While most start-ups struggle to raise the funds to turn their dreams into reality, Hampton Creek Foods CEO Josh Tetrick has convinced some of the world’s wealthiest people that his plant-based egg replacers are worth a serious punt.
The San Francisco-based firm, which hit the headlines in 2011 after Tetrick secured cash from Bill Gates and the founder of Sun Microsystems (Vinod Khosla of Khosla Ventures) to get his business off the ground, has just completed a $23m Series B financing round led by Horizons Ventures (founded by Asia’s richest man, Hong Kong's Li Ka-shing), bringing its total funding to $30m to date.
Other investors in the latest financing round include Yahoo co-founder Jerry Yang and AME Cloud Ventures, Code.org's Ali and Hadi Partovi, Jessica Powell of Google, ScottBanister, Ash Patel, plus early investors Khosla Ventures, Collaborative Fund, and Kat Taylorand Tom Steyers’ Eagle Cliff.
38% of the world’s eggs are produced in China
The money will be used to pursue strategic partnerships; grow the 45-strong team; accelerate growth in North America - where Hampton Creek has just launched retail products in Whole Foods and is working with leading food manufacturers about using the egg replacers as ingredients; and expand its operations to Asia.
Ka-shing, an early backer of Facebook and Spotify who reportedly has a net worth of $32bn, is a Buddhist vegan and convinced that "there is a better way to create a food system that can feed 9bn people by 2015", communications director Morgan Oliveira told FoodNavigator-USA, noting that 38% of the world’s eggs are produced in China.
"Mr Ka-shing also sees this as a potential solution to the bird flu problem."
Partnerships with six Fortune 500 companies
While some of the world’s biggest ingredients suppliers have been selling egg replacers for years, the fact Hampton Creek has struck deals with six Fortune 500 companies, including "some of the world's largest food manufacturers”, indicates that Hampton Creek may have genuinely cracked the problem (excuse the pun) of finding something that is functional, and affordable, she added.
Tetrick, meanwhile, did not set up Hampton Creek Foods “just to sell products to vegans in Northern California”, he told us in a recent interview.
The firm's mission is simple, said Oliveira: Hampton Creek will make plant-based egg replacers so effective and affordable that they will be adopted by the biggest guns in food in everything from salad dressings to cookies, mayo, muffins and pound cakes.
As for producing its ingredients (each is customized according to the application), Hampton Creek is working with three different manufacturers in Southern California, Tennessee, and Seattle, but it is also exploring is also exploring setting up its own facility, she said.
"We're scaling up fast. We can't disclose the names of the potential customers we're working with but most are still at the R&D stage, so it's too early to say when the first products using them will go to market."
We’re not obsessed with eggs, we’re obsessed with coagulation, emulsification, aeration…
The secret to Hampton Creek's success, says Tetrick - who recruited former Unilever Food Solutions global R&D director Johan Boot to his team in 2012 - has been the systematic analysis of hundreds of varieties of plants to identify those that can replicate the function of egg in any given application.
"We have a laser-like focus on functionality. We’re not obsessed with eggs, we’re obsessed with coagulation, emulsification or aeration."
So some products have just one ingredient - notably an undisclosed ‘bean’ native to Asia that coagulates with heat and can make a perfect scrambled egg (minus the egg) , while others may have a combination of plant proteins, starches and gums.
“The ingredients will be recognizable, peas, beans, sorghum and some others. We’ve been exploring more than 1,500 ingredients, and found 11 that are really powerful, but they are sub-species of sub-species that when processed in a particular way have the functionality we want.
“Take green peas. There are so many varieties and each has a radically different impact on the end product, but we’ve identified one type that is unbelievably functional and a species of sorghum that works in a very particular way.”
We’ve been exploring more than 1,500 ingredients, and found 11 that are really powerful
The R&D approach has been systematic, he added: “We looked at the molecular weight of these different plant proteins and processed them using heat and pressure to get the functionality we wanted.”
And while the PR buzz is about the firm’s retail products such as ‘Just Mayo’ (a yellow pea-based mayo alternative in a jar already available nationwide in Whole Foods and launching nationally at other chains shortly), ‘Eat the Dough’ (a sorghum-based refrigerated cookie dough launching next month) and ‘Just Scrambled’ (like Egg Beaters - minus the egg - launching in the fall), Tetrick’s primary goal is targeting industrial users of egg.
“Our product is cheaper than egg, and just as good, if not better at replicating its functionality. Ultimately I want it to be 40-50% cheaper and my customers to be in rural China, Nigeria and Birmingham Alabama as well as New York City and San Francisco.”
Josh Tetrick, who has nothing against eggs per se, but believes that industrialized egg production is cruel and environmentally unsustainable, was one of six CEOs who participated in FoodNavigator-USA's recent business leaders round table debate.
Click here to read the highlights from the debate.