NotCo: Will this Bezos-backed plant-based foodtech be Chile's first unicorn?

© The Not Company

Armed with $85m Series C funding, NotCo has expanded to the US, competing head-on with popular US alt-protein brands for a foothold in the multibillion-dollar vegan market

In November, across the US, the Amazon-owned Whole Foods Market began stocking cartons of a new milk-like beverage, but marketed as NotMilk. As a plant-based alternative to animal-sourced milk, NotMilk is made up of a surprising cocktail of pineapples, peas, cabbage and sunflower oil that, thanks to the work of AI algorithms, tastes like conventional milk.

Behind NotMilk is The Not Company (NotCo), a Chilean alternative protein startup backed by Amazon CEO Jeff Bezos. NotCo raised $85m Series C funding in September 2020 to drive its expansion in the lucrative US market, breaking the dominance of homegrown alt-protein brands, with its range of lactose- and gluten-free plant-based dairy and meat products. 

At the heart of NotCo is its proprietary AI algorithm Giuseppe, named after Giuseppe Arcimboldo, the Italian painter who is best known for creating portrait heads with images of fruits, vegetables and flowers. Giuseppe has analyzed over 7,000 types of plant amino-acetic structures to identify plant-based ingredients that resemble the characteristics of animal-based food. According to NotCo, Giuseppe can detect the unique molecular connections of the composite ingredients of animal-based food and use various biotech processes to learn how to reproduce the flavors and textures of food derived from animals.

The company aims to beat US competitors like Impossible Foods and Perfect Day on their home turf by targeting the 33% of US consumers who, according NotCo’s own research, have tried plant-based milk but switched back to dairy because they prefer the taste of real milk. More products from NotCo’s full range, already available in its native Chile, will be added to the US market. 

“When you think about the taste of milk, a human mind would never think that a combination of pineapple and cabbage would could recreate the taste of milk, but Giuseppe can and does," said CEO and co-founder Matías Muchnick. "That’s the power of introducing a new technology into an obsolete system. You’re adding a whole new world of innovative possibilities that are good for us and the environment.”

From 2019 to 2020, NotCo secured total funding of over $115m from prominent investors including Bezos Expeditions, Kaszek Ventures, The Craftory and Maya Capital. The most recent round, the $85m Series C, was led by Future Positive and L Catterton, joined by General Catalyst, Endeavor Catalyst, IndieBio and Humbolt Capital, together with follow-on investment by previous investors.

With NotCo setting up offices in New York and San Francisco, there is talk among industry observers that the company could target a Nasdaq IPO by the end of 2021.

Chile’s first unicorn?

NotCo was co-founded in 2015 by Muchnick, the founder of Eggless, the first food company in Chile to offer vegan mayonnaise, data scientist Karim Pichara and plant geneticist Pablo Zamora. With an initial capital of $250,000, the team set up R&D facilities in Santiago, taking advantage of Chile’s large talent pool and lower costs, to run small-scale pilots and create meat-free solutions for food suppliers. 

Two years later, NotCo made its first own-label product NotMayo, which was launched in Walmart stores in Chile. Within eight months, NotMayo accounted for about 10% of the total mayonnaise sales in Chile, the third-largest mayo consumer in the world. Next came NotYogurt, followed by NotIceCream in 2019. 

In 2020, the company introduced meat-free sausages and minced meat substitutes. A chicken substitute will soon be added to the NotBurger and NotMeat brands. Today, NotCo supplies white label solutions to fast-food chains like Burger King. Its NotBurger patties for Burger King are sold in Chile as Rebel Whopper that can be flame-grilled just like the famous Whopper burgers. 

NotCo’s Vegan Royal pizzas are being rolled out in over 100 Papa John’s outlets in Chile. It also sells vegan meat, milk, ice cream and mayo directly to consumers through online shops and supermarkets in Chile, Argentina and Brazil. 

NotCo aims to offer a full range of traditional favorites to expand its customer base through diverse retail channels. Unlike its competitors, NotCo tries to replicate the whole product, "flavors, taste, smell, color and the interaction between all of them and the molecular components in food,” said Muchnick.

Industry observers have suggested that NotCo could be Chile’s first unicorn, but CEO Muchnick is circumspect. “There are many cases of unicorns that later fail. Becoming one is only the first step, but not the definitive one to transform a company into a success,” he said.

Riding on a megatrend 

Just before the pandemic, NotCo made a corporate restructuring decision to close its NotMayo plant in Chile and shift production to an unnamed third party in order to focus on developing new markets. “We have more resources to focus on what we know and how to do best for the products already released in the market,” said Maximiliano Silva, NotCo’s country manager in Chile.

The company’s strategy to expand beyond LatAm is supported by its investors, who are banking on a worldwide plant-based food megatrend. Nicolas Szekasy, Managing Partner of Kaszec Ventures, one of NotCo’s early investors, thinks NotCo has “strong potential” to become the “leading global player in the foodtech space.” 

“In this uncertain time, consumers have amplified their appetite for the plant-based world. Covid-19 has allowed us to see that meat production is not only environmentally harmful and inefficient, but also that its supply chain is fragile.

“We are happy to witness an inflection point where plant-based products are becoming an increasing proportion of a new normal, once they can actually taste amazing like we see NotCo crafting,” he said in a press release announcing the Series C funding.

With more VC funding being pumped into alt-meat foodtechs, the $15bn global vegan food market is projected to grow exponentially over the next few years due to greater consumer awareness of the health and environmental benefits of plant-based substitutes. Investments in the agrifood tech sector hit almost $20bn in 2019, a sixfold growth from 2012.  

Europe could be next in NotCo’s global growth ambitions, if recent executive appointments are any indication. Former Coca-Cola top executive Flavia Buchmann, who used to head the Sprite global business, has joined NotCo as CMO; Catriel Giuliano and Luis Silva, from French multinational Danone, joined as the R&D head and global business development chief, respectively; and French-educated former Jeffries banker and US big data adtech Tapad VP, Jose Menendez, is the new global COO. 

NotCo plans to scale its expansion in the US, but can it compete with established US alt-meat brands that already supply to franchises like McDonald’s and Starbucks? 

Elio Leoni Sceti, co-founder of The Craftory, one of NotCo’s investors, is unfazed by the US competitors. “To my knowledge, no other brand in this space has the scientific expertise to create plant-based food that looks, feels and uniquely behaves just like the animal-based produce it replaces.

“Thanks to NotCo, consumers can make an easy and seamless change to a more sustainable way of living. That’s why we led NotCo’s previous round and continue to invest in this excellent business,” he said.

Edited by Suzanne Soh

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