After years of enthusiasm around alternative proteins, cellular agriculture startups are facing a far more sobering capital environment. Venture funding has tightened sharply, exits remain elusive and investors are demanding clearer paths to customers, costs and scale.
The shift is forcing founders to rethink not just how they raise money – but when, from whom and for what purpose, experts shared during the 2026 Tufts Future Food Innovation Day hosted by Tufts Center for Cellular Agriculture last week.
Venture capital pulls back as liquidity stays locked
“The funding environment has been very, very challenging for both alternative protein plant-based companies, cell ag and fermentation,” said Heather Courtney, founding general partner, Alwyn Capital. She notes that founders are increasingly asking, “If we can’t raise venture, what do we do?”
One reason venture dollars have slowed is structural. “Liquidity is locked up, people aren’t seeing exits,” Courtney explained. “And in order for us to go out and raise our next venture fund, we have to see exits for our underlying investors.”
At the same time, investor attention has shifted elsewhere. “AI has also taken a huge amount of mind share,” she said. “Things like sustainability are kind of secondary. Everybody wants to put money into data centers.”
The cost-cutting in alternative proteins last year was expected, said Steve Simitzis, managing partner, Replicator VC. “I was expecting plant based to take a hit. And it certainly did. I was expecting cultivated to retrench and kind of go back to basics, which it definitely did.”
Investors want companies to meet the moment they’re in
One recurring theme across alternative proteins: startups often approach venture capital too early.
“If you’ve got an idea on paper, probably a VC is not going to give you capital,” Courtney said. Even with a strong pitch deck and founding team, she warned founders need to be honest about whether they are actually ready for a Series A.
Instead, she encouraged companies to assess where they are in their lifecycle and match that with the right capital source. “One of the ways that you can use these government grants is to de-risk your technology, your company, your strategy, your narrative, your ability to work with your co-founders.”
Until federal grant programs fully resume, Courtney pointed to philanthropic capital as a key bridge. Philanthropic organizations, she said, “step into funding opportunities where venture capital, who needs to see a return in a 10-year life cycle of a fund, maybe doesn’t have the patience for your technology.”
She outlined multiple structures – mission-related investments (MRIs), program-related investments (PRIs) and donor-advised funds – that can effectively function as early capital without forcing startups into premature dilution.
“There’s trillions of dollars sitting in donor advised funds, not being leveraged for anything right now,” Courtney said. “It can really be used to catalyze some of what we’re talking about doing today.”
What founders got wrong in 2025
Some of the most common pitching mistakes are already starting to fade – and that’s a good thing, explained Simitzis.
“I’m happy to see the end of the ‘we’ve invented a new ingredient, and now we’re going to launch a retail brand around it,’” he said.
Simitzis added that when founders argue they need to start their own brand to educate the market, it signals a “weak demand from the market.”
Instead, he said startups should be proving that someone already wants what they’re building.
“There isn’t as much customer discovery and customer validation as I would like,” he said. “Everyone’s talking about scale-up and capacity,” without identifying the customer for these products, he added.
The difference is explicit demand, Simitzis emphasized. “We chose this molecule because we got feedback from 10 different CPGs that this is a burning need for them today,” he said. “Then, to me, that’s a business that you should move forward with.”
How cellular ag startups can stand out now
Both investors emphasized differentiation rooted in realism.
Simitzis described two broad categories of viable companies. The first are platform and enabling technology players. “If you can uniquely own a part of the process – reduce cost, increase yield – and sell that into adjacent markets while cultivated meat is not yet at scale, that’s really exciting.”
The second category is end-product companies – but only if they rethink how food products are developed. “This is food,” Simitzis said. “I would like to see chefs and culinary experts at the beginning stages of product development,” to inform how these products come together.
Courtney added that affiliation and structure also matter. University ties can help, but only if IP ownership is clear. “If the university owns a significant portion of your IP, you’re in trouble,” she said. “If you’re just using lab space, that’s actually probably a benefit.”
What could unlock investment in 2026
Looking ahead, Simitzis sees several forces converging that could shift both perception and capital flows.
One is nutrition. With GLP-1 drugs reshaping diets, he expects demand for “higher protein, higher fiber, lower caloric density products” to intensify. “To the extent that alternative protein products can design for those factors, I think that’s going to be really important.”
Another is pet food. “I maintain that that is going to be the proving ground for alternative proteins,” he said, citing lower regulatory and consumer perception barriers.
Perhaps most significantly, Simitzis believes food security could become a decisive narrative. Rising beef and egg prices, he argued, are exposing more Americans to something unfamiliar. “We are now getting a taste of food insecurity,” he said.
He sees cultivated meat and biomanufacturing increasingly framed as strategic assets. “Do we want to import all that from China, or do we want to make it ourselves?” he asked. “If it becomes an issue of national security, all this will melt away.”
Courtney echoed that founders should expect a longer road – but not a dead end. “What you have to ask yourself is, where is your company right now?” she said. “What’s the best source of funding that’s available to you?”
