Cultured Meat and Future Food Show Episode 04 with Lisa Feria

The following interview was recorded and published in early 2018.

Alex Shirazi (00:00):

Thanks for joining us on the Cultured Meat and Future Food Podcast. We are excited to have Lisa Feria as the guest for today’s episode. Lisa Feria is the CEO of Stray Dog Capital, a mission driven venture capital firm that invests in early stage mission-driven companies that aim to take animals out of the supply chain. She’s a seasoned business manager with over 15 years of experience running organizations and businesses. Lisa has always been heavily involved in the community as a volunteer for SPCA and the United Way, and was the recipient of one of the two Arts Wave Awards given by the Procter and Gamble CEO. Lisa is currently a board member of Encompass and the Great Plains SPCA. Lisa enjoys a plant-based diet, and lives in Kansas City with her husband, two boys and many dogs. Lisa, I would like to welcome you to the Cultured Meat and Future Food Podcast.

Lisa Feria (02:09):

Thank you. I’m very excited to be here and speak with you today.

Alex Shirazi (02:12):

Lisa, tell us a little bit about Stray Dog Capital and overall investment strategy.

Lisa Feria (02:18):

Stray Dog Capital is a venture capital firm. We’re located in Kansas City and our investment thesis is focused on taking animals out of the supply chain by investing in early stage startups that are doing fantastic work and producing products and services that will replace animals.

Alex Shirazi (02:36):

What are some of the other VC firms that are in a similar space, if any, either partners of Stray Dog Capital or even competitors?

Lisa Feria (02:44):

So about two and a half years ago, because there weren’t that many firms that were doing what we we’re doing. And at that point we were not taking additional capital in. We created glass wall syndicate, and the glass wall syndicate is an investor based community nonprofit that aims to collaborate with other investors who were interested in investing in this space and meant to aggregate them so we can do due diligence on companies together and really form a community. And so we have over a hundred members there, we co-invest with the gospel syndicate members, all the time. So for example, new co-op capital is a trust vegan, vast we co-invest with them Blaine and Bjorn, plan power ventures. So there are many other firms that are either trust or foundations or venture capital firms that we co-invest with all the time. In addition, more typical venture capital firms are also starting to get into the field and starting to realize that this is a very interesting space to invest in from a growth, potential standpoint, as well as from a return on investment. And then finally, we have some strategics that are coming into the market. For example, Tyson Foods has opened up their own venture arm. Cargill has invested in some clean meat companies. So we have some other strategics that are also getting in, in the investment community

Alex Shirazi (04:04):

For the entrepreneurs in the audience. Tell us about what you really look for when you’re looking to make an investment in a founding team.

Lisa Feria (04:11):

Many times when we invest, the founding team is what we have because the team usually has no product. They have a lot of ideas and great plans and scientific strategies, but they don’t really have anything to show for it because we invest very early stage, sometimes even pre-revenue, many times pre-revenue. And so getting a good understanding about the different elements within the team, how the team gets along and who’s doing what is very critical to us. So we look for a team that’s nicely balanced. We highly prefer co-founders more than one person. Usually whenever you have a person and that’s not all the time, sometimes you have a single founder who has it all, most likely you’ll have co-founders who have a different set of experiences. And each one will drive their growth in the company in a very different way. And so when I evaluate a company, I look at the co-founders and I make sure that their backgrounds are complementary to each other. They’re going to build on each other. They have some areas of adjacency, but what they have more is if you think about these concentric circles, they have very different areas of expertise. And then in some area of collaboration, there are similarities. And if there’s more than two co-founders, even better, because they usually tend to be very different in what they bring to the table. So differences in backgrounds and experiences, passion still are incredibly important. I’ve made investments. We’ve made investments in the past because we have seen that this team will make it happen no matter what, that’s always, sometimes people call it a hustle, but just passion, where you are going to have obstacles there there’s no doubt, not even in the companies that you see in the news that are having, you know, multi-billion dollar valuations, those companies, at some point where it was dicey, they were going to make it or not. Every entrepreneur, every company goes through a period or more than one period where things are not working out you the list from a company, the product time, and I got pushed off. And so you will have obstacles and having somebody or a group of co-founders with a ton of passion to make it happen is incredibly critical because there will have a lot of difficulties at some point. See, I would say inter-relational relationships within the founders, you know. Working in such a high-stress, difficult environment, like a startup, you’re going to have issues, you’re going to have disagreements, and having a team that either has worked together or has a very clear path on how to solve disagreements will make sure that their relationship is kept healthy and productive, and constructive and happy, and identify they need to work on that. And they need to evolve. That that’s really important. That’s very mature. Usually most sophisticated teams will say, “okay, here’s how we’re going to react. If we have a disagreement, here’s what we’re going to do. If it’s important to one incredibly important here. So we’re going to bring in to help us think through it.” You know, they have already thought through those paths and those pipelines and those things and collaborate together to help them be very sturdy as a company. In the long-term having fantastic ideas is very important. You have to have somebody who is a great executer kind of handle the execution of those ideas. And then you need to make sure that those relationships work with each other well. And if they don’t that they have a path to solving issues

