And relatively cheaply iterate is huge And you don't really have that in most Cases Within These tough Tech spaces and Food and Agriculture and Um you know every time you need to make A change there might be a new regulatory Hurdle some of those regulatory hurdles Require years of paperwork and waiting And there's uncertainty and you know if If you're if you're trying to breed a a Different variety or a healthier variety Or tastier variety of of a tree fruit For instance you got to grow the tree You know and that takes years and then If there's some sort of weather event You may have to start over and and you Know for a lot of what is being grown in Agriculture you might get one shot a

Season or one shot a year and so it Takes a long time to really find product Market fit and to know whether or not You have something that a works and B is What the consumer or customer is looking For and the difficulty there is Yes it's patience Um it's it's it's it's just uncertainty I mean it's more uncertainty but that I Think that also impacts the level Certainly the level of capital Efficiency but but the way that you have To underwrite risk because it's not just Time it's time with salaries and then And then perhaps if you're waiting on Regulatory for one product The engineers the r d the team doesn't Sit there there are other products and Maybe you get broader pipelines built And you know the burns start to increase In that way so I think it it impacts These longer adoption Cycles impact Um the risk profile the impact the Capital intensity of the business and I Think the way that we have to Um you know handicap or underwrite Certain risks but Um there's a lot of investors in this Space increasingly that that really see The potential for impact stories within Food and Agriculture and strictly Superior Solutions where we can meet the Consumer where they are and where They're going and drive large outcomes

And it's it's helpful that this is a Very large Market Everybody Eats several Times well most people eat several times A day so there's a there's a you know There's an opportunity but um you guys Are having to be patient with my long Answer here yeah the short of it is yes We have to be very patient and I think Increasingly so every year Monica Um you invest in agriculture with the Sustainability Focus you also invest in Climate Tech climate Tech is one of Those areas where uh it takes I mean just a ton of time and effort in Order to have a big impact especially With certain types of climate tech there There are big investments in uh direct Air carbon capture sucking carbon out of The air out that uh have yet to prove That they're really feasible so I Imagine it takes a lot of patience but At the same time as these things are Pretty Buzzy topics do you find uh that You encounter investors who don't Realize what they're getting into or uh Or maybe even Founders who Um learn over time oh my gosh this is Going to take forever to prove I mean Obviously these are worthy causes but What are your thoughts on that on that Topic yeah so we invest in climate Tech In these tough Tech sectors but after Companies are commercial and so usually They have five to ten million in Revenue

They have they have shown product Market Fit and are scaling their product if you Look at the zero to one of those Companies we'd often work with investors Who might have a slightly different Business model I mean the reason we Invested the stage we do and have the Timelines we do is because we're also in A business selling a product right our LPS want their money back in 10 years And so there are other funds that have Slightly different products and Different business models breakthrough Energy Ventures for example has a 20-year life cycle and so there have Been situations where breakthrough does You know seed series a company gets from Zero to one and then we partner with That company as they're going through The growth stage and commercialization Stage and scaling so I think there's Quite a there's a range of capital Providers and and financial products if You think of VC out there that are Appropriate for companies at different Stages In terms of whether investors or Founders or just coming into this blind I do think that uh even though this is a Nascent after We've tried it once before I think 10 Years ago when people were doing this There was a lot more of that a lot more Software investors investing in biofuels

Companies and expecting the same risk Return profile and being surprised I Think it's I I do think it's a bit Different now you have alumni from Tesla And face Sunrun a lot of these great Vintages of the 1.0 of climate tech Companies who've seen how hard it is They have an appreciation that you know It isn't going to be as easy as scaling The next Enterprise SAS business but Also an appreciation for how big the the Prize can be and how big the outcome can Be and so to Matthew's point on risk Reward we do think about it as we need To get it really right in picking who we Think the winner is because there are Potentially even more dramatic Winner Takes all you know economies of scale Dynamics and climate Tech than there are In Enterprise SAS but if you do get to The right one it's worth it to be Patient because these are massive Industries and massive opportunities Yeah and you're you're referencing Cleantech 1.0 which you know some there Are some successes there but it Definitely was kind of one of those like Rude Awakenings I think that has Informed the current ERA of climate Tech Charles I'm curious would you rather be A micro Brewer's favorite tool or a Miller Lite Like uh like you mean powering Miller Yeah for example

