Should cultivated meat pivot as a B2B ingredient business?

After years of aiming for the dinner plate, cultivated meat leaders are rethinking their approach, shifting focus from direct-to-consumer cultivated meat products to behind-the-scenes partnerships with meat producers and farmers to potentially improve scalability and efficiency.

Cultivated meat startups may benefit from establishing B2B partnerships with meat producers, rather than focusing solely on branding and consumer-facing efforts, said Steve Simitsiz, partner at venture capital firm Solvable Syndicate at yesterday’s Tuft University’s Cellular Agriculture Day.

These partnerships could integrate cultivated products into existing supply chains (e.g. blending with ground meat) and expand into other sectors like fast food, which could be “enormously impactful,” he added.

For example, integrating farmers into the cultivated meat ecosystem can help strengthen the sector’s growth.

Simitsiz pointed to “containerized production systems” or self-contained modular facilities akin to shipping containers, that can be set up near farms to produce cultivated meat where cultivated meat companies can leverage a farm or producer’s existing infrastructure, supply chain and market presence to integrate cultivate meat into traditional products (e.g. blended patties, and patties).

Containerized productions near farms will allow farmers to “enhance their role in sustainable practices rather than feeling displaced by the movement,” he added.

Investor misalignment, costs stifle cultivated meat growth

Early investments in cultivated meat between 2018-2019 with companies like Sci-Fi Foods, New Age Meats and BlueNalu represented different strategies, highlighted Steven Finn, co-founder and general partner at Siddhi Capital. Siddhi Capital was an early investor of BlueNalu and New Age Foods.

Sci-Fi and New Age pursued blended products, such as plant and meat hybrid burgers, yet both companies failed due to investor misalignment and the underperforming blended products markets – where companies pursuing blended meats were often lumped into plant-based offerings with subpar options, many of which did not prove their viability to investors and consumers, Finn explained.

“Plant-based screwed it up for everybody. There was a time where had 75 or so identical chicken nuggets,” he said.

For Blue Nalu, producer of cultivated blue fin tuna toro, the company’s focus on B2B partnerships contrasts with the early emphasis on consumer-facing branding, Finn said.

The cultivated meat industry’s pivot towards B2B as an ingredient solution could force companies to think longer-term rather than competing in the plant-based market, he added.

Challenges in food-tech investment

Sustainably-focused and environmentally beneficial food companies face specific challenges that differ from other climate tech sectors, where cost and scalability often take precedence and technology, such as renewable energy or carbon capture, must compete directly with existing systems on price and infrastructure. In contrast, food companies must balance environmental goals with taste, nutrition, affordability and sensory appeal, making it more difficult to prioritize sustainability without addressing immediate consumer demands, Simitsiz said.

“Climate is going to continue to warm, supply chains are going to continue to be under stress, and people are still going to need food. None of those things are changing. So, in the long run, you can certainly build a business around that,” he said.

Advancements in science have progressed further in the last couple of years, yet “valuations are at their absolute lowest,” making this a strategic time for early-stage investment, Simitsiz said.

The recent election and geopolitical dynamics, such as China’s push into cell ag and biomanufacturing, may ignite a competitive “space race dynamic” in these technologies and in turn ramp up innovation and investment in the US, he added.

For food, consumer perceptions — especially taste — are “deeply personal,” making market success harder to predict, Simitsiz said.

He pointed to how the appeal of targeting high-value, niche markets like clean tuna, which addresses sustainability concerns and offers strong commercial potential, compared to commodities like chicken or beef, require significantly more resources to scale.

Galy: a case study on technological and market viability

Breakthrough Energy Ventures prioritizes companies that demonstrate the potential to reduce greenhouse gas emissions by half a gigaton annually at scale, explained Meghan McGill, senior investment associate at the VC firm.

McGill highlighted Galy, a cell ag company producing sustainable cotton as a success story. The company’s recent Series B funding round, bolstered by long-term off-take agreements that secure future buyers and financing for production scale-up, underscores the value of “de-risking” market entry despite market uncertainties, she added.

Off-take agreements demonstrate market demand by securing committed buyers, providing proof of viability and reliable revenue, compared to venture capital which focuses on funding growth based on projections and future potential, McGill explained. Off-take agreements reduce financial risks, enabling companies to scale production confidently and navigate commercialization more smoothly by locking in buyers for future production.

Achieving cost parity due to the rising costs of raw materials, labor and energy is difficult in climate tech. Companies must demonstrate both technological and market viability to attract investors, which often involves creative financing (e.g. offtake agreements) and establishing strategic milestone to prove demand and reduce perceived risks, she said.