ARLINGTON, VA. — Interest is growing in the global development and production of alternative proteins, but it’s going to take more capital investment to fulfill their promise. So concludes a new series of state-of-the-industry reports from the Good Food Institute (GFI).

The think tank examined three areas within the alternative protein sector — plant-based alternatives, cultivated meat and precision fermentation — and found a mixed scenario.

Total 2024 global funding for the sector reached $1.1 billion, which was down 29% from 2023.

“There was $1.5 billion total investment in 2023 (across all three categories),” said Daniel Gertner, GFI’s lead economic and industry analyst and one of the authors of the reports. “Four-hundred-and-twenty-five million was Oatly’s convertible note financing, and they’re a publicly traded company. The vast majority of the rest was in privately held companies.”

Capital flows to fermentation

Fermentation companies drew the largest capital infusion last year at $651 million (up 43% from 2023), GFI said, followed by cultivated meat and seafood producers at $139 million (a year-over-year drop of 40%) and plant-based projects with $309 million in investment (down 64% from 2023).

GFI highlighted Meati Foods, a Boulder, Colo.-based manufacturer of mycelium steak, chicken and breakfast patty products, for receiving $100 million in the largest fermentation deal of 2024. Emeryville, Calif.-based Prolific Machines, which uses light to make the cell cultivation process more efficient, attracted $54.6 million in Series B financing last year, GFI said, and Heura Foods, a producer of plant-based proteins headquartered in Barcelona, brought in $43 million in 2024, more than doubling its total funding.

Gertner said companies that manufacture fermentation-enabled products increasingly have drawn investors because of their productivity and the growing consumer interest in the sector.

“And fermentation as a production platform has seen pretty good government support in recent years because it fits into the biotechnology push,” he said. “I think those factors play into the sustained interest in bio-fermentation and traditional (fermentation), but they both need more capital investment.”

Privately held alternative protein companies raised more money than publicly traded companies last year, according to GFI, particularly involving fermentation-enabled products. Gertner said that’s because the majority of businesses are privately held, and the category enjoys more favorable consumer perceptions along with government support.

“Since the first disclosed investment in a fermentation company in 2013, privately held companies in the fermentation sector have raised $4.8 billion, while publicly traded companies have secured $39 million,” the GFI report said.

Regulations impact investment

Government regulations impact investment in the alternative protein sector, according to the report, pointing to “significant regulatory approval milestones” that occurred last year in Canada and New Zealand involving fermentation.

“Regulation in general can speed or slow a novel product’s path to market and affect the amount of funding a company receives,” Gertner said. “So, the more that proceeds, the more favorable for companies to be able to go through that process and receive approval and receive funding. Public regulation is very important.”

Cultivated meat has been slow to receive US government regulatory approval, and Gertner said the only two products approved for sale — cultivated chicken from Berkeley, Calif.-based Upside Foods and Just Eat’s Good Meat brand — aren’t currently being sold. However, Upside plans to launch a second cultivated chicken product in the United States by the end of 2025, and Good Meat’s 3% cultivated chicken product is available at one retail outlet in Singapore.

Meanwhile, several states already have banned cultivated meat before it can get to market. Last week, Nebraska became the sixth state to pass a ban, following Montana, Indiana, Mississippi, Alabama and Florida.

“Regulatory is the main issue right now,” Gertner said. “Investors may be hesitant to provide financing without regulatory clarity and companies being able to produce.

“State bans in and of themselves are not the problem. It’s really federal regulation that will determine whether companies will be able to sell and how soon.”

There were a few positive investment developments for the US cultivated meat sector last year, according to GFI. One example is Tufts University in Massachusetts, which received a $2.1 million state grant to establish the Foodtech Engineering for Alternative Sustainable Technologies center. The goal is to foster growth in the cellular agriculture sector, support workforce development and advance cultivated meat technologies.

Some bright spots for plant-based

Besides Heura’s $43 million capital infusion last year, GFI said Oatside, a Singapore-based oat milk manufacturer, had raised $35 million in a Series B funding round, and Plantible Foods, a San Diego-based manufacturer of Rubi Protein derived from Lemna (commonly known as duckweed), had closed a $30 million Series B funding round.

The funding rounds came despite a “fundamentally different” investment environment in the past two years compared with the period before 2022 when interest rates were lower, GFI said.

Privately held plant-based meat, seafood, eggs or dairy companies now have raised a total of $8.4 billion since 2006, the report said, while publicly traded plant-based protein companies have raised $2.5 billion.