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Q&A: E²JDJ talks investment strategy, and the alternative protein

Venture Capital funds targeting alternative proteins have seen a spectacular rise in numbers recently as more people look to invest in areas that confer…

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Venture Capital funds targeting alternative proteins have seen a spectacular rise in numbers recently as more people look to invest in areas that confer multiple benefits to society and the planet. It’s a rapidly evolving and explosive space and it’s a segment where E²JDJ has identified unique opportunities within their broader AgriFood and climate investment thesis. An early-stage venture capital fund based in New Orleans, Louisiana, its founders Corey Jones and Stephanie Dorsey back early-stage companies that provide scalable solutions to climate change, animal welfare, public health, food security, ecosystem degradation and the future sustainability of the global food system.

They are backed by well-known family offices across the globe and notable institutions. The firm invests globally throughout the value chain in game-changing technologies and platforms that displace animals from food and materials systems, promote human health, lower global energy consumption, reduce the environmental impact of industry, and leverage technology to materially impact productivity.  

Mr. Jones and Ms. Dorsey both come from families of entrepreneurs. Mr. Jones was a private growth equity investor in tech-enabled companies and investment banker before launching E2JDJ with Ms. Dorsey, a long-time thought leader in the sustainable food and agriculture space and former lawyer at a New York City corporate law firm. Mr. Jones and Ms. Dorsey both serve on numerous advisory boards in the AgriFood Tech and Science space and are passionate about emerging technologies that could reshape the industry and be revolutionary. Unlike many of today’s technological disruptions, the disruption they’re fueling is about our collective survival. 

Ms. Dorsey believes there is an urgent need to massively improve the resilience, health, and sustainability of our food system, and given its contribution to climate change, deforestation, biodiversity loss, water pollution and AMR risk, Mr. Jones thinks that humanity is at a critical juncture. The entire industry has and continues to face “make it or break it” challenges while concurrently being resistant to innovation. This has created the perfect storm for disruption at the scale not seen since the healthcare industry was digitally disrupted from pens and paper. The healthcare technological revolution was one that Mr. Jones witnessed firsthand through investing and working with healthcare startups pioneering disruptive technologies. With immense challenges that have been egregiously ignored and decades-worth of innovation lag, the current opportunities are abundant in the space. This opportunity is what compelled the founders to launch E2JDJ.

Speaking exclusively to The Vegan Review, Mr. Jones and Ms. Dorsey explained what E2JDJ’s goals are, what lies behind its investment strategy, and where they see the firm in the future.

 

Anay Mridul: What compelled you both to start E²JDJ?

Stephanie Dorsey: The food system and the planet are in a dire situation. The climate crisis is real and we are running out of time. It’s no secret that the agricultural system impacts climate change and is one of the industries most impacted by climate change. If we continue with our food system as it is, we will surpass all possible planetary boundaries in the next 30 years. Two things were apparent to us: (1) this was one of our generation’s most pressing problems, and (2) we are in a once-in-a-generation shift. There has never been a clearer moment in time to seize the opportunity of solving huge challenges in food and agriculture. Fortunately, the silver lining is that we are at the beginning of an agricultural fundamental system-wide transformation. 

At the outset, Corey and I thought best about how to truly leverage our respective zones of genius and perspectives and how we wanted to change the food and agriculture system, a space in which we were pulled to and became immersed over the years. We identified where the greatest opportunities were to evolve the system and ultimately decided to build our firm to catalyze innovation and lasting change in the space on a large-scale system level. Launching a venture capital firm truly enables us to experience the best of both worlds—we get the privilege of both being entrepreneurs and simultaneously supporting exceptional founders who can overcome today’s challenges and build a better world. We are endlessly energized by this work.

