Pullback by consumers is chilling a sector that boomed before the rapid rise in interest rates
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Venture capital funding for plant-based meat start-ups has slumped to its lowest level since 2018, as a weaker economic outlook and rising interest rates curb enthusiasm for the once high-flying industry. Start-ups focused on plant-based meat secured $75.2mn from venture capital firms in the first quarter across just 22 deals, down from $703mn in the same period last year, according to data provider PitchBook.
The slowdown comes on top of a steep drop last year, when backing from venture capital funds — a critical source of funding for start-ups — tumbled to $1.5bn, half the total in 2021. Investors raced to back the plant-based meat industry in the final years of a stock market boom powered by record-low interest rates. Shares in industry leader Beyond Meat surged after its initial public offering in 2019, with the company’s market capitalisation hitting nearly $12bn.
However, as big central banks have lifted interest rates in a bid to choke off higher inflation, consumers have cut back and investors have become more cautious. The plant-based meat industry is exposed to the combination of inflation and rising interest rates, said Carlotte Lucas, senior corporate engagement manager at the plant-based advocacy group Good Food Institute Europe. “This fast-moving sector is just getting started and will need to continue weathering the difficult market environment,” she said.
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