Investment in vegan businesses is accelerating. Here are the areas it’s growing in and how businesses can find investors.
As a vegan founder myself, I understand the struggles it takes to get my business up and running. I can’t count the number of times I wanted to expand my product line, advertise my products on vegan media platforms, only to find myself not having enough funding to allow this to happen.
The traditional method many business owners follow is what’s referred to as bootstrapping. This is the process of building your business from your savings. When you make sales, that money comes in, you recycle it back into your business, and the company slowly grows from there. When you see companies such as Beyond Meat and Oatly use investment money to scale their business globally and be valued in the billions; perhaps the option for other vegan businesses to follow in their footsteps comes from raising capital.
Vegan angel investors and syndicates
Angel investors are high net-worth individuals who invest in early-stage businesses. They can include doctors, lawyers, as well as experienced business owners who want to use their hard-earned income to make another company grow. In exchange, they traditionally get an equity percentage in a business.
In order for an angel to legally invest in a business, they must meet certain financial requirements that allow them to make riskier investments. In the UK/EU, these are called experienced investors, and in the US, they are referred to as accredited investors.
While the laws have many components to them, the general rule is that the individual must have a net worth in excess of €1,000,000, excluding their primary residence, or meet other income requirements, such as an income of more than $200,000 per year in the US. Before seeking investment, please familiarise yourself with the current laws to make sure you’re not making any securities violations.
You can find angel investors by asking around in your local community, networking on LinkedIn, and browsing through syndicates on AngelList. A syndicate is a group of angel investors who come together to invest in a common project or fund, and many cities have them already.
A traditional approach includes founders validating their business with their own money, as well as money from family and friends. Once they show that their vegan product is accepted in the marketplace, angel investors come in and help jumpstart the next stage of their business before approaching venture capital funds down the road.
What do vegan investors look for in a business?
Different investors look at different things when investing in businesses. While speaking with potential investors for my healthy vegan subscription box, many of them told me they are only focusing on plant-based proteins and cellular agriculture. They always ended the conversation saying there are other investors out there with more of a focus on improving human health.
In a previous startup, we had 28 points of contact with one person before they finally agreed to invest in us. If you’re a vegan business owner who is seeking funding, the very first thing to do is understand that there are different investor types. When you speak with some of them, it’s important to find not only the right investor type for you. It’s equally important that this is a person you can work with on a professional level since they will be tied to your business with you.
Michiel van Deursen, founder of the plant-based investment firm CapitalV, told me the main thing he looks for while investing in a vegan business is the founders. His rationale for this is because the product can change, the market can change, but it ultimately comes down to the founders being the ones who have to run the company. Other things he looks at are the product, the market, and the numbers.
Dave Murphy, investor in Amsterdam’s vegan cheese company Willicroft, describes his criteria for investment as “a holistic perspective”. “Simply being ‘vegan’ doesn’t necessarily mean being a better investment. It’s equally important to consider sustainability, quality, impact and scalability,” he says. “When you combine these criteria with a powerful idea and a set of ambitious and committed founders, it’s hard to go wrong.”
For this reason, it’s important to reach out to many investors to find one that is the right fit for your business. It’s perfectly normal to hear many of them say no before committing to a yes.
Vegan investment platforms and funds
Venture capital funds are institutional firms that typically invest in early-stage high growth potential businesses. While many typical VC firms may invest in vegan businesses based exclusively on the numbers, here are some venture capital funds that focus on plant-based and sustainable ventures:
Laws passed in recent years have opened up early-stage investment opportunities to everyday investors. In the same way angel investors can invest in a business, equity crowdfunding platforms open up those opportunities to people like you and me. Instead of raising a lot of money from a small group of people, crowdfunding allows businesses to raise small amounts per person from a large group of people who are passionate about the projects they believe in.
The equity crowdfunding platform Seedrs allows non-accredited investors from the EU and UK to invest as little as €10 in a startup each. While this may not seem like a lot, the plant-based meal delivery company allplants raised €4,503,887 from 1,857 investors in just a couple of months.
In the US, the all-vegan supermarket Vegan Fine Foods raised $711,381 from 1,364 investors on the crowdfunding platform WeFunder. Other crowdfunding platforms include StartEngine and Republic.
One of the newest platforms out there is VeganLaunch, which is a niche platform dedicated entirely to raising money for vegan businesses.
One of my favourite resources as a vegan business owner is Vevolution. This website is an online fundraising platform that connects founders of plant-based and cell-based companies with values-aligned investors.
As a user, I can go on the platform and create a profile for my business and participate in their ongoing pitch competitions to get my idea in front of some of the largest vegan VC firms and angel investors out there. On the flip side, investors create profiles and can browse through various plant and cell-based startups to add to their portfolio.
There is even an online community called the Vegan Investing Club, which has an audience of more than 10,000 vegan investors that discuss deals.
Direct and initial public offerings
Last on the list is when a business owner wants to take their company public on the stock market. In 2019, Beyond Meat went on to launch one of the most successful IPOs in history. Going public at a $1.5 billion valuation, it eventually grew to be worth more than $13 billion within three months of its IPO date.
The Very Good Food Company is a plant-based meat company in Canada that successfully built a new production facility and expanded its product lines after going public on the CSE. IPOs generally come later in the lifecycle of a business, after it is already established.
These are a few routes vegan businesses can take to get funding. For my own vegan business, I will continue to fund it myself as I reach out to angel investors and VC Funds, and keep my company listed on the Vevolution platform. It’s important to remember that while the thought of getting capital is appealing, you do have the responsibility of handling other people’s money, where if your business fails, they could lose 100% of their investment.
Many vegan businesses have gone on to be very successful when the founders funded it themselves.