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The Amazing Expanding Plant-Based Retail Hoofprint

To our Valued Investors:

Of the many pre-IPO investment opportunities we offer at Iron Edge VC, one of the more widely recognized names is Redwood City, California’s Impossible Foods. When one asks, “What does Impossible Foods Do?”, the simplest and a rather common response is, “They are a fake meat company”. This pithy assessment may conjure up unappetizing images for those who have yet to sample the company’s products, and it falls far short of capturing the essence of Impossible’s mission. They are an innovation company. They are a science company. They are a company that aims to “turn back the clock” on climate change. By design or otherwise, they are an enterprise that is positioned to generate huge revenue as they change the world.

In a bold statement he made recently, Impossible Foods CEO Patrick Brown formally reframed his dream as a brave prediction of what the world will look like in fifteen years: “Our mission is to completely replace the use of animals as a food technology by 2035. We’re dead serious about it and we believe it’s doable. I was confident that we would succeed when I launched this company, and now I’m completely confident. It’s game over for the incumbent [meat] industry—they just don’t realize it yet.” It’s almost as though the man started out with a What if we could pull off this crazy stunt type of musing, and as it began to come to fruition thanks in part to external factors, he felt emboldened to double down. It’s easy to imagine all of the world’s most devoted carnivores scoffing at the idea. Many are the backyard barbecue masters who refuse to let go of their steaks and burgers until you pry them out of their cold, dead hands. Multitudes of brunch buffet enthusiasts would sooner knock you out than relinquish that steaming plate of juicy bacon. A box of Chicken McNuggets can buy a valuable stretch of quiet time during a long car trip with children. The quest to eliminate meat as we know it might seem downright quixotic, but perhaps more attainable when compared to Elon Musk’s promise to establish a society of one million people residing on Mars in only twice the time. Still, how does Dr. Brown intend to reverse such deeply ingrained eating habits within a decade and a half?

One way to go about it is to create something that tastes good. In an Iron Edge VC newsletter titled My Impossible Adventure (October 17, 2019) I shared the details of a visit to Burger King and a sampling of the Impossible Whopper. In a newsletter sent out a few months later, I boasted about the Impossible Bolognese dish that fooled my three very picky children: they didn’t realize that the meat on their plate had never in its earlier existence said “moo”. The beef alternative, in my informal tests, had clearly demonstrated its ability to pass for the real thing. In truth, though, the best was yet to come, in my humble opinion. When I recently had the opportunity to sample an Impossible Breakfast Sandwich at Starbucks, I was astounded. Go ahead and try one sometime if you happen to know where to find a Starbucks. The Impossible sausage was so realistic, it crossed my mind that perhaps the company was employing some backward scheme of serving real meat and passing it off as not real.

The key difference between Impossible Foods and most of its competitors is all about the science. While others have created a product intended to appeal to affirmed vegans and vegetarians who might have little desire to consume anything that closely resembles meat, Impossible has targeted the aforementioned beef and pork devotees. They wanted to persuade people to stop eating meat rather than cater to those who would continue not eating meat. The only way to accomplish this was to dedicate a large portion of early funds to filling a room with enough scientists to make it look like a Far Side cartoon and making them compete to produce the most convincing plant-based entrée. It worked. The eggheads focused on a protein called heme. Heme is present in all real meat cells, and it is the key ingredient to stimulating human taste buds. The biggest challenge was figuring out how to create large vats of heme that could be used to make tons of alternative beef every day. When somebody came up with the idea of extracting heme from soy plants, inserting it into genetically modified yeast, and fermenting it in order to dramatically increase the supply, the problem was solved. Finding the key to securing as much heme as they would need led to a plant-based food that almost perfectly imitated genuine ground beef, from its raw packaged state to the final, cooked meal.

More recently, Impossible has made known its intention to reinforce its winning approach. Over the next twelve months, they plan to double the size of their research and development team from approximately 150 to 300. The new hires will be given mission-based marching orders with a broad scope. Any idea that promises to diminish the traditional meatpacking industry will be considered. Steering this effort will be the freshly appointed Chief Science Officer, John D. York. York has the background of a respected Vanderbilt chair, professor, and lab director, and his job is to see to it that Impossible’s R & D department applies science and imagination to new heights of innovation.

One of the challenges that the company has been deftly meeting is keeping up with its own success. One year ago, you would not have seen Impossible Beef in a grocery store unless you visited one of the less than 150 coast-to-coast that carried the stuff. Today, it’s available at more than 11,000 supermarkets, representing a one-year increase by a factor of 77. Initially, the game plan was to conduct a steady, controlled rollout, but the covid-19 pandemic significantly accelerated the retail footprint expansion. As meatpacking plants closed due to viral infections among their workers, Impossible stepped in to blunt the resulting meat shortage. Many consumers were afforded their first taste, and word of mouth propelled sales. Less widely considered in the western world but perhaps more important is the quality of the pork offerings like the sausage found in the Starbucks sandwich. While Americans lean more toward beef and chicken, pork is the world’s most widely consumed meat thanks to its popularity among the 1.4 billion people who live in China. In that country, the ability to raise enough hogs to satisfy the overwhelming demand for pork is threatened by a rash of African swine flu and the simple lack of room for raising the animals. With the right pork alternative on its menu, Impossible Foods is poised to do mountains of business in Asia. They might be showing only the tip of their iceberg even after their astonishing growth in the past decade.

Here’s one more interesting — and very relevant — fact about Impossible Foods: unlike its nearest competitor Beyond Meat (Nasdaq: BYND), Impossible shares are not available for purchase on any stock exchange. You cannot log on to your online trading account and scoop up a piece of this promising company. Never fear, though, because your friends at Iron Edge VC are here to help. We can escort you through the front door and give you access to this exciting company through our Fund today. If you would like to learn more, or if you know of anybody else who would, do not hesitate to contact us by clicking “Get in Touch” below.

If you have enjoyed this article, visit the Iron Edge Blog for past updates on other pre-IPO investment opportunities.

As always, shares are available on a first come, first served basis.

All Our Best,

Paul Maguire, Managing Partner and The Iron Edge Team

5f6e0d464e388c4975685025 Paul Min

Paul Maguire

Founder And Managing Partner