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Animal rights as an investment theme wins ethically, morally, and money-wise – you don’t need to tell family offices

Billionaires, celebrities and their family offices are increasingly concerned about animal rights and keen to back new technology to disrupt the food and fashion industry, to judge by recent fundraisings.

Vinod Khosla, founder of Sun Microsystems is a leading exponent of the trend. His venture capital business has added to his exposure by backing cell-based leather producer VitroLabs. Other investors include Leonardo DiCaprio, Jim Mellon backed Agronomics, Invest FWD run by Anders Holch Povslen, the Pinault family’s luxury group Kering and Angelo Moratti’s Milano Investment Partners.

Their backing illustrates growing concern among these groups over the rearing of animals for slaughter. Plant-based meat was first to emerge as a possible alternative. The movement has more recently become involved in cell-based meat and leather, grown in laboratories. 

In a ViewPoint last February, Family Capital said animal rights were a growing investment theme. Carl Icahn has started a proxy battle against the directors of Mcdonald’s over their treatment of pigs, although proxy advisory firm ISS has opposed his campaign..

Khosla was an early convert to meatless meat. He founded Sun Microsystems in 1982 along with Andy Bechtolsheim, Bill Joy and Scott McNealy. He stayed at the firm for four years before pursuing a two-decade stint at Kleiner Perkins Caufield & Byers. In 2004, he set up Khosla Ventures, targeting nascent technologies that can deliver a positive socioeconomic impact.

Bay Area-based VitroLabs was founded in 2016 by Ingvar Helgason and Dr Dusko Ilic. It grows leather by taking a small biopsy from cows and cultivating cells in its laboratory. This allows VitroLabs to produce sustainable animal hides in a matter of weeks. It secured $46 million in its first funding round, calling its products “cultivated animal leather”. 

Cell-generated products are becoming a far more ubiquitous feature, as evidenced by the rise in sustainable food manufacturers including Wildtype, which has developed a way of harvesting cells to make “sushi-grade” cellular salmon.  Future Meat Technologies is backed by S2G, run by Lukas Walton, a member of the Walmart dynasty.

In the Netherlands, the government has decided to commit $65 million through its National Growth Fund to building a cellular meat and agriculture ecosystem. Netherlands-based firm Mosa Meat produced the first lab-grown beef burger in 2013. 

The possibility of eating factory rather than field-produced meat over the coming years is likely to rise; along with lab-grown leather products as fashion brands look for low impact alternatives. In March 2021, fashion designer Stella McCartney debuted clothes created with Bolt Threads’ mushroom leather, a vegan alternative. 

VitroLabs investor Kering is a luxury retail group established by French billionaire, François Pinault in 1963. It includes leading fashion houses such as Balenciaga, Gucci and Yves Saint Laurent. The Pinault family’s wealth is managed via the Artémis holding company. Bestseller is one of Denmark’s biggest retail businesses. Povslen, its backer, is also renowned for investing heavily in Scottish forests.

Backing from Milano Investment Partners illustrates growing interest in the theme from the Italian fashion industry. The management company, a backer of several fashion brands, is majority-owned by ACM, a family office owned by veteran VC investor Angelo Moratti. 

VirtrolLabs’ Helgason, who hails from Iceland, was himself a fashion designer before setting up VitroLabs. He reportedly got the inspiration from a storyline in Blade Runner, the iconic sci-fi film, where snakes and owls are grown in a laboratory. 

At the beginning of 2022, Khosla Ventures launched its inaugural Opportunity Fund, which followed close on the heels of the VC firm’s $1.4 billion Fund VII. 

The Opportunity Fund is designed to double down on investments in maturing companies that Khosla originally backed at an early stage; something more VC firms are doing to extend the investment lifecycle in high-performing portfolio companies. In private equity, they are typically referred to as continuation funds. 

One Khosla portfolio company to benefit from this approach is Impossible Foods, which develops plant-based meat products, but has yet to list. The firm was launched by former Stanford University Professor, Patrick O. Brown. It launched its first product, the Impossible Burger, in 2016. 

 

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