SAN FRANCISCO — Two venture-backed startups are ceasing operations amid declining demand for meat alternatives. The leaders of Hooray Foods and Nowadays, both based in San Francisco, shared plans to end production in separate social media posts.
Hooray Foods three years ago launched plant-based strips developed to sizzle, smell and taste like bacon, featuring ingredients such as coconut oil, rice flour, tapioca starch, liquid smoke, umami seasoning, maple syrup, salt and beet juice concentrate. Following a decade of experience working in the sustainable food industry, founder Sri Artham created the product in his home kitchen and partnered with food scientists and chefs to perfect the recipe.
This past January, Hooray Foods launched an equity crowdfunding campaign with a goal of raising $500,000 to broaden distribution and accelerate research and development to expand its product line. At that time, the product was sold in more than 1,000 grocery stores, including Whole Foods Market nationwide. The startup previously raised several seed funding rounds backed by investors former Dunkin’ chief executive David Hoffmann, Lyra Growth Partners, Evolution VC Partners, Gaingels, Sand Hill Angels, Stray Dog Capital and GlassWall Syndicate.
On Sept. 7, Hooray Foods shared an update on its Facebook and Instagram accounts, noting “after four years on the market and over five million bacon strips made, we have come to the difficult decision to cease our business operations.”
The company added “the economics of running a company of this size simply do not match our revenue, and we are unable to continue producing our product for sale.”
Nowadays two years ago introduced its plant-based nuggets made from seven ingredients, including organic yellow peas, whole wheat flour, maple fiber, sunflower oil, yeast extract, mushroom extract and water. Prior to launching the business, co-founders Max Elder and Dominik Grabinski had experience in the food industry. Mr. Elder was a plant-based advocate with Nestle, General Mills and the Bill & Melinda Gates Foundation Nutrition Program. Mr. Grabinski was an agriculture engineer at various ingredient companies, including Cargill and DSM.
Last year, Nowadays closed an oversubscribed seed round at $7 million that brought its total funding to date to nearly $10 million. The startup planned to use the capital to scale its proprietary whole-cut technology platform and commercialize new alternative chicken products. The seed round was led by Stray Dog Capital, with additional strategic support from Standard Meat Co., a privately-owned meat processor that supplies restaurant chains, supermarkets and club stores. Other investors included VegInvest Trust, Tenacious Ventures, Cornucopian Capital and Good Protein Fund. New investors include Selva Ventures, Vanterra Accelerator Fund, FoodHack, Gaingels, Beyond Impact and Unpopular Ventures, plus angel investors Rachel Mansfield, Varsha Rao and Brandon Shainfeld.
On Sept. 13, Mr. Elder shared on LinkedIn: “Our journey over the past three years has been extraordinary. From commercializing a product in less than nine months, patenting novel extrusion technology, launching into retail with Whole Foods Market, establishing partnerships with award-winning restaurants nationwide, and feeding lots of friendly faces along the way, it’s been an incredible ride.”
He thanked his team, advisers, investors and customers, adding, “Together, we pushed the boundaries of plant-based food innovation, explored clean label solutions, and raised awareness about the benefits of alternative proteins.”
Plant-based meat sales peaked in 2020 when consumers had more discretionary income and were interested in broadening their food spend in the wake of pandemic-related food shortages, according to a report by the financial services company CoBank. But fewer than half of Americans who tried the products at the time repeated their purchase, per data from the market researcher Mintel. Research by 84.51º, a part of the Kroger Co., in partnership with the Plant Based Foods Association, found taste, texture and quality were unmet needs in plant-based meat alternatives.
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