Corey Jones: I have always believed that entrepreneurs were the backbones of communities and society as a whole and personally wanted to find ways to fuel entrepreneurship. One of the biggest disconnects some investors have is that they have never been entrepreneurs and have no visibility into what it is like to run a start-up. While those investors may have good intentions in seeking to support founders, it is challenging to truly understand the best ways to support an entrepreneur unless an individual has been one. As founding partners of a VC firm and growing up in entrepreneurial families, we have unique insights and lived experiences that we can leverage in identifying exceptional founders and supporting them through their journey.

AM: What is your investment strategy?

CJ: We invest in innovators that are shaking up every component of the food and agriculture value chain from production to consumption. We have a diversified portfolio that balances investments by stage of company, subsector, technology and product range. We invest at the early stages and focus on the strength of the management team, soundness of the science and technology, viability of the business model and commercialization strategy, and Intellectual Property potential and/or portfolio. We look for scalable high-growth startups that by partnering with us they can grow their business to be more transformative than the business would have been without our partnership. 

SD: We back forward-thinking entrepreneurs who are adaptable, relentless, resourceful and positive. We look for founders who can execute with velocity and have the capabilities to drive the company to success. We want to see that founders are thoughtfully examining critical questions like: (i) who is my consumer, (ii) do I understand them well enough, (iii) how can I win with them more efficiently at scale, and (iv) where does the company need to improve its capabilities. We are looking for unique things that the founder has figured out that no one else has figured out. We want to get a sense of the viability of the solution, the order of magnitude of the opportunity, what drives the growth, if the path to the opportunity is plausible and what it takes to get there. And finally, we want to be mission-aligned with the founders. We are both entering into a long-term partnership to work on challenging things together, so that alignment must be there from day one.

 

AM: Where do you think E²JDJ’s focus fits within the alternative protein segment of the food and agriculture landscape?

CJ: We spent a significant amount of time surveying the food and agriculture landscape, analyzing market data, identifying the key challenges in the space and future bottlenecks and obstacles that may inhibit the long-term growth of the space. Additionally, we spent a large amount of time studying the history of the companies that succeeded and failed and formulated bespoke theses around the sub-sectors we invest in to avoid the failures and replicate the successes of the past. We identified that there was a fundamental shift underway in the way we need to grow, harvest, transform and ultimately eat food. 

Particularly when connecting the dots between climate change and animal agriculture, we saw there was a great need to reimagine animal-based food and material production. The writing is on the wall and there is no question that the climate crisis is being exacerbated by the animal agriculture industry. Not only does raising animals require vast quantities of water and land, but it’s also a huge contributor to climate change, producing more greenhouse gases than driving cars. With food in particular, the world is waking up to the public health implications of industrial animal agriculture when it comes to food-borne pandemics and antibiotic resistance, among other things. 

When you look back in history, the use of animals for products and services like transportation, communications, and labor, time and time again they have been displaced by superior technologieswhether it be horse-drawn carriages by combustion engines and carrier pigeons by telephones, to petroleums replacing whales and tractors replacing oxens. If history is any guide, the millennia-old technology of conventional animal agriculture will be displaced just the same. Legacy products derived from animals are now faced with incredible disruption with next-generation newcomers to market: animal protein alternatives. Alternative proteins have ample opportunity for growth and they provide a way for humanity to rethink and redefine the ways in which we feed the world. The capital flooding into the space indicates the strength of investor conviction in the category. Alternative protein reached record-breaking levels of investment in 2020 and it is currently on track to have another blowout year in 2021. 

At E2JDJ, we identify less crowded areas in emerging subsegments of alternative protein that are poised for accelerated growth. As sector specialists, we have the ability to look across the board to identify the highest potential companies in the market and track the growth and development of those companies over time.

What we found during our survey and assessment of the plant-based, cultivated and fermentation spaces of the alternative protein market was that there was a real concentration of attention on certain categories and market segments  However, we’ve gone deeper with our investment approach and thesis, identifying unsaturated areas that are on the front end of new cycles that are either neglected and/or ripe for innovation, for example, certain deep tech plays leveraging advances in biotech, computing, automation and artificial intelligence. As a specialist fund, we have the unique ability to be able to go deep and closely monitor and track developments in the space, challenges in the ecosystem and areas that offer significant untapped growth opportunities.

