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Meati is turning fungi into climate-friendly steaks. Will diners bite?

The sustainable food startup just raised another $100 million to try and break through a tough market for alternative meats.
By Julian Spector

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Climate-friendly alternative proteins have proved tough for diners and investors to swallow. After a hype-filled cycle, stalwarts like Beyond Meat and Impossible Foods have grappled with declining valuations and a long road to becoming low-cost meat replacements for the masses.

Hardly auspicious conditions for raising money, but an up-and-coming alternative-meat startup called Meati nonetheless pulled in another $100 million in May, pushing the company’s total funds raised to $365 million. Meati manufactures various fillets that look like chicken and beef, but are in fact made from fermenting mycelium, the fibrous root network formed by fungi. These fillets went on sale at six Sprouts locations in February 2023, and since then have hit the shelves at 7,000 grocery stores nationwide.

This February, the company brought in new CEO Phil Graves, a numbers-guy type who previously founded and ran Patagonia’s in-house VC firm for sustainability-minded startups. Now Meati plans to use its new funds to ramp up production at its Mega Ranch” factory in Colorado and market its product to a broader swath of new customers.

I am competitive. At Patagonia, I never wanted to make [sustainability] investments that underperformed from a traditional investment perspective,” Graves told me in a phone interview last week. I want to make Meati the best-performing investment in [our investors’] portfolios. I also want to make it the best in terms of planetary impact and human health impact.”

The planetary impact would come from displacing hugely carbon-emitting beef production; unlike cattle, mycelium doesn’t burp distressing amounts of methane into the atmosphere, or require acres and acres of land for grazing. Meati’s protein-packed products have an extremely small physical footprint and use little water, so they can nourish people without locking up lots of environmental resources.

New fungi-based approach to a tough market

Graves acknowledged that the alternative meat market has been frothy” over the last few years, with sky-high valuations and promises of future growth punctuated by losses and retrenchment. In today’s market, you need to have a clear path to profitability,” he said.

The most prominent decline for a new protein startup now stands as a dire warning to entrepreneurs and investors who would follow in its path. Beyond Meat went public in early 2019 and soon surged to $235 per share. Since then, it has slid ever lower, and now sits below $7 per share. Del Taco recently ended its pioneering partnership with Beyond Meat, citing low sales, and Carl’s Jr. scaled back from offering it at all its locations.

Still, people need to eat, and the long-term imperative to feed a growing global population without wrecking the planet continues to lure entrepreneurs.

We wanted to see something at parity or better cost-wise, unquestionably healthier and scalable,” said Joshua Posamentier, cofounder and managing partner at Congruent Ventures, which led Meati’s first round and joined the latest funding. He saw Meati as structurally different” from the other new protein companies.

Graves declined to comment on whether Meati’s own valuation had followed the boom-and-bust trend of the broader alt-protein market. But he said he’s working to turn a profit next year. He wants to show the world that pseudo-meats can make money now, not in some distant, hypothetical future.

The major alt-meat categories produce either processed vegetable proteins (which have a long ingredient list and require a lot of effort to make them appear meaty) or cell-grown meat (it’s meat, but the question is whether consumers want to eat something from a proverbial petri dish). Meati distinguishes itself in that its products are not processed but fermented, which allows for a very short and clean ingredient list.

It comes from nature, there’s no mad science behind it, no genetic modification, and the end product is effectively a superfood,” Graves said.

The company puts a teaspoon of Neurospora crassa spores into a brewery-like tank and adds sugar for the fungi to eat, and the ensuing fermentation creates the protein equivalent of hundreds of bison” in four to five days, Graves said (his job right before Meati was running a regenerative ranching operation called Wild Idea Buffalo Company). Then the wet material gets pressed and shaped, shrink-wrapped, and sent to grocery stores. Now Meati does this around the clock at its Mega Ranch facility.

At least one other company has pursued this particular strain of fungi for alternative protein, a startup called Better Meat Company. The two have been locked in a legal battle for nearly three years over intellectual property related to cultivating the spores. Meati argued that a former employee breached a contract to work for the rival startup; a judge recently allowed some trade secret claims to move forward but upheld Better Meat Company’s patents. The result is that both companies have protection for their respective mycelium-based products, and the two seem to be content to move on from costly litigation.

