Groundbreaking science and tech nurturing innovation in the next gen space. Watch Tommaso Di Bartolo, founding partner of Awesm Ventures, along with industry fellow, Ron Shigeta, PhD, Scientist, Advisor and Investor in FoodTech, hosts two passionate entrepreneurs in the next gen proteins space: Jeff Banas, a Biochemist with extensive experience in enzymes, DNA and molecular research, Co-Founder at Sun Coast Naturals, an inventive food ingredient company that produces clean, natural, healthy, and sustainable next gen protein ingredients; and Raavee Shanker, Co-Founder of Asia Insect Farm Solutions and Plento, a groundbreaking initiative in the next gen proteins space that is setting itself apart in the world of snacks by mixing both plant based protein and insect protein packed with nutrients, vitamins and minerals.
TopFloor: Where handpicked startups present sector-specific innovations to a jury of industry fellows
In Season 2, recognized world-class Researchers, Scientists, Faculty Members, Senior Executives, Experts, Chefs, Investors and Entrepreneurs from around the globe, engage in strategic exchange of views and share startling intel on viable transformative innovation in Agriculture, Food and Beverage, zooming in the next gen proteins space.
Topfloor is where inspiring and passionate game changers, visionary entrepreneurs share startlingly impressive intel on food of the future with a panel of experts.
With Special participation of
Serial entrepreneur w/ 2 exits, author, advisor, faculty, investor.
Tommaso Di Bartolo
Episode's 🔖 Transcription
Tommaso: Topfloor, where we handpicked startups to discuss how to future-proof the market of food and specific alternative protein. We are already in our Season 2 Episode 10. Hello everyone.
Spirulina in the market
Tommaso: Without further ado, I would like now to hand over the screen to Jeff. Jeff will introduce within the next eight to 10 minutes Sun Coast Naturals and how they are trying to change the world. Well, Jeff, please take it from here.
Jeff: Thank you for the introduction. I appreciate it. As Tommaso mentioned, we are a natural healthy ingredient company. We are a food tech company that focuses on sustainable ingredients and protein. Most importantly, we are unnatural. Sun Coast Naturals was founded by a number of individuals that have long standing experience in biotech proteins, and food ingredients were entering the market with unique and patentable proteins that the market actually hasn't seen before. So when people talk about alternative proteins and healthy eating, they think about plant based and plant based is of course right now very big. There are the big players like soy, there are up and comers like potato, pea lentil insects, and then there are some that are kind of falling by the wayside like algae. When we look at plant based proteins, we see the market leader soy having, you know, some I'll say challenges as they become more widespread in food ingredients. For instance, growing allergenicity and a lot of healthy eaters are contrary to GMOs P which has been an exciting up and comer also has a couple challenges, especially in the taste arena where you have an astringency that lingers in on the tongue. After you have a pea based protein alternative for instance, in a burger or in a soup or something like that.
Spirulina is a recognized superfood and has been really left by the wayside except in the health crowd where people are more than willing to put in shakes and smoothies. However, it hasn't really gained mainstream attention because of its color. And its flavor as well. If you've ever had spirulina, which is a blue green algae, you'll know that it tastes like fish, it smells like fish, and it's very green. So if you ever wanted to put this in a consumer product, you face some serious challenges. But that's where Suncoast comes in. We've taken our expertise, and we've taken the spiraling of the superfood and transformed it into a product called spy Pro, which is a neutral taste, odor and color protein isolate and it's the first in the market. You will not find this anywhere else at least as far as we've looked. During that process, we also produce a natural blue color used in the ingredient industry. We call Five Pro is, I'll show you, as well as a growing market for natural blues where people are trying to get away from synthetic colorants in their food. Spy pro itself, we've done the research, as far as we can tell it is the most sustainable protein in terms of minimal land usage, minimal water usage, and even so far as to say it can grow on non farmable land with brackish water.
So you don't even need a high quality land department. We're posing it to be a premium offering in the market. Because of its unique properties. We've judged a number of properties such as excludability, which is a very big one. But most important in the turnit of the protein market is taste, flavor, taste is king in the food market. And that's where a lot of plant proteins face challenges in their taste profile. FIFO, which is our secondary co product, is already an FDA approved colorant with a growing market as people seek out more natural colorants to add to their foods. Ours of course, is all natural, sugar free, and actually has better dissolving characteristics than the competition.