Alex Shirazi (07:12):

As a follow up to that, you know, we we’ve been hearing more and more that entrepreneurs are creating companies without the business plan. How important is it for your team that an entrepreneur comes to you with a solid business plan written out?

Lisa Feria (07:27):

I love business science. And the reason I love business plans is because business plans help you think. It’s less about the capital sourcing elements of. It it’s less about here’s my check in the box venture capitalists evaluate my business plan. It’s because the people who have gone through the due diligence and the detail-oriented nature of having to think through all the elements of the business plan tend to have the tires kicked a lot better in their organizations and other products strategy. Now, there is a reason some people have barely a business plan put together, and those are companies that are so incredibly early, there’s so much scientific and technical discovery that needs to happen that there’s almost no way to figure out a business plan or do a typical business one. I would still encourage any entrepreneur who’s looking at an idea or a company or service to go through the discipline of trying to put together a business plan, because it will make you a more diligent thinker and it will make sure that you’re thinking about all the little elements. So whenever I don’t get full out, you know, 30 page business plans that often, but whenever I do get them, I’m very impressed because I know this team has really thought through all the details related to their business.

Alex Shirazi (08:38):

What are some of the clean meat companies that Stray Dog has invested in? And what are some of the other companies that you see as leaders or incumbents in the space?

Lisa Feria (08:47):

Stray Dog Capital has invested in many clean meat companies, Memphis Meats being the most well-known here in the United States, but we’ve also invested in Mosa Meats which is the Mark Post company. And he’s the one that created the original $300,000 burger, the original clean meat or cultured burger. We invest them in his company as well, but we also have investments in a couple of Israeli companies called SuperMeats and Aleph Farms who are doing clean meat, and we are evaluating some clean fish or culture fish companies. So there’s a large group of companies, a number larger than 14 that are coming together into this market because there’s not only the technology that has caught up to where we need to get it to in order to get these things, to actually become reality, and also there’s a lot more venture support behind it. So companies and groups like Stray Dog Capital has come into play and said, “hey, we are willing to invest in this type of company, we are willing to be the patient capital that this company needs to grow.” In terms of the leaders that I see in the space, I think that clean meat companies is there. What I like about those different investments that we made is that each company’s doing lean products in a different way, they’re approaching it with a slightly different angle, or equipment, or scientific path line and that makes it really exciting, because when you approach a problem with many different, in many different directions on dimensions, the likelihood that you’re going to find a solution is significantly higher, so we are thrilled about that. But in terms of plant-based products, I think beyond meat is no doubt one of the leaders in the field. They’ve taken the whole eating experience and taken it to a higher level. They’ve been very thoughtful about how does the product look and smell? How does it how does it change color and scent as you cook it? What does it taste like? Or what does it feel like in your mouth? And you bite into it? You know, that whole sensoral experience is such a human experience. It’s such an important human experience, and they really have taken that to the next level. We have a lot of different companies. We’re also focusing on shorter ingredient decks. Nutpods is a great example of that. And then we have companies, for example, Geltor, who is doing collagen and gelatin in the future that doesn’t come with all the issues that animal-based collagen and gelatin come with. And they are progressing through their different stages of technology development incredibly fast. So it’s a very exciting category. All the products that we’re going to see and are seeing already in the market. It baffles the brain how quickly this has come to be and how quickly it will continue to grow. And we are located in Kansas City, and you would think, “what do you eat your plant based in Kansas City? You know, there’s gotta be nothing there.” And that couldn’t be further from the truth. I can go and eat a Beyond Burger at a Burger Five, right next door. I can go eat an Impossible Burger at a local place downtown here. There’s many different, plant-based eating locations, restaurants, there’s different plant-based bakeries here. I mean, just plant-based is not only in California in the eco-chamber of California, it really has permeated and will continue to permeate everywhere.