AM: What would you say is the unique value proposition for your firm?

CJ: We are real growth partners in the way we work with companies. We aim to be both a resource to founders and symbiotic partners. In building the firm, we were focused on value creation centered around addressing all of the pain points expressed to us by founders. From what we’ve heard and seen, the greatest challenges were around establishing sales and distribution channels and finding aligned investors.

As such, we tapped into our network and our partners’ networks to establish relationships on the sales and distribution side to connect founders with prospective revenue relationships. For example, on the food front, we connect founders to key retail, foodservice and additional B2B opportunities and on the agriculture side, we connect founders to growers who can be potential customers. We also focus on supporting founders through introductions to our wide investor network and facilitating connections to like-minded, value-add investors during current and subsequent capital raises. 

SD: It’s worth noting that we know first hand that entrepreneurship is quite the undertaking and building something is never easy. We are completely empathetic of the journey and have a tremendous amount of respect and admiration for all entrepreneurs—it takes courage to take a huge risk and go all-in on a vision that sometimes only a few can see. Whether an investment opportunity is a fit or not for E²JDJ, we always aim to be a resource to everyone we meet on their journey.

AM: What are the market trends you are seeing?

SD: At a high level, innovation is exploding in food and agriculture from new digital capabilities that are playing out around the supply chain from seed to site all the way to efficacious biological products that replace traditional chemical inputs. Looking at the broader agricultural ecosystem, there are four major areas of innovation that we are closely monitoring: (i) rerouting the value chain, (ii) crop efficiency technology, (iii) biochemicals and biomaterials and (iv) food technology and alternative protein.

CJ: The trend around emerging technologies is unsurprising. Technology has disrupted every industry and the food and agriculture industry is now faced with incredible disruption brought on by new applications, major advances and lower cost of certain technologies like machine learning, quantum computing and genetic sequencing. Within the category of sustainable food production, the alternative protein market is an area of immense innovation and activity. Huge technological leaps are being made in the space. Cellular agriculture and fermentation are powerful technological platforms for taking alternative protein products to the next level. Plant-based companies are also finding ways to leverage deep tech, like companies that are leveraging artificial intelligence and machine learning in product design and formulation to find plant ingredients that replicate animal products at the molecular, physical and chemical structural level.

Consumer demand is also driving the markets. Consumers have an abundance of options and have a heightened awareness of health and environmental issues associated with food. Consumers are also concerned about animal welfare. Today, we are seeing that consumers are demanding healthy, functional and sustainable products with few and simple ingredients, without sacrificing taste, price or convenience. Alternative protein companies are creating alternative meat, dairy, egg and seafood products that are closer than ever in taste and functionality to conventional counterparts and they are doing so in a healthy, sustainable and cruelty-free way.

AM: Where do you see your firm in 5 years’ time?

SD: We are independent thinkers who have a tireless pursuit of rigorous and thoughtful inquiry. We share a commitment to excellence. We undertake a principles-based approach in everything we do. Those core values are in the DNA of our firm and will continue to be. Looking towards the future, we are focused on building a best-in-class firm that will stand the test of time. 

As we scale up the firm, we plan to continue implementing differentiated investment strategies, targeting large investment frontiers, unlocking opportunities through our relationships, and supporting founders that are creating world-changing solutions. 

CJ: We envision the firm to grow both from a perspective of assets that can be deployed to support founders and the number of companies we can invest in to solve some of the world’s most challenging problems. We want to continue providing support, knowledge and resources to bold founders to help them scale breakthrough solutions and accelerate their growth.

The post Q&A: E²JDJ talks investment strategy, and the alternative protein appeared first on The Vegan Review.

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