Beyond Meat’s IPO Bags $241M to Make Plant-Based Burgers Mainstream
A Beyond Meat burger is coming to a location near you—and soon. The food technology company’s upsized IPO has raised $241 million to finance plans to bring its plant-based “meat” to more grocery stores and restaurants across the country.
Beyond Meat priced its IPO Wednesday evening at $25 per share, which was the high end of its revised range. The El Segundo, CA-based company sold approximately 9.6 million shares at that price. Last week, Beyond Meat planned to offer 8.75 million shares in the range of $19 to $21 each, and this week adjusted that to $23 to $25 per share. The shares are expected to begin trading on the Nasdaq Thursday under the stock symbol “BYND.”
The underlying concept of alternative meat companies is that “meat” comes from proteins assembled in a particular way, and while for millennia meat proteins came from animals, these proteins can just as well come from plants. Beyond Meat says its proprietary manufacturing process uses heating, cooling, and pressure to “weave” yellow pea protein into a fibrous structure that has a meat-like texture. The process also adds amino acids, trace minerals, and lipids, which sizzle in a hot pan as they render from the patties and make the food products even more meat-like.
Founder and CEO Ethan Brown says in a letter accompanying the IPO prospectus that Beyond Meat wants to improve human health and alleviate the environmental impact of animal farms. He adds that the approach could also economically benefit rural communities.
“Instead of growing low-value commodity feed for animals, I see a future of farmers growing higher value protein crops for more direct human consumption via plant-based meat,” Brown says.
Beyond Meat’s biggest product is the Beyond Burger, but the company also makes products that square up against ground beef, sausages, and chicken strips. Those meat products generated $87.9 million in sales last year, a 170 percent increase compared to 2017, according to the filing. Retail sales from grocery stores such as Kroger (NYSE: KR), Albertsons, Wegmans, and Whole Foods Market account for most of Beyond Meat’s revenue. But the company is also seeing revenue growth from sales of its products in restaurants such as BurgerFi, Carl’s Jr., TGI Fridays, and A&W Canada. Beyond Meat is not yet profitable, recording a $29.9 million net loss last year.
The Beyond Meat IPO comes as consumer appetites grow for alternative meat products. Impossible Foods, a startup in Redwood City, CA, has commercialized a burger made from wheat and potato proteins and expanded its market presence primarily through restaurant sales. Last month, Burger King revealed tests of an “Impossible Whopper” at restaurants in the St. Louis area. The fast-food giant has since said it plans to roll out the Impossible Foods burgers to all of its US restaurants by the end of this year.
Beyond Meat will need to scale its operations to compete against a meatless burger sold in Burger King, the sixth largest US restaurant chain by revenue. The newly public company expects it will need to invest between $40 million and $50 million of its IPO haul into manufacturing. Another $50 million to $60 million is earmarked for research and development, as well as sales and marketing. Europe is one new market that Beyond Meat is targeting and the company plans to open manufacturing facility somewhere on the continent in 2020.
Prior to its IPO, Beyond Meat had raised approximately $200 million in financing. Its largest shareholders include Kleiner Perkins Caufield & Byers with a 15.9 percent stake prior to the IPO. Obvious Ventures and DNS Venture Partners each held an approximately 9 percent pre-IPO stake.
Photo by Beyond Meat