Deal focus: Starfield serves up Series B

Ground beef is the typical target for plant-based protein replacement start-ups globally, a decision driven by geography and technical competence. Many of these companies are based in the US, where beef is the most widely consumed meat. And they default to products like burgers because recreating the texture of anything more complicated is difficult using plant-based components.

China’s Starfield is one of a cluster of Asian players looking to do it differently. Though young – the company was founded in 2019 – its product range is deliberately broad. Pork and chicken sit alongside beef, reflecting the preferred meats in its home market.

Starfield is also pushing boundaries in terms of the forms these meats take. It recently released sliced ham and beef lines, with the latter intended to mimic the structure and taste of pastrami. Meanwhile, a black pepper beef dish is under development that will be served as a single piece of meat, aiming to capture the complexity of real tissues and fibres.

“Kiki Wu, the founder, is a vegetarian and she used to run vegetarian restaurants in Shenzhen. She put her original impetus into Starfield. We’ve seen the research her team has conducted on products and industry supply chains, and their successful cooperation with customers. We believe they are the best in this track,” said Ron Cao, founder and managing partner of Sky9 Capital.

Sky9 led a Series A for Starfield in April 2020, a year in which the company also raised a seed round and a Series A extension. It recently secured USD 100m in Series B funding led by Primavera Capital Group. Sky9 re-upped alongside several other existing investors, including Joy Capital, Matrix Partners China, and Lightspeed China Partners.

Youth appeal

Among Starfield’s research efforts is a survey launched last year in conjunction with Bloomberg Businessweek. It found that the key concerns for consumers were food security, price, and food experience. Asked what would motivate a repeat purchase of plant-based meat, 50% of respondents cited health. This compares to 27% for environmental protection and 13% for taste.

The survey also confirmed that the most frequent consumers of protein replacement products are relatively young, born between 1980 to 1995. One of the challenges for start-ups in the space is how to effectively address this target market.

Starfield seized the initiative by teaming up with Dicos, a Chinese equivalent of KFC that has 2,600 branches nationwide, to sell plant-based chicken burgers. This was followed by tie-ups with Luckin Coffee and bubble tea chain Heytea, which were looking to diversify their food offerings. The black pepper beef dish will debut at Heytea.

Pursing a B2B2C model, Starfield claims to have worked with more than 100 brands covering 14,000 outlets. It will soon announce a collaboration with KFC, AVCJ has been told, and there are plans for a snack line to be distributed by FamilyMart.

“When we invested in 2020, the plant meat track was just emerging. There were just five or six start-ups. While the business models were similar, Starfield’s products had a better reputation in the market, and more importantly, it quickly executed on the collaboration with Dicos. This gave us confidence for potential business landing,” said Cao.

The company has built its first dedicated factory in Hubei province, which is intended to enhance supply chain and cost controls. Having in-house facilities also increases product iteration efficiency, so that Starfield can respond quickly to evolving customer demand. This is considered important given the rate at which plant-based proteins are developing industry-wide.

While the capital expenditure was significant, Cao is not unduly worried about Starfield’s financial stability, pointing to the size of the Series B and the speed with which it was raised. “We believe that from a strategic point of view, building its own factory is a very important step,” he said. “It will make the barriers to entry higher and the company’s core competitiveness stronger.”

Bigger picture

These barriers are not only defined by technology and infrastructure. Protein replacement is gaining traction globally at a time when China and the US are drifting further apart. Regulation may play a role in its development. Cao observed that Impossible, one of the largest plant-based protein specialists out of the US, uses genetically modified beans that may struggle to get approval in China.

Starfield’s rising valuation is also spurred by a broader push into sustainability-related investments. Green-tech and renewables are the traditional lodestars in this area, but plant-based meat fits into the rubric of reduced carbon footprints and healthier lifestyles.

“It’s one of the reasons why this track has attracted so much funding,” said Cao. “At the same time, the Chinese market offers a certain demographic dividend. We believe that Starfield will become a mainstream choice for health-conscious people in the next few years.”

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Consumer
• Early-stage
• China
• Sky9 Capital
• Primavera
• Lightspeed Venture Partners
• Matrix Partners
• green-tech