Investment memo

TO:         Professor Clark Hansen, CEO, AMDP

FROM:    Emily Pin Yi Li, R&D, AMDP

DATE: September 26, 2020

SUBJECT: Investment candidate—impossible Foods Inc.

In our last discussion about our weekly investment and funding proposal, you have pointed out that AMDP is especially interested in investing in social enterprises that integrate social responsibility and environmental sustainability into its business. After extensive research and comparison, I highly recommend investing in Impossible Foods Inc., a food tech company that has a huge potential to redefine the food industry while reducing the impact of animal agriculture. In this memo, I have organized the information about the company in the following manner:

1. Our standards for investment

2. The overview, financials, and values of Impossible Foods Inc.

3. Market opinion from well-regarded industry sources

4. Recommendation 

AMDP Investment Criteria

Triple Bottom Line 

Triple bottom line is a framework that emphasizes the societal and environmental impact of a company as much as its financial indicators. The triple bottle lines refer to the 3 Ps (Timothy):

1. People- the impact of a business has on its stakeholders

2. Planet – the environmentally responsible a firm has been through its history 

3. Profit – the traditional financial metrics that measures the profitability of a company 

Corporate Social Responsibility

Corporate social responsibility (CSR) refers to a company’s voluntary act of integrating its business activities with its societal, environmental, and economic concerns. It acknowledges that a company’s responsibility is more than to act in the best interest of its shareholders but also to consider its impact on the community (Edmondson). 

Social Enterprise

Social enterprise makes business decisions based on social impact and financial gain. A social enterprise believes that it is possible for it to make a profit while doing good for the world such as saving the environment with innovative solutions and improving the lives of the community through new technologies. (Social Enterprise Alliance)

Carbon Footprint

Carbon footprint measures the total amount of greenhouse gas emitted from human activities. It is typically calculated by estimating the impacts of all greenhouse gases and expressed as a single number in terms of carbon dioxide equivalent. It is an important measurement since greenhouse gas emission from activities such as manufacturing, production, use of fossil fuels accumulates in the atmosphere if not enough biocapacity is dedicated to absorbing the emission. This framework provides a measurement to compare emission across activities and the amount of biocapacity needed to neutralize all the emissions produced. (Clark) 

Overview of Impossible Foods

Impossible Foods Inc. is a company founded in 2011 by Patrick O. Brown, a Stanford Professor in the department of biochemistry. The company has a mission to address the urgent problem of climate change by developing plant-based substitutes for meat products. By researching the molecular mechanisms responsible for the flavors, texture, and nutrients of meat products, Impossible Foods was able to recreate the sensory experience that meat products provide with planets.

Rocketed Growth of Impossible Food and Untapped Market of Pant-Based Meat Product

Impossible Food Inc. is currently experiencing explosive growth with its signature product— Impossible Burger—rocketed to the No. 1 item sold at various grocery stores in the U.S. and its newly launched product—Impossible Sausage—became available in more than 22,000 restaurants in six months. Its retail footprint is present in the United States, Canada, Hong Kong, Macau, and Singapore, and at restaurants like Burger King and Starbucks. The company is continuously seeking opportunities for further market expansion.

Impossible Food’s primary contenders for the top purveyor of plant-based patties is Beyond Meat, who has gone public roughly a year ago. Momentum is building up to find alternatives for carnivores as more companies are also developing their version of plant-based products. While the market for plant-based meat products is emerging, it is far from being saturated. According to Statista’s forecasted market value of plant-based meat from 2018 to 2026, the worldwide revenue for plant-based meat will reach 30.92 billion U.S. dollars by 2026 from 13.31 billion in 2020, which is equivalent to a 132% growth.

Impossible Food’s tremendous growth potential is also shown through its excess demand from investors. The company currently has no plan of going through IPO, but it had gone through 12 rounds of funding with total funding of $687.5M since it was founded (Crowjo). Some of its investors include UBS, Google Ventures, Bill Gates, Singapore government-owned company Temasek Holdings, and Hong Kong billionaire Li Ka-Shing’s Horizons Ventures. The company’s previous investment round closed at $500 Million was one of the largest investments for a food tech startup. 

