Bluestein Ventures closes third fund with $45m to focus on nutrition, sustainability, digitization

“At Bluestein, our mission is to transform the food system to be better, healthier, and more sustainable. We do that by investing across the supply chain in food, anything from goods on the shelf, how goods get to the shelf, and how goods are made,” Hartman said. “For fund III, we're continuing to build out a portfolio with an emphasis on our mission, and the portfolio will have an emphasis on three themes: nutrition, sustainability, and digitization. So, these are the driving macro forces in the food industry over the next five to 10 years.” 

Fund III: Investing in gut microbiome research, prepared meals, food prescription marketplace

Founded in 2014, Bluestein Ventures’ is a family private-equity firm focused on investing in early-stage startups, primarily pre-Seed to Series A, that offer products and services geared towards creating a healthier and more sustainable food system, Bluestein said. 

With its third fund, Bluestein Ventures has invested in gut microbiome research and testing company BiomeSense, prepared meal delivery company WECO Hospitality, and Attane Health, a marketplace for food prescriptions for consumers with chronic conditions. 

In its previous funds, the firm invested in prepared meal delivery service Factor, retailer Foxtrot, mycelium-based protein company Meati, and freight-visibility software provider FourKite. 

The firm also “decided for the first time actually to raise outside capital and spin it out of the family office,” welcoming Lindsay Levin, former CMO at RXBAR, to the firm as a venture partner. 

In searching for prospective startups to invest in, Bluestein noted that it’s important for companies to have “game-changing innovations that are solving a market opportunity,” a market for the product and a path for capital efficient growth. 

"We talk a lot about capital efficiency as being key, which in the food industry ... we know that's always necessary for long-term success. So, we definitely want to see that from the earliest stages," he added.  

Food as medicine: ‘We see opportunities across the supply chain to place bets in that space’

With its focus on nutrition, Bluestein is watching and investing in the food-as-medicine space, including alternative medicine platform People Science, immunity sparkling beverage brand Vive Organic, and Attane Health, the two noted. 

“One area that we've been particularly excited about digging into is food as medicine, which is the integration of nutrition, wellness, and health care to solve chronic health problems and other unmet medical needs, emphasizing prevention over treatment. And so, we really think about holistic nutrition and how do you heal your body with food. Food is a major fuel for our bodies that can help nourish us, and so we see opportunities across the supply chain to place bets in that space,” Hartman said. 

Companies like People Science and Attane Health are also leveraging technologies to help consumers develop healthier habits, Andrew Bluestein said. For instance, Attane Health is working with Medicaid to bring consumer food and nutrition programs to those with chronic conditions and features an “online grocery component with nutritional education to really bring better access and affordability to populations in need,” he added. 

When asked about the role AI has in its broader investment strategy, Hartman explained that it wasn’t just about the technology itself but how it can address problems in the food supply chain related to nutrition and sustainability. 

“The application of AI, that's the important piece, less the AI itself and how does it apply to the food industry, and we see potential for application across the supply chain, and it's an area that we've been digging deeply into,” she said. “It's just finding the highest value applications and how do you actually put that through the supply chain to make a meaningful impact.”

Can plant-based move “through the trough of disillusionment?” 

Bluestein also still sees potential in the beleaguered plant-based meat alternative market, which has faced slumping sales in several categories and its own set of funding challenges. 

Though admitting the plant-based market is “going through the trough of disillusionment now,” Hartman said that it has “long-term legs,” as more consumers embrace conscious eating and seek out healthier alternatives.

While many predominant plant-based brands were able to replicate the taste and texture of animal-based meats, the next generation of plant-based meat companies will need to focus and innovate on nutrient density to win over consumers, she noted. Bluestein Ventures invested in Meati because it’s addressing nutrient density, she added. 

“I think when you're looking at plant-based particularly, what we always have looked for is this trifecta between taste and texture, price point, and nutrient density, and that's where we saw Meati fitting in the bullseye. And when we invested back in 2018, no one had really done that because Beyond and Impossible had really nailed taste and texture, but they had not nailed nutrient density,” she said.