And although it is an established market, because of our processes, we can make some serious inroads based on competitive pricing and superior characteristics. So the global market I don't have to explain to anyone watching this channel how big the growing alternative protein market is. Pea and cannoli you can see are growing at a CAGR of 16 and 13% respectively and even today, additional protein like whey is still experiencing strong growth. On the natural blue coloring side, we're also looking at an excellent expansion all the way up to 2025, where we expect this market to exceed 350 million.
So one of the unique propositions about Sun Coast Naturals is that we plan to get our first commercial plan up and running within 24 months. And this is how we're going to do it. We already know how to make the protein. And since we already know how to make it, all we have to do is scale it up. Now I know that sounds simple, but that's where a lot of companies face challenges. So we're going to do stage approach where we start manufacturing samples to get customers that we have previously shown interest in this product, to reevaluate it coming out of Suncoast and signed letters of intent or offtake agreements to essentially sell out our first 50 tongue plants, which we expect to build, as they said, and less than 24 months from our initiation. From there, we are going to expand up to a 2500 ton plant, which will then make a significant impact in the market. 50 tons in the ingredient market.
There's our five year plan to get up and running in the commercial market. Our co-founders, I'll introduce them to you myself, of course. I'm a protein chemist and biochemist's analytical chemist for 20 years. We also have Rick who brings his food and protein launch experience from ADM and other food industries. And Cuong who is our finance here and lawyer extraordinaire. He's been in multiple startups. He's been involved in multiple investment rounds and raises as well. We also have two advisors. Scott is our key into the market. He's been in the food and ingredient market so long his Rolodex of people. Remember, Rolodexes could probably fill the Encyclopedia Britannica, and he's been helping us quite a bit in reaching out to customers. As of right now we are in our fundraising. Our first plant is expected to bring in both positive revenue but also positive profits. We have already calculated our cogs, our SGA. We have detailed financials for those that are interested. But the breakdown is that as soon as we build that 50 Pilot Plant, we expect to be cash positive. Our second plant is supposed to be more expensive, of course, but also bring in additional revenue of up to 16 million. The second plant focuses on five pro only, whereas the first plant will manufacture five pro and spy Pro. So where we are right now is we are starting our Angel round, where we're offering equity in the company as well as board seats or information rights to be negotiated. We're looking at a $750,000 round right now, which will start up our operations and will allow us to start filing our patents which many we have written already, we're ready to file them. And most importantly, we'll be able to get the equipment to generate samples and get them in the hands of customers. So we can lead to the offtake agreement, we're then going to move on to what we call a seed round. Which could be debated as a series A but we'll call it seed where we're actually going to then raise money for design of the 50 tonne plant and a building of a pilot plant, which would allow us to go from,you know, maybe a pound of protein a week to 50 or 60 pounds of protein a week, which a lot of companies require so that they can do large scale extrusion, they're typically looking for, you know, sometimes 500 pounds to work with. And so moving from seed to series A is then when we are able to build our 50 ton plant with those off take agreements or letters of intent in hand. I can tell you our past conversations, we've had distributors that are interested in buying out the capacity of the first plant just for themselves.
So the interest has been very high. Like I said, we're not a traditional food tech startup in that we're not actually going after the consumer market, we're actually going after those that make the innovative products that then go to consumers. So things like Impossible Foods and Beyond Meat. Those types of companies are who we're going to target with this unique protein offering that they'll be able to, in some cases drop into their formulation and improve the tastes right off the bat. That leads to less masking ingredients that leads to less processed foods, which again, is one of the new growing trends amongst this movement. And that is to have a less processed food intake.
Challenges and strategies
Tommaso: A question, Jeff, why is it that spirulina hasn't been really tapped into? What's the challenge? What are you guys doing differently? Why are others not considering that yet? You said it, it's still not compared to others? Is it because of the cost?
Jeff: The main reason when there are people looking into algae to use as a protein, some are taking the genetic engineering route, some are taking the fermentation route, which are of course more costly. You know, in a nutshell, I'm not sure why no one has thought of this. Yet, I can tell you that the challenges and getting the green color out of it were significant. And we had to overcome them in some very creative ways. So that may be a big stepping stone there. There are certain processes that if you don't do them exactly the way we've discovered, you want to get a product of that color. So I'm thinking technical challenges as well as people are already looking at biotech rounds, which of course are more sexy, usually.
