Xinmeat (Xin Su Shi), a Hangzhou, China-headquartered producer of plant-based meat, is seeking to raise “tens of millions of CNY” in Series A+ funds, founder and CEO Song Gao told Mergermarket.
The proceeds will be used to fund sales and marketing, team expansion, and research and development (R&D), Gao said, declining to comment on the startup’s current valuation or fundraising timeline.
Open to strategic, overseas investments
Gao hopes to attract strategic investors with industry experience and resources to help his business expand both domestically and overseas.
On its expansion strategy, the CEO said his company is already working with retailers, restaurants, and supermarkets in Southeast Asia and North America, and is in the process of developing new partnerships in Europe.
Xinmeat’s products are “relatively mature”, and its production capacity has improved following the launch of a new manufacturing facility last December, Gao said, adding that the brand is also on its way to bringing the price of its plant-based meat closer to traditional meat and poultry.
A 220-gram bag of Xinmeat plant-based pork belly is selling at under CNY 60 (USD 8.76), according to WeChat-based e-commerce platform Youzan.
While primarily operating in China, Xinmeat’s long-term ambition is to grow into a global company. As such, the team is very interested in talking to overseas investors, said the CEO, noting that an overseas investor might even have a better grasp on his business since the alternative protein industry is more developed in the west than in China.
Despite China’s unfavorable macroeconomic environment and prolonged Covid restrictions last year, Xinmeat announced the completion of a Series A financing round in December, where the company received “tens of millions of CNY” from several strategic investors, most notable among them was HCH (Hai Chuang Hui), the investment and corporate venture capital (VC) arm of Haier Group, China’s largest home appliances and consumer electronics company.
Xinmeat’s other backers include Sheng Mei Qi Ming, a Hangzhou-based investment firm, and Matrix Partners China, the country’s leading tech VC firm.
According to the Chinese corporate database Qcc.com, Matrix Partners China has also invested in Starfield, one of China’s larger plant-based meat companies that scooped USD 100m in its most recent funding round in January 2022.
Plant-based meat with a Chinese flavor
Xinmeat's brand positioning highlights the importance of understanding the tastes and preferences of Chinese consumers and developing products that are suitable for a variety of Chinese cooking methods, including boiling, roasting, steaming, stir-fry, and braising, said Gao.
He explained that this is because China, with the world’s largest meat-consuming population, is poised to grow into a huge market for alternative protein.
Xinmeat currently has over 20 stock-keeping units (SKUs), including raw materials for plant-based protein, plant-based meat (primarily pork and beef), and plant-based meat dishes, the CEO said, adding that some of their products take the form of ready meals, a food category that he is very optimistic about as it has gained popularity in China during Covid.
Business model-wise, Xinmeat combines business-to-business (B2B) and business-to-customer (B2C), Gao said, adding that most of the revenue comes from the B2B side.
When asked for details about his clients, Gao said the information is confidential but revealed that his team is working with “over a thousand clients” on the B2B side. For B2C, the brand will primarily target customers in first- and second-tier cities, where people understand the health benefits of high-quality protein, via venues such as supermarkets, grocery stores, and e-commerce platforms, said the CEO.
Founded in 2019, Xinmeat now has a team of close to 100 people working across R&D, sales and marketing, and production, according to the CEO.
Although estimates differ, China’s plant-based meat industry is expected to grow into a USD 13bn industry by 2023, according to a 2021 report by the consultancy Euromonitor. China’s pledge to reach peak carbon emissions by 2030 and carbon neutrality by 2060 is also creating tailwinds for plant-based meat companies to grow and raise capital, although investor interest dipped in 2021, which only recorded four investments. This was due in part to the high costs of marketing and customer education costs for plant-based meat, according to a 2022 report by the tech news outlet KrASIA.
The global market for alternative protein is set to reach at least USD 290bn by 2035, accounting for 11% of the overall protein market, according to last year’s report by the Boston Consulting Group.
Prior to founding Xinmeat, Gao studied at the National School of Development at Peking University and worked in operations and branding roles at Chinese conglomerate Fosun International [HKG:0656] and Beijing-based pharmaceutical company Tongrentang [SHA:600085], according to Gao.