You know Um I think I as a so I'm a technologist Kind of at heart and I think the thing That for me and the rest of my team I Think the thing that gives us the most Satisfaction is seeing is making an Impact at a large scale so we are we Want to be quality obsessed enough for The small micro Brewer but we want to Build a key part of what you know drives Us and makes us so excited to come to Work every day is that that scales into The majors and that gets you know on the On you know uh gets enjoyed by you know The whole world that's something that is Extremely exciting for us is the um are The microbrewers I know that you My understanding is you're primarily Working with these these more like Specialized Brewers right now Um are they more eager to explore the You know the future yeast that you've Developed or are developing or are you Getting bites from the big the big names Yeah it it definitely started with the Small guys so there's 10 000 breweries In the U.S and that's actually part of Why this was such a great like uh Startup Market to sell into is because There's a lot of small breweries that Are not risk-averse in fact they're very Innovative and experimental they Pride Themselves on that sure sometimes

There's only one decision maker you have To talk to the Brewer and if he buys Then or if she buys great whereas these Bigger players yeah we're making uh We've made a lot of progress there too But there's you know uh there can be Dozens of stakeholders that need to Check the boxes before you you know sell Into that and a lot of these big guys They'll look at Innovation they'll say They uh you know they're happy to be on The sidelines for a while until it gets Proven out and all the value value Associated with it and then they'll hop In so yeah it's very much been a Progression for us have you but have you Found like the reception has been Positive among the the big the big People the the name brands yeah Absolutely people are are very excited About it yeah yeah any specific people Um I can't I I mean I I can say Um yeah not that I can't speak about the Big guys any names we'd know Um yes definitely definitely oh my gosh Did he would start with an H [Laughter] Um Um yeah anyways so uh you know I have to Keep trying I just love it and M you Know anyways Um We're talking about beer we're talking About lab meat we're talking about I did

Bring up coffee earlier and there are Some interesting things happening coffee Both with regard to like you know Heirloom varieties or Um stuff that's there's one I'm trying To think of the name Tomo yeah atomo right that's that's an S That's an STG coffee without a bean it Coffee no Bean I tried it at CES the the version with Oat milk in it Totally I could have fooled me thought It was coffee entirely and it's it's got Roasted date seeds in it Um they're like roasting and date seeds And that have been upcycled and they're Also using um Chicory which is often used in like Coffee Alternatives I'm like doing your Job for you sorry preach keep going I Really liked it but I did try the one That didn't have oat milk in it it was Just like a black coffee and it was you Know it was good it was better than than Some of the coffee I've had but I'm not Saying where I've had bad coffee but if I had it recently Um So you know that was an earlier version The uh I don't know I I I didn't ask you A question even but what do you yeah What's on your mind no sorry sorry go Ahead Well I'm curious we're talking about

These big categories that are like Obviously headline worthy because their Obsessions or their passions but there's So much interesting stuff happening in Agriculture that is more Niche um and I'm curious for the people in the Audience who are operators who are Founders or aspiring Founders how do we Talk about Um or you know how do you even like Make these important things that aren't So buzzy Sexy or whatever they need to be so that People are going to devote time and work On them I know that there are plenty of People already working in these fields But you know one of the things Monica is Uh you've invested I think in Fertilizers But how do you sell fertilizers when We're next to to beer and coffee like It's got to be hard well I mean not I Think people are motivated by the impact At the end of the day the synthetic Fertilizer Market is 180 billion dollars A year like there's a big price to be Had Um actually the company we're invested In is in is in Berkeley it's called Pivot bio they did a big press release a Week or two ago they talked about how They're at over 100 million in Revenue Growing 60 year over year Um in a strange way the Russia Ukraine

War was a bit of a Tailwind for them Because it drove up the price of Traditional energy which is what is used To make synthetic fertilizer and Synthetic fertilizer is terrible for the Planet you basically use methane to Create the fertilizer in the first place Which is anywhere from one to three Percent of global emissions depending on The estimate Um and then Farmers end up over applying It on the field because a lot of it gets Washed off during rains and so it goes Into our water systems creates havoc in Our ecological systems the the sorry to Interrupt but the seaweed blob have you Heard about the seaweed blob that's that Was headed towards Florida I've spent a Bunch of time writing about it and enjoy It exactly um but enjoyed the topic not The reality which is just tons of excess Seaweed entering uh the You know entering Florida wreaking havoc On uh you know basically all of the Coastal areas over there so sorry to Interrupt there but I'm just curious But so there's money it's sort of that Was your first answer is there's money And there's impact there's there's many Many percentage points of global Greenhouse gas emissions at stake if you Can solve this problem yeah Matthew I'm curious or Matt I forgot Either one of them uh either way