Tommaso: Which is great on one hand because it increases the barrier of entry right? I mean, is this also you are mentioning patents and food patents are pretty challenging more on the ingredient sides common. What I mean, without going obviously into details,but what is the line of reasoning there? How are you guys approaching it? What makes you confident that you actually will get a patent? Is it worth fighting that and at that stage?
Jeff: Because we're targeting first off process patents, process and technology. So I because you are correct, it's difficult to patent in the food and ingredient world the actual material or the actual product. So we are focusing On the patents that will allow us to make this which will stop other people in their tracks and trying to duplicate it.
Tommaso: My last question that I had regarding your goal to market at the very end, you said "our intention is to serve that specific target audience". And as a startup, you always do sales, business development, customer discovery. I mean, what kind of conversation have you been having nowadays? How are they interacting? What's the engagement level? Give us a bit of how the market is embracing what you're presenting.
Jeff: Sure, we have another, we have a number of major food and coloring houses interested in the blue, the five Pro, our natural colorant, especially because they're seeking domestic sources these days. Secondly, in terms of the protein, we've had great interest from not only food and ingredient distributors, but directly from food companies, the companies that do make products, as a matter of fact, really what is, the next step is getting the new samples into their hands, because what I showed you in the vial is the last of what we have, unfortunately, but they are interested in getting their hands on mass amounts of it, so that they can experiment with it, they can put it in their foods, they can see what properties that has and how they fit into their processes. So there's been a lot of excitement, because this is a protein. So far, nobody has an offer. And they recognize the first mover advantage.
Tommaso: Ron, do you have any further questions?
Ron: I guess the real thing is, if you have interest, as soon as you can convert that into some documentation, that they're going to give you pricing that they would definitely take samples that you make, I mean, it's going to really move you faster. The funding can go really slow without those things. So waiting for your pilot plant to be giving out samples is also probably, hopefully not your plan, right?
Jeff: In the initial Angel round will allow us to make samples on a small scale, and get them into the hands immediately.
Tommaso: And are you guys based on those conversations that you have, with potential partners/customers? Have anybody signaled any interest in joining your initial round of I think, what was it 750 or under a million?
Jeff: We have had those conversations, there are a couple of country companies that are considering it. Of course, so many of them have tightened their belts right now in the current situation. But there are certainly people that were in serious discussions with us about what type of strategic partnership could be joining there.
Tommaso: In terms of the strategy of building your startup out, are you focused on strategics or traditional VCs? What are your thoughts on the strategy side for that?
Jeff: Our strategy, actually, we're going after both, of course, the VCs who are interested in seeing a product and seeing a social media following clamoring for the product, are not our target audience. We're certainly looking for investors and strategics that are looking at the long term play here. Because this is not something that's going to blow up overnight. It takes time to build plants and get your distributors in line. So definitely people that are the strategics. They understand that and we're looking for VCs, investors who also understand that.
Tommaso: we are now switching over to Raavee Shanker. I'm very curious to hear what you guys are up to how you guys are different. Actually where you guys stand how much evidence do you have that it's just not just another alternative for the next gen protein startup. But you know, how do you want to make this big?
Raavee: Before I kick off talking about my company, since the interests of those who are here are purely going to be in food tech, I thought it would be very good to start with this report from the UN, right. So it is called the state of Food Security and Nutrition in the world. And as I was going through it, I found it very insightful to make things that I'll be talking about in my presentation today. Okay. Firstly, one of the information I gleaned from this report is that two thirds of the global population will be living in urban communities by 2050. This shows that we are moving towards a world where it is going to be highly urbanized. And we are going to see people living very busy lifestyles. So how we give the whole fuel our bodies with nutrition is going to change that was one of the takeaways I took from it. The other three are going away quite fast, the number of people affected by malnutrition is increasing since 2014, an estimated 2 billion people, which is 25% of the global population did not have regular access to safe and nutritious food in 2019. And lastly, obesity is on the rise in all regions of the world.
So if you see the last three points that I spoke about, they can very easily be linked with the idea of having access to nutritious food. And that's where I believe the Plento comes in. We have two ways of looking at it. Firstly is the amalgamation of two words, plant and to, right. So this is very strongly where we are focusing in terms of creating our products, we will use plant based ingredients. And to for insect based ingredients, right and claimed to also is a play on the word plenty, which means there is actually more than enough food and resources for us to leverage on in order to feed our increasing population.
