Investors, like consumers, can’t get enough of plant-based brands. The massive fundraising rounds and eye-watering valuations normally reserved for tech startups are fast becoming the norm in the booming category.

Meatless Farm is the latest to get in on the act, this morning hyping up an impending £5m round on Crowdcube, letting the humble customer buy a piece of its high-growth journey for the first time.

It comes hot on the heels of Spanish meat-free startup Heura raking in €4m in just four hours last week from 3,000 crowd investors, including former Manchester United player Chris Smalling. The campaign valued the four-year-old business, which has accrued sales of €7.6m, at a whopping €69.7m (£60m).

This appetite for plant-based businesses is nothing new. Last year, out of 58 food and drink raises on the Seedrs platform, 42 had a plant-based focus. That included Allplants, which raised £4.5m (the largest vegan campaign up until now), and This, which bagged £4.4m in total and was the fastest campaign at the time to ever hit £1.5m. More than £15m in total has been raised for vegan businesses on the Crowdcube platform.

Details on the Meatless pitch are still thin on the ground until it goes live next week, with no indication of the Leeds-headquartered company’s value. A spokeswoman for Meatless Farm says it is not providing a valuation at this stage as it is in the process of rapid growth and expansion. More will be known later in the year, when the crowdfunding investment from the convertible campaign is turned into equity in a much larger planned corporate funding round.

It might not be entirely unkind to suggest that some crowdfunders are targeted at unsophisticated investors because they can’t get private venture capital cash at a frothy valuation. But that’s not the case here: Meatless Farm has good pedigree, already raising close to £40m from private channels over the past three years.

That in itself suggests this particular raise is more about marketing than it is expansion cash. The crowd route has always been a good way of raising profile and getting consumers invested behind a brand’s success in very competitive markets, with Brewdog, and its loyal army of equity punks, perhaps being the best example.

In a Brewdog-esque stunt, Meatless has put out a striking billboard campaign aiming to tempt retail investors (ie the man/woman on the street) with an exhortation to ‘Get your piece of the M*** F*** pie!’.

The recent high-profile IPO successes of Oatly and Quorn owner Monde Nissin, and Beyond Meat before them, provide potential novice investors plenty of incentive to rush out and do just that. It’s hard not to get excited by the stunning rise of Oatly, with an initial $10bn valuation in its New York flotation last month now sitting at $17bn after a 69% surge in share price.

Indeed, in the UK alone, sales of meat alternatives and plant-based dairy products have roughly doubled over the past five years [Nielsen 52 w/e 5 September 2020] and rose 18.3% to £577.4m in 2020 [Kantar 52 w/e 6 September 2020]. Meatless founder Morten Toft Bech says replacing meat with plant-based protein a couple of times a week is reaching “a tipping point” that is “no longer niche”.

However, it’s not all plain sailing. Covid proved to be a temporary setback for the flexitarian movement as the number of Brits actively reducing or not eating meat fell from half (51%) of all consumers in 2019 down to four in 10 (41%) in 2020, according to research from Mintel. Meanwhile, sales of processed meat rocketed 18% last year as shoppers turned to the home comforts of real bacon, sausages and burgers.

That didn’t stop Meatless recording an impressive 148% year-on-year net sales growth in 2020 to £7.5m. But its estimated £25m net sales for this year are lower than previous guidance, as the pandemic took a toll on foodservice partnerships with the likes of Pret a Manger, Leon and Itsu. Atlhough the company hasn’t published full accounts at Companies House yet, the latest available set for 2019 show accumulated losses jumped from £450k to £6.4m.

It is likely to be just a small speed-bump in the road, with further flying growth at plant-based alternative brands, including Meatless Farm, the norm. But it should serve as a reminder to be cautious in a world where valuations are getting dangerously close to being untethered from reality.

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