Um Do you come across any of these areas That are absolutely Under head you're Not getting the headline yeah I mean I Think there's certainly a couple of you Know if you talk about lab meat and and Coffee and the like I think you know They they certainly get a lot of the Media coverage but I think most of our Portfolio is in the in between spaces Across the supply chain Um where people may not see the the Stories as as sexy Um and there may not be a direct Consumer story and I think that's part Of it a lot of what we invest in is B2B And so you don't really hear about What's happening Upstream but the Potential for impact is massive I think You know soil amendments you know things That are more gentle on the environment Um there's a new paradigm coming in pest Controls and all of this stuff goes into The food that we eat we just don't think About it because it's not necessarily Direct but I think Um there are a host of solutions that Are are coming to Market in massive Mark You know these are 10 hundred billion Dollar Global Market opportunities Um and yeah they don't necessarily grab Some of those consumer-facing headlines But I think for the investor in the Space

Um they're very much top of mind because Of the potential for impact and and you Know that's most of our portfolio the Other thing we look at is is second Order impacts Um and so if we're trying to you know Things like financial services for Instance you know we're in an insurance We're in data and trading you don't Think about that as food or AG Tech but You know certain things that can Democratize or Grease the wheels or make It easier for people to adopt better Farming practices or participate in Things that might be more expensive Today or where they need Capital today Those aren't necessarily sexy stories But those things can scale Um and and can really drive impact at Scale and volume and so we're very much Interested in those opportunities as Well even if there's not a direct Consumer story in the in you're watching Agriculture closely Um all of you are Um I want to start with Matt on this one Is there anything specific that you see And you're like why isn't anyone working On this Oh Model I have to say I'm actually very Um There are some incredibly smart people Working on some very large problems

Um and we are very Um impressed with what we see on a Consistent basis I think people are Working on you know across the board in The supply chain I'm sure there's Something maybe you'll think of Something in a moment but nothing comes To mind that I that I say I I wish Somebody would invent this thing because I think people are working on a lot of This stuff right now Monica you've had the benefit of at Least 20 seconds to think about it yeah Yeah Um so as as Matthew said people are Incredibly Innovative across the supply Chain I think one unlock that I've only Just started to see people starting to Build is helping to get transparency end To end across the supply chain it's hard To incentivize or expect a farmer to Adopt climate-friendly practices when They will get paid no more to do that You know there's only so much risk they Can take when when they're when they can Grow crops only once or twice a year and Then why would they change their Practice if at the end of the day you Have to sell a commodity product into a Commodity market and so Indigo AG sort Of tried this V1 you know it's still Pretty small and we're starting to see Some SAS based transparency platforms Like regrow but it is in very early

Stages and I think is a critical enabler For all of the interesting Innovations Across the supply chain mean because That's the only way we can actually De-commoditize our food and reward People for growing truly sustainable Climate-friendly products so you're Saying Tech You're saying like Some something ability transparency yeah Exactly as Through the supply chain basically yeah Um anything come to mind for you I Obviously you're you're an operator your Head's down but yeah curious well yeah Like you know I'm very focused on sort Of fermented Beverages and whatnot but I Think the thing that keeps striking me Is probiotics and the opportunity to use The same sort of bioengineering Principles that we're using to affect Flavor and quality in beverages but Imagine that you could engineer the Probiotics that are in your gut or you Know we're on an egg we're talking AG Tech or in a cow's gut you know imagine If you can make them healthier you can Deliver medicines uh you could even Perhaps reduce the methane that they Emit you know there are lots of Opportunities that you could use Engineering probiotics for and I think That there are definitely some startups That are starting to think about that uh

Certainly and there's there's also a lot Of human Therapeutics based ones that People have been talking about a lot but On the AG Tech side I think there will Be some really interesting stuff coming Online cool yeah cool thank you well I Mean thank you so much for taking the Time talking to us about this enormously Important topic and I feel like we just Scratched the surface which is Yeah it it's all you know we only had 30 Minutes we're gonna do it but yeah but Thank you so much thank you for Listening yeah thank you thank you Thanks appreciate it

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