So we are on a mission to create the best snacks for you and the planet. So how we do this is that we take everyday comfort foods, and we innovate them. So many people see indulgence and nutrition as being two different extremes. What we want to do is to look at underutilized ingredients, ingredients that are highly nutritious, that are climate resilient, that are resource efficient, and also tasty at the same time, so that we can bridge the gap between intelligence and nutrition. And we are also committed to creating all our products with no GMOs, hormones, antibiotics, free of gluten, dairy and soy.
As a start, we decided to embark on what we refer to as the healthy ship revolution. Right now our product is still in formulation. So unfortunately, I'm not able to show you guys a finalized version of what is going to be we set out trying to formulate a batch of chips, which is about 20 grams protein per 100 grams. We are not done with our final formulation yet but I can say with a lot of happiness that our current prototype is already achieving 28 grams protein per 100 grams. We are trying to push it further and see if we can use just natural ingredients alone and try to achieve more than 30 grams of protein per 100 grams. It has been a challenge so far, but we are still working on it. At our current formulation. Our product is also low in carbs, low in saturated fat. It is packed with minerals such as magnesium, zinc, potassium, phosphorus, and also our B vitamins. Like I mentioned earlier, we use key natural ingredients. We work with a team of food technologists to actually create these chips that we want to bring to market. They contain prebiotic dietary fiber, which is supposed to be very supportive of our gut microbiota. And lastly, we only use ingredients that do not require excessive processing. So to actually hit all these points, it wasn't very easy for us as a team, we have to go and look at a whole vast list of ingredients. And since we are based in Singapore, we did not want to venture too far, like get ingredients that are only grown in Brazil or Peru, we wanted to find ingredients that can be strategically sourced from within Asia and Southeast Asia, so that we are also very sustainable in our sourcing needs.
So just a very quick comparison, right, I've made a comparison here with three other chips brands. The first one is just a very popular brand that makes chips. I didn't want to name them. So for these Bama chips, they don't try to cater to the health and wellness market. So the only positives they offer is they are soy and dairy free mostly. And they are in very exotic flavors that customers can come on board. Next, we look at a healthy brand that makes multigrain chips, right, which is supposed to be very low in fat, and so on. But they are also packed in carbohydrates, which is not very good to be consumed in large amounts along the day, right, and they don't have minerals and vitamins that we need. Next, we also focused on brands that cater specifically to the fitness market, who create things like protein powders, cookies, chips, as well. So likewise, they have chips that are high in protein, they have chips that offer a complete amino acid profile, but at the same time they are formulated mostly using either soy or dairy. So this is where I believe that what we are creating what we are bringing to a market has a very good place because it's filling an existential gap where he can he can serve very different demographics, whether they are people who have nutrient deficiencies, whether they are people who are going for fitness, whether they are those who just need busy lifestyle, and need a quick snack on the go to feel nourished.
So some statistics that we found when we were creating our snack product is that snacking in terms of retail value, right in terms of sales, is rapidly evolving in Asia Pacific, so much so that we have surpassed both the Western Europe and North America regions in 2017. Being based in Singapore, I believe we should honestly take a very good look at the Asia Pacific region since this is where these other countries will be based around. But then again, we also do not want to ignore one of the biggest countries in the world in terms of snacking, which is the United States. In 2018, the US was ranked second in savory snack product launches, I think the snacking culture has always been very huge in the US. And this is something that we want to leverage on by bringing onboard healthy food snacks. So some data here that shows that what we are doing is very aligned with what the typical us consumer ones are. 70% of consumers in the US say that they are willing to give up a familiar favorite snack for one that is high in protein. Likewise, 34% of them want snacks with front of pack protein claims and 24% of millennials actually snack four or more times per day. So why are we looking at targeting the millennials here because we believe these are the demographic that is going to drive the adoption for very novel food ingredients. For many of us, we might kind of be set in our ways, we might not be very open to trying new products, new ingredients.
So based on our experience working with different groups of people, we have found that millennials are the ones who feel that they have a stronger commitment to environmental sustainability, who actually are more open to trying new and novel experiences when it comes to food. So catering to their needs is one of the strong focuses of our company. In terms of business model. We will want to source all our ingredients from Asia, our production will be in Asia as well. We will start off by working with CO packers and they will help us to optimize our costs and in distribution like I mentioned earlier, the United States, Japan, South Korea, these are the markets that we will be targeting and in terms of going to retail right we are also not just looking at retailing in supermarkets. We are also trying to work with non traditional retail like gyms, theme parks, office pantries, where people of different genders have different demographics, they are able to mix freely, and we want to be able to offer our product there. So that they can look at our product is something that they can use as a form of nourishment in India's jam packed lifestyles.
