NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, February 20, 2018

Dao Foods International, Inc., has launched to meet China’s rising demand for meat and other protein food products with animal-free alternatives.

A collaborative effort between Dao Ventures, Moonspire Social Ventures, and New Crop Capital, Dao Foods is introducing innovative and climate-friendly protein products, primarily plant-based and clean meat (PBCM), into the Chinese market.

This cross-border impact venture aims to disrupt the global meat, egg, and dairy markets in order to curb the environmental impact of meat production and address the health and safety concerns of meat consumption in China. This comes as the Chinese government seeks to potentially cut the country’s meat consumption in half by 2030.

“With rapid rising incomes and increasing meat consumption in China, our aim is to introduce alternative products into the China market to reduce the consumer demand for animal products from the traditional livestock industry, which has had growing negative environmental, food safety and health impact,” said Albert Tseng, co-founder of Dao Foods and Managing Director of Moonspire Social Ventures.

Dao Foods was founded by experienced impact investors and social entrepreneurs Tao Zhang and Albert Tseng, representing Dao Ventures and Moonspire Social Ventures, respectively, in collaboration with New Crop Capital, a Dao Foods founding investor and specialized private venture capital fund. Dao Ventures has supported more than 1,000 Chinese and international SMEs and made and facilitated over US$200M in impact investments. New Crop Capital has made investments in 16 of the most innovative companies in the alternative protein space worldwide.

The founding members of Dao Foods will be leveraging their existing relationships in both North America and China, including the nonprofit Good Food Institute, which co-initiated the formation of this new endeavor, as well as Dao Ventures’ local infrastructure, to deliver solutions for China’s skyrocketing meat consumption.

“Diets are radically changing in China, and New Crop Capital is proud to be a part of Dao Foods to steer this change in a direction that supports the health of people and the planet,” New Crop Capital Investment Manager Chris Kerr says. “This is a critical moment for China’s food industry, and we at New Crop Capital believe that Dao Foods is equipped to take advantage of this moment to make climate-friendly foods the norms, not the exception.”

Based on conservative estimates, globally, 14.5% of man-made greenhouse gas emissions emanate from animal agriculture – more than the total emissions from the entire transport sector. China alone consumes more than one-quarter of the world’s meat, including half of its pork.

With the value proposition of significantly reducing carbon emissions and ensuring food-related health and safety, plant-based and clean meat are part of a macrotrend in alternative proteins that has attracted the attention and investment dollars of business tycoons such as Bill Gates, Richard Branson, Sergey Brin and Li Ka-shing, as well as traditional meat companies such as Cargill and Tyson Foods.

Tyson Foods Inc., the largest U.S. meat producer, has created a venture capital fund focused on investing in companies “to sustainably feed” the world’s growing population. Its recent investments include plant protein company Beyond Meat and Bay Area-startup Memphis Meats, which produces beef, chicken and duck directly from animal cells without breeding, raising, or slaughtering animals. Beyond Meat and Memphis Meats are both New Crop Capital portfolio companies.

Memphis Meats’ clean meat also has attracted investments from DFJ, Cargill, Gates, and from Richard Branson, who said in an interview to Bloomberg, “I believe that in 30 years or so we will no longer need to kill any animals and that all meat will either be clean or plant-based, taste the same and also be much healthier for everyone.”

Business magnate Li Ka-shing, one of the richest men in Asia, has invested $75M in the plant-based meat company Impossible Foods.

Dao Foods plans to accelerate this shift toward plant-based and clean meat and capitalize on the investor interest in these better alternatives.

Dao Foods International, Inc. is headquartered in Toronto, Canada and plans to establish a China office soon as it conducts ongoing market research with various stakeholders on the ground in China while continuing its collaboration with North America-based partners.

Photo courtesy of Global Water Forum.