To reach profitability, Meati needs to produce more while shaving the costs to make each unit. Graves recently dug into the ingredients list to remove superfluous items and streamline production. In addition, the company is looking at automation and efficiency upgrades at the factory to churn out steaks and cutlets more rapidly. Meati also laid off 13 percent of its workforce when Graves was elevated to CEO in February, after a brief stint as CFO.

New tech-driven foods typically start out at a premium, compared with the cost of conventional food. To reach mass-market adoption, alt-protein startups need to lower their prices relative to the incumbent meats that are widely available — but it’s hard to do that and generate more profit at the same time.

If they can get people to eat steak made out of fungi rather than steak made out of cows, that will be a really excellent thing for the environment and the climate. And the more people they can get to eat that, the better,” said reporter Michael Grunwald, author of a forthcoming book on reducing the climate burdens of food production. It just needs to taste as good and be as cheap, and it’s not there yet.”

I picked up the Meati chicken cutlet at Whole Foods for $8.99 and the steak look-alike for $10.99. The packages come with two servings, each of which packs 17 grams of protein. That’s already a reasonable” price per serving, Graves said, given the protein density. And there’s less of a premium if customers compare it with other sustainable, humanely harvested meat options — wild-caught salmon, grass-fed and grass-finished beef, pastured poultry. Still, the goal is very much to lower the price point.

As our costs come down with scale and volume, we want to share those savings with our retail partners, who will share them with their customer base,” Graves said. We built this beautiful Mega Ranch — the more pounds that we produce through the plant, the better we are able to amortize those costs.”

Mycelium magic

As mycologists know but few laypeople have cause to understand, mycelium is the structural workhorse of the fungi kingdom.

Mycelial tendrils fan out underground, forming dense networks that can transport resources and even communicate across species — scientists have found that fungi can interact with trees, for instance. The mushrooms that we know and love are technically the fruiting bodies” of a mycelial network: The root systems channel water upward to a single point, basically inflating a mushroom, which then transmits spores into the world to perpetuate the species. (For a stunning succession of jaw-dropping mushroom facts, I recommend Entangled Life, by the perfectly named Merlin Sheldrake, a Cambridge University-trained mycologist.)

Meati now must grapple with the limited public awareness of mycelium and its often astonishing properties.

The cutlet packaging describes the meal as mushroom root,” which is approachable as a synonym for mycelium, but also a little misleading: Mushrooms in the conventional sense don’t factor into the process or the product. Graves suggested that down the road, the terminology could evolve — maybe myco-protein” would catch on, to emphasize the nutritional content of the food.

Digging past the nomenclature, I cooked myself two Meati meals to test out the funky fungi. I heated up some olive oil and pan-fried the classic cutlet, a chicken breast analogue. Once I’d cooked it through and produced a pleasing golden crust on the outside, I let it cool, sliced it, and served atop a hearty salad with cherry tomatoes, diced avocado, shredded cheese, and a zingy vinaigrette.

The author cooked the Meati steak with butter and herbs (in process, left). After pan-frying the Meati cutlet and serving on a salad (right), it looked remarkably like a sliced chicken breast. (Julian Spector)

The sliced cutlet looked remarkably like a freshly cooked slab of chicken, and cutting through the layers of mycelium really felt to me like parting the sinews of a chicken breast. I nearly gobbled down the two servings myself, but instead pulled in a neighbor for a second opinion. He deemed it way better” than fake meat he’d tried previously.

The following night I sampled the steak, which is more or less the same chunk of mycelium, plus some beet juice to color it. I cooked this one with butter seasoned with rosemary sprigs and garlic cloves. To my palette, the outcome did not conjure steak as successfully as its predecessor embodied the feeling of chicken. It was fibrous and chewy in a way that felt different from the fibrous chew I have come to appreciate when biting into a steak. This was just one attempt at a straightforward preparation; I imagine marinating and grilling it could produce a more satisfying flavor and mouthfeel.

Meati also offers a crispy cutlet, like fried chicken, and a seasoned carne asada steak, augmentations that could well make the novel protein go down easier. And if customers get more accustomed to mycelium as a category, Meati could launch new products that don’t try to replicate the look and feel of familiar meats.

Ultimately, our mycelium is not an animal, so why don’t we let it shine for what it is?” Graves said.

Julian Spector is a senior reporter at Canary Media. He reports on batteries, long-duration energy storage, low-carbon hydrogen and clean energy breakthroughs around the world.