And lastly, e-commerce is also another platform that we want to be leveraging on. So Amazon is one that many US consumers are very familiar with. In Asia, we also have ecommerce platforms like lazada, shopee, and Timo. I am Raavee, I am the CEO of the company, At this moment, we are still trying to achieve some milestone before our next funding round. So anyone who wants to learn more about our company or is looking to invest is always free to hit me up with a call or a text.
Pricing and market
Tommaso: Thank you so much. Ron, take it from here. Thoughts, ideas, questions?
Ron: What do you think, given where you are now? What's Plento's biggest obstacle to success at this point?
Raavee: Right now, the market for insect based products is mainly in the US and in Europe. So one of the challenges that we have that we want to strategically manage is to partner with companies who have the expertise with logistics and distribution in these countries, because we are very confident that we can create a very healthy product at a fraction of the cost of what others might be able to do in this very developed countries. So this challenge right now is going to be getting our products on the shelves in Europe and possibly the US.
Ron: How much money are you making from every bag of chips? How much is it gonna cost? I mean, there's a lot of there is a general rule that the more food value you put into a food product, the more it's going to cost. What's the secret there? How do you get more food value for less? I don't think it's because insects are cheap, but insect protein flours, it's cheaper, but it's certainly more sustainable. So how does that work for you?
Raavee: We have strictly kept all our sourcing to be within Southeast Asia at the moment. Initially, we were looking at Asia, the broader scale. But as we fine tune our ingredients, we were very strongly committed to just using ingredients that can be found within Southeast Asia alone. So by doing this, we were able to bring our operating costs, our production costs down to a very small price point, if let's say you would want to know more details in terms of how much it costs to produce 100 grams of chips, compared to other brands, there is something that I can always take me through and then separate.
Ron: Okay, then maybe we should talk afterwards. But I would think that like anybody who is listening to the pitch today, probably is starting to think like, how much is that bag going to cost? I think people would like to know, and if you have something that really is that impactful, it's really in your advantage to tell everybody about it. Some of those numbers are difficult to sort of, to open up but it sounds like one of the strongest parts of your pitch is that you have a special product.. Another question I have is, how about the branding, if you guys started doing some branding. You have a lot of market research, but have you yourself done some focus testing this kind of thing?
Raavee: I think because you get your pricing in, in after you get your weight in ounces. So 12 ounces, I believe is about 340 grams. So right now I think what we are looking to achieve for the price point we have is closer to about five or four to five US dollars, that is very open to our minds. But as our product gets ready, then I think we would be closer to the final figure that we can bring to market.
We are currently working on the branding as well, because right now we don't want to brand our product as strictly being based on just plants alone or just insects alone, because the insect base industry is not as established or doesn't have the scale that plant based companies have. So some of the challenges that we faced are in terms of how do we exactly brand a company like that. So for us, right now, we are focusing on showcasing how we can be very sustainable. When people think of Plento, we want people to understand that this is a brand that they put sustainability first. And without compromising on nutrition and taste. This is the kind of branding that we will bring about.
Tommaso: Also today for the 10th episode, this is almost it for Topfloor. And actually we usually bottom line. Ron, what are your thoughts on Jeff's spirulina secret sauce? Are you interested in hearing more and connecting that and double down?
Ron: Today and I will be connecting with you guys on LinkedIn to talk a little bit later, hopefully in the coming week. So got some ideas for you guys. Thanks. Awesome.
Tommaso: Well, that's great. So Jeff, we all are connecting Ron with Jeff. And how about having after a workout some chips with a lot of proteins? Ron, are you intended to meet with Raavee's chip party?
Ron: I'll be talking to both you guys. It will be fun.
Tommaso: And from our side also ventures representing the CBC. I would also be curious to meet with Jeff and Raavee. So you have two yeses on both sides.
And we like to wrap up our broadcasting always with the quote that is shaped and mark my life with I learned to phrase which goes like this:
Tommaso: “Never forget where you come from, it keeps you humble. But where you come from, cannot limit you where you want to go.”
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And this series is brought you by:
Awesm Ventures: A VC that unlike others, invests exclusively with and on behalf of corporations in fragmented industries. http://www.awesm.ventures
SiliconVal.ly: The Innovation institute focused on helping future-proof corporations in traditional industries. http://www.siliconval.ly .
This is a proteinX Series. http://www.proteinX.org
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