Bezos-Backed Vegan Milk Startup in Chile Eyes ‘Unicorn’ Status

The explosion in global sales of plant-based foods has a Chilean startup backed by Inc founder Jeff Bezos targeting a record valuation for the company.

NotCo SpA., maker of the vegan NotMilks sold at Amazon’s Whole Foods stores in the U.S., is determined to reach so-called “unicorn” status in its next funding round, or an estimated value of $1 billion. It’s citing a 2021 outlook of a fourfold increase in sales and a fivefold jump in volumes as the basis for what could be a tripling of its current worth, which some reports have put at more than $300 million.

The company is funded through this year, and will only take money before that to reach its goals more quickly, Chief Executive Officer Matias Muchnick said in an interview.

“It has to be for a valuation of $1 billion,” Muchnick said. “We won’t budge from there.”

NotCo’s optimism about its potential worth isn’t uncommon in the alternative protein sector, which investors have showered money on in recent years. Concerns about the environmental impacts of meat has fueled a boom in the popularity of protein-rich products made from plants, especially faux burgers and imitation milk. Global sales are around $35 billion, said Nick Cooney, a managing partner at Lever VC, which invests in the space, and several “unicorns” have already emerged.

Vegan burgermaker Impossible Foods Inc. is valued at around $6 billion, while Just Inc., which makes plant-based egg substitutes, has a valuation north of $1 billion, Cooney said. Oatly took American coffee shops by storm with milk made from oats in 2018, and most recently raised $2 billion. The company has announced plans for an initial public offering with a target of $10 billion.

Bezos-Backed Vegan Milk Startup in Chile Eyes ‘Unicorn’ Status

Latin America’s burgeoning tech industry struck a record number of venture capital deals last year, according to an industry association.

Brazil-based fintech Nubank, the region’s largest private startup, is now valued at $25 billion, and Colombian delivery app Rappi Inc. is now valued at at least $3.5 billion. Payment provider dLocal became the first unicorn to hail from Uruguay, while Mexico’s used-car platform Kavak’s valuation reached $1.1 billion.

If NotCo succeeds, it will be a first for Chile. The previous biggest startup deal from Chile was the 2019 sale of a controlling interest in Santiago-based online grocery delivery firm Cornershop to Uber Technologies for $459 million.

NotCo, founded in 2015 by Muchnick, Karim Pichara and Pablo Zamora, has raised $120 million in three funding rounds. Among its investors are Jeff Bezos’ Bezos Expeditions, Catterton Partners, Kaszek Ventures, Twitter co-founder Biz Stone, and 3G investment arm The Craftory, among others.

Muchnick is betting that the company’s rapid growth will justify the valuation and a potential initial public offering of shares in 2023.

Because of confidentiality agreements Muchnick declined to say how much the company plans to sell this year.

NotCo uses artificial intelligence to analyze molecular structures and find new combinations of plant-based ingredients. Its products include mayonnaise substitute NotMayo, NotIceCream, NotMilk and a NotBurger.

Bezos-Backed Vegan Milk Startup in Chile Eyes ‘Unicorn’ Status

So far NotCo has entered the Argentine, Brazilian and U.S. markets, outsourcing production activities to local food suppliers. It is in talks with supermarkets in Canada to sell NotMilk, and also eyeing an entry into Colombia, Mexico and Peru.

In the U.S., it’s currently only selling NotMilk because the plant-based burger market is crowded.

In the U.S. “60% of consumers of plant-based milks aren’t happy with the taste of the product,” Muchnick said. “We saw we could become the first ones to sell a plant-based milk that tastes like milk.”

In line with a strategy of targeting the right products to each country, the startup won’t be offering the NotBurger in Peru, as local specialties, such as lomo saltado, are more common than burgers.

The company is also forging new alliances with restaurant chains this year, mainly to increase brand awareness, Muchnick said. It already has deals with Burger King and Papa Johns in Chile.

In 2020, in the midst of the pandemic, plant-based substitutes increased 24% compared with 2% for animal-based food sales, Muchnick said. NotCo is expanding its workforce this year to 300 from 230.

“We’re still far from a saturation point,” he said. “The U.S. is the biggest market, and it’s far from saturated. Nor is Mexico or Asia. This is just beginning.”

©2021 Bloomberg L.P.

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