Impossible Food Inc’s Action to Make a Difference

Impossible Food Inc. is founded upon a clearly articular mission to help the ecosystem with its innovative food production technology. In the “About Us” section on its website, it reads, “[o]ur mission is to restore biodiversity and reduce the impact of climate change by transforming the global food system.” The plant-based substitutions for meat products offer an alternative to animal agriculture, one of the major causes of global warming. The company has reduced 96% of land use, 87% of water, and 89% of greenhouse gas emissions compare to the traditional meat-centered food production. The business is aligned with AMDP’s goal to invest in companies that are committed to doing business in a socially responsible, environmentally sustainable, and profitable manner. 

Moreover, on top of its sustainable food production, Impossible Food’s newly released product outperforms conventional sausage from pigs for nutrition. “Impossible Sausage has the same amount of protein, 60% more iron, 45% fewer calories, 60% less total fat, 50% less saturated fat, and 0 mg cholesterol. Impossible Sausage contains no antibiotics,” as stated on its website. By taking the health of its customers in mind, Impossible Food has operated on a purpose beyond making a profit.

Appraisal from Third Party 

In an article discussing Impossible Foods’ Growth published by Business Wire, a global leader in press release distribution and regulatory disclosure, the company’s performance was described as “rocketing retail.” The article cited several surveys on the consumer’s positive experience with the product and praised the company for being “one of America’s fastest-growing brands and the leading driver of growth in the overall plant-based food category.” 

The New York Times, on the other hand, conducted an experiment to rate the best tasting plant-based meat burger. Among the other six brands listed, including Beyond Meat, Impossible Burger was named the top plant-based burger. It was described as “the most like a beef burger by far [product]” even though the article also pointed out that the product could do even better if the patty didn’t lose its juiciness like other plant-based meat did. 

Impossible Food Inc. Is Worth the Investment 

Impossible Food Inc. is a social enterprise that has a huge potential for growth. Its mission to reduce human impact on the environment combined with its unique business solution give it the qualities necessary to succeed. In addition, the company is invested by various business and investing magnates, including Bill Gates and Li Ka-Shing’s. Their willingness to fund the company hints at the potential of the business. The company has passed the launch stage of its business life cycle and is currently entering its preliminary stage of growth. Our investment would fuel the growth of the company by providing capital for its manufacturing scaleup, product development, and market expansion. With its current performance and market outlook, I feel confident to recommend Impossible Food as our next investing target and our next step to create a sustainable world.

If you require any further information, please do not hesitate to contact me.

Regards,

Emily Pin Yi Li

AMDP R&D Analyst

Work Cited

Clark, Duncan. “What's a Carbon Footprint and How Is It Worked out?” The Guardian, Guardian News and Media, 4 Apr. 2012. 

Doering, Christopher. “Impossible Foods CEO: Plant-Based Competitors 'Suck' and Stifle Industry Growth.” Food Dive, 7 Oct. 2019.

Edmondson, Brian. “What Is Corporate Social Responsibility?” The Balance, The Balance, 7 July 2020. 

“Impossible Foods' Growth Accelerates as Flagship Product Rolls Out in More Than 11,000 Stores in All 50 States.” Business Wire, Business Wire, 16 Sept. 2020.

“Impossible Foods Closes $200 Million in New Funding to Accelerate Growth.” Business Wire, Business Wire, 13 Aug. 2020.

“Impossible Foods Competitors, Revenue and Alternatives.” Growjo. 

 “Impossible Foods: Meat Made from Plants.” Impossible, 2020. 

“Impossible Foods.” Wikipedia, Wikimedia Foundation, 30 Sept. 2020.

Moskin, Julia. “How Do the New Plant-Based Burgers Stack Up? We Taste-Tested Them.” The New York Times, The New York Times, 22 Oct. 2019.

Shahbandeh, M. “Plant-Based Meat: Forecasted Market Value Worldwide 2018-2026.” Statista, Statista, 7 Nov. 2019, www.statista.com/statistics/877369/global-meat-substitutes-market-value/. 

Shieber, Jonathan. “Competition among Alternative Protein Players Gets Hot as Companies Beef up with New Deals.” TechCrunch, TechCrunch, 11 Aug. 2019. 

Timothy F. Slaper, Ph.D., and Tanya J. Hall. The Triple Bottom Line. “What Is It and How Does It Work?.” Indiana Business Review. Indiana Business Review.

 “What Is a Social Enterprise?” Social Enterprise Alliance, Social Enterprise Alliance, 11 June 2019.