Foodtech NotCo raises US$85 million Series C for US expansion

Contxto – Chile’s hardest hitting footech, The Not Company—NotCo for short—, has reached another milestone. Not only has it announced that it is closing a Series C round worth US$85 million, but it is also looking to use that cash for its latest international expansion into the US.

Last week (23), sources reported that the foodtech was close to wrapping up US$85 million in funding.

Now, we can confirm that the investment round was co-led by Future Positive and L Catterton, the world’s largest  global consumer-focused private equity firm with a special portfolio especially set up for scaling Latin American startups.

Thus, according to TechCrunch the company’s valuation stands at US$250 million. What’s more, it may even become profitable by December of next year.

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NotCo products and strategy

The foodtech’s current portfolio of plant-based products includes mayonnaise, milk, ice cream, and more recently, meat. The startup already sells and distributes some of these eco-friendly edibles in supermarkets in Argentina, Chile, and Brazil.

However, a key to its growth is its distribution channels via partnerships.

To roll out its NotMeat and NotBurger products, for example, last February it allied itself with Papa John’s pizzas and Burger King in its native Chile. That way, consumers looking for substitutes could taste NotCo’s offerings in their full meat-free splendor.

• Related article: Open a restaurant in the middle of a pandemic? Why Not, says NotCo

Regardless, evidence points to its alliance with “BK,” being a key ingredient in its recent success. Sources reported that NotCo manages to sell 48 sandwiches per Burger King restaurant every day.

NotCo expands to the US market

The new funding comes as the company announces scaled up operations and marks plans for international expansion leading with an entry into the United States.

Now, although one wouldn’t say that the US is a saturated market for plant-based food substitutes, the local competition there is fierce. 

The NotCo team clearly understands the magnitude of their undertaking. Beyond the newfound millions they’ll be investing in the expansion, the company’s co-founders, Matias Muchnick (CEO) and Karim Pichara (CTO), will setting up shop personally in the US to accelerate the process. 

Furthermore, according to Businesswire, the scaleup has assembled a dream eam of global corporate talent:

• Flavia Buchmann, formerly at the head of Sprite’s global business for Coca-Cola will now be NotCo’s global CMO charged with building the brand’s global presence and consumer acquisition.
• Luiz Silva, formerly at Danone, previously led NotCo’s expansion in Brazil and will now take the lead of the company’s Global Business Development.
• Catriel Giuliano, also formerly at Danone, is in charge of R&D, as an expert in global innovation and plant-based ingredients.
• Jose Menendez, formerly at Jeffries and Tapad, a New York-based tech-company, leads Operations as NotCo’s global COO.

NotCo covering the Americas? NotMexico 

“NotCo is pursuing a fundamentally original way of replacing animal-based foods with more sustainable alternatives,” said Ramiro Lauzan, Partner at L Catterton Latin America.

Few people would deny that the startup’s leveraging of Artificial Intelligence to make plant-based dairy and meat substitutes is innovative. But I am also interested in NotCo’s innovations (or lack thereof) as a scaling startup.

I’m not dissing NotCo, but I am intrigued at how its expansion has followed an almost idealized path followed by innovative startups founded in countries with limited market sizes.

It is always fascinating to see how each Latam country’s startups tend to behave in the ways that best suit them for success.

Startups from Brazil famously doesn’t mess around when scaling. They first focus hard on their massive local market and then scale worldwide, hitting the Asian, European, and American markets.

Indeed, just last week (1), Fazenda Futuro—another plant-based footech—secured US$21 million to launch into the US.

Then think of Bolivian startups’ strategy. They have a tried and tested method of scaling quick and to nearby markets. 

And of course, there’s “The Chilean Model” of first taking over the Southern Cone and then striking out to the big time: this time, the American market.

This tells me that the gravitational pull of a market’s size, closeness, and purchasing power is still far stronger than any institutionally built stimulus for expansion. 

Indeed, Mexico’s notorious exclusion from NotCo’s shows that bodies for regional integration, such as the Pacific Alliance, have their work cut out for them. 

So, the question remains, will NotCo enter the Mexican market through the backdoor via the US? It’ll either be that, or I’m going to have to start smuggling the stuff myself.

Related articles: Tech and startups from Chile!

-ML, AG