Alex Shirazi (11:51):

Cool. And I know that the Kansas City barbecue is quite famous. So maybe in the future, we’ll have clean Kansas City barbecue.

Lisa Feria (11:59):

You know, we will!

Alex Shirazi (12:01):

The lab grown hamburger debuted by Dr. Post was back in 2013. What do you think has caused the sudden interest in clean meat startups now such that organizations like Y Combinator are putting out a request to fund clean meat startups with their RFS or request for startups?

Lisa Feria (12:20):

There are many things that have happened since dr. Post created the original burger back in 2013, the original clean meat or cultured meat burger, the famous three hundred thousand dollar burger. There’s a couple of, well, I wouldn’t say a couple, there’s many things that have happened since then. So there’s the environmental degradation awareness that has just permeated our psyche in terms of how much animal agriculture degrades the environment from a pollution standpoint, from a deforestation even standpoint, it’s just water and overall land usage is just not a good use of our resources. We expect to have 10 billion people on the planet by 2050. We cannot feed 10 billion people with the way that we eat today. There’s no way. And then you have the developing countries now starting to eat more like the United States, which creates even more of a burden and more of an issue with pollution and degradation because they’re eating more products that then are worse for the environment. So you have that PC, you have the millennial generation, the largest cohort ever, ever, eating this way already. The millennial generation is three times as likely to eat vegetarian and vegan than the previous generation and 12 times, as likely as the baby boomer generation. That’s huge. You have a huge group of people who are already wanting to eat in a way that is more consistent with their own principles and values, that is more consistent with environmental reasons, et cetera. And then the third piece is from a technology standpoint. We’ve made great progress. And part of that is because the medical field has made great progress with tissue generation and cell growth. And so many of those technologies are now being used to drive clean and cultured products because other fields have advanced them to a point, other much better funded fields have advanced them to a point, where they can now be used for products like these and you went from a $300,000 per pound, or so to 2000 to over, you know, a couple hundred now in the, in the scale of within a year, which is crazy to think about. And so you have a lot of different companies that are capitalizing all these opportunities and realizing this has not a nice to have. This is not an optional product that if we get to it, it would be great. This is something that we need to do. We physically cannot, this earth cannot sustain the amount of human beings we’re going to have on it. We have to figure out a way to eat differently. And, you know, Stray Dog Capital will continue investing in companies that are providing fantastic, healthy, plant-based products, but we also realize that there is a lot of tradition and culture associated with the consumption of meat. And so we are going to continue to work with these companies to bring this to market because it’s a mandate for all of us. We need to eat differently in order for us to be able to live in this planet and the way that we do now.

Alex Shirazi (15:19):

From a market integration standpoint, what do you see is really the biggest challenge to getting clean meat into the market? Is it perception and just the marketing in general, technology, mass production, or even tastes like what, what really is it?

Lisa Feria (15:33):

I believe the challenge in getting clean meat to market will be scale because taste, a lot of people are doing when they, when they hear about clean meat, many people say, “well, this is going to be an issue of nobody’s going to want to eat it.” And that’s really not the case. There’s been many surveys that have been done, and particularly millennials are very much open to trying products like these. And so let me tell you a story about two years ago. I went to a Future of Food Tech conference in London, and there were a couple, maybe one or two, cricket flour based companies, and I thought it was interesting. And then I came back a year later and there were at least 10 and there are whole investor groups that are only investing in insect based protein. And if you think about a yuck factor we’re using “well consumers would never eat that.They will never eat a chip made out of cricket or larva or whatever.” And that’s actually not true. What we have seen is that this market is growing actually very fast. There’s much more consumer, risk loving, where there’s just that much more consumer appetite for trying out new things that potentially are marketed correctly to them. And so when I think about clean meat, I don’t think that eventually the target consumer, which is really going to be mostly the millennial generation, not only that generation, but in terms of their first entry to trying out these products early adopters are going to be the millennials. When I think about that, I think the challenge is going to be, is it going to be affordable enough? Are you going to be able to sell it at Walmart at a reasonable price? Are you going to be able to find it everywhere? And scale up is the underlying key and pin that will enable all that to happen. These companies still have a long way to figure out how to do this and mass scale. Ideally, at some point you will have just, if you think about a brewery and you have all of these brewing tanks and reactors that are making the beer, brewing the beer, you will have those but of meat. So you will brew meat, just like you brew beer today. And it needs to brew at a level where the process is so cheap. Then, you know, it can be at the price of meat or even under cuts meat, but they have a really challenging assignment to be able to deliver something like that, because it’s not known to do it yet. They still have to go and figure it out.

Alex Shirazi (17:52):

And actually, I just recently heard about a Chirp Chips, I think. And it’s like that cricket flour based chips and definitely very interesting concept.

Lisa Feria (18:01):

Yeah. I actually was traveling and went through the, I want to say it was a New York airport, and was in one of those little shops trying to get some food and saw one of these cricket flour companies just right next to the ladies, very little advertising. It was cricket flour. The only reason I knew the brands, that’s how I knew about it, but it was not like, “Hey, this is insect flour.” You would pick it up just like you would pick up, “Hey, this is just a different type of chip.” And they don’t feel the need to tell the consumer very clearly what they are. And, clearly if it’s in these shops and has a lot of visibility, it’s not doing that badly.

Alex Shirazi (18:39):

For most tech companies, a laptop computer and a web server is really all you need to get started as a tech company. But when you’re tackling the food industry a lot more is needed. Do you think that this deters entrepreneurs from jumping into the food and science area and entrepreneurship?

Lisa Feria (18:56):

Even though clean product require a little bit more of of a scientific expertise. And I would say, you know, for your example of tech companies, you still need people who a have passion and B. know how to hire people, because that’s really what you need. Initially, when you start up a team, when you start up a company it’s just you and your co-founder, and you’re trying to figure out, you know, here I’m going to handle sales. You’re going to handle all the scientific projects and products and, and the scientific plan. And they’re very divided in terms of business and science. But what I’ve seen is that many times you’ll have an experienced CEO who has no, or very little science background, who is able to, through a co-founder or through hiring, get the right people in the, in the boat to row in the right direction. So really, if you want to get into this field, then you have a lot of passion for it. And some expertise, it could be sales, and marketing, and business, and finance, et cetera, and are able to either find a co-founder who has the other elements of the expertise that you don’t have, or get plugged into a university who is already doing in students, PhD students, usually, who are doing already some of this research and have this experience, or even better, the real entrepreneurs that have been CSOs before, chief scientific officers, that then can help you bring the reality to life. Having the very specific set of expertise isn’t an end all be all, it’s great to have, but what you really do need is an ability to partner with others and identify great talent and convince them that your vision is worth leaving their, you know, science, their academia. You gotta convince them that your vision is worth them leaving academia or another company in order to come and work for your brand and for your company.

Alex Shirazi (20:40):

We often hear really the best configuration for a founding startup is a developer, designer, and hustler, but that’s for tech. I think, you know, when it comes to science startups, what is that best configuration?

Lisa Feria (20:53):

Yeah, I think you have to have a business head usually. And that would be the person who really handles more of the fundraising and talking to venture capitalists, who handles the financial elements of the company, who works with the distributor, and sales, and marketing, and handles all that piece. And then you have a science person, a science geek, who then handles the scientific development and progress and keeps the company moving forward and focused on what they’re trying to achieve. Many times the person, the co-founder, who is on the business side, ends up doing a lot of branding for the company. Speaking, a lot of panels are going to meet investors or partners, elsewhere. And then the, the person in charge of more of the scientific progress and department then makes sure that everybody is focused on moving the progress, the product through the pipeline, and make sure the progress, the product is progressing according to plan.

Alex Shirazi (21:50):

How soon after, or even before cultured meat hits the store shelves, do you think that it will be adopted by large chain and fast food restaurants?

Lisa Feria (22:00):

I think clean meat will be adapted by large chain and fast food restaurants almost immediately, as long as it’s within reasonable price. Within a reasonable price, I think it will have very easy and quick adoption, and here’s why. What we’ve seen with the non-dairy market has been that it used to be that milk was a loss leader. Cow’s milk, you know, they would lose other kinds of money on it. They were priced at a coordinate to bring people into the store. What has happened in that category over time is that as non-dairy gains a lot of traction and as non-dairy gains, a lot of market share, and skewed space, they have found, in they I mean, large retailers, they have found that they can make money with these products. They can charge maybe sometimes a little bit of higher price or not even necessarily highest charge a higher price, but they just have higher margins on them. And they’ve been able to make those up great, fantastic pocket, increasing pocket or profit for the retailer, where instead of it having to eat the cost of this loss leader, commodity, they can bring in the incumbent or they can bring in the new competitor and then it some rewards associated with it. And if you think about the fast food category in general, it’s been a race to the bottom. It’s like the $1 everything menu, and how cheap can we make this? And I think there’s a huge opportunity from a revenue standpoint, to bring products that are so different, that then can either command a better price or a better margin and bring so much differentiation and uniqueness to a category who’s had trouble growing over time. And so I think that it just brings such an attractive product proposition that adoption in these larger regional retailers and fast food restaurants, won’t be challenging.

Alex Shirazi (23:46):

We have a question from one of our listeners, Fluorine from Germany asks, “how did you get into entrepreneurship and what was your path to becoming a VC?”

Lisa Feria (23:55):

Hi, Fluorine. That’s a great question. My path was non-linear. So I already started by being a chemical engineer and I went into food very much everything related to food. Food manufacturing, food operations, production, just really sales, everything related to how do you get a product from wheat on the field all the way to some consumer packaged goods in your pantry. And I grew up in that. I started with General Mills and then I moved to Procter and Gamble learned a lot about consumer goods and how to market and brand them appropriately, and how to understand what the consumers wants, and give that to them, and sell a product. And eventually within P and G, because the P and G brands are usually in many occasions, really large billion dollar brand, I was managing a smaller brand and it felt like our own little company, like our own little startup within this beast of a, of a company. And it was such an exciting and fun environment to be in where you could really innovate where you could say, “why do we do things this way? Let’s try them this other way.” and have the leeway to do that where you can really motivate a small group of people to be on the same boat, excited about the underdog, excited about driving this product and brand forward. It was such a fun experience, and it was tough because underfunded brands, usually smaller brands are underfunded or not funded as well as you would like. And so you had to make, do and be very scrappy. There were so much value and excitement associated with being scrappy and getting your goals even though you didn’t have as much of a budget to do so. I really loved that. And in addition, over that time, I became plant-based. So I started eating more plants and became vegan eventually and wanted really to do something that was more within the entrepreneurial world, but also connected with my principles and values. And the co-founders of Stray Dog Capital, Chuck and Jennifer, were looking for somebody to lead the firm, and then we found each other, and the rest is history. So it was a very nonlinear path. And I think it goes to indicate that there really is no perfect way to end up, A. as a VC VC, or B. as an entrepreneur.

Alex Shirazi (26:08):

You can get in touch with Lisa on LinkedIn or by visiting straydogcapital.com. Lisa, do you have any last insights for our listeners?

Lisa Feria (26:16):

The only additional thing I would add is that the plant-based and clean meat market is poised to grow so fast, so aggressively because everything is growing it and rising based on consumer demand and changing consumer tastes. And so getting involved in this field right now is in my mind a perfect moment and a perfect timing. As a matter of fact, I was speaking to somebody today who was interested in working on clean fashion. They said, “am I too late?” and I said, “no, but if you wait, you will be.” So if you have any thoughts and any desires to jump on board and start your own company, or join one of the VCs working on this, or start a vertical within a foundation to invest in this or donate to this field, this is absolutely the time this whole category as a whole needs to be successful in order for us to continue to live on earth, honestly, to be able to feed as many humans as we’re going to have. It’s a mandate for us, for you and I to do something about it immediately. This is not something for our kids to solve, or our grandkids to solve. They won’t have an opportunity to do that if we don’t really change the way we eat and stop the degradation that we have on the planet. So I would encourage and welcome anybody who’s thinking about working in this direction to not wait and to jump on it.

Alex Shirazi (27:33):

Lisa, thank you so much for being with us today and sharing your story on the Cultured Meat and Future Food Podcast.

Lisa Feria (27:39):

Thank you, Alex. This was a lot of fun.

Alex Shirazi (27:41):

This is your host, Alex, and we look forward to being with you on our next episode.

Transcription by Mackenzie Ortlieb.