The Next Wave in Plant-Based Alternatives: Our Series A Investment in New Wave Foods

Jan 06, 2021

Plant-based alternatives have stormed the red meat market over the last several years, and we believe the seafood market is poised for similar disruption—this coming wave is one reason we’re thrilled to announce NEA’s Series A investment in New Wave Foods.

Plant-based proteins are not a new phenomenon. In fact, it’s been almost a century since the first commercially available vegan meats were developed. Yet plant-based protein products today are one of the most important consumer trends we’ve seen in decades, with a rapidly growing target audience of ‘flexitarians’ (i.e., semi-vegetarians) finally propelling these products into the mainstream.

Americans consume 1.5 billion pounds of shrimp annually (more than any other seafood), with about 92% imported from other countries. This reduces the cost to consumers, but exacts a far steeper price by many other measures, including consumer health, environmental impact, resource sustainability, and working conditions. New Wave Foods aims to provide consumers with an uncompromising seafood alternative—starting with shrimp and shellfish—that is delicious and truly healthy, with none of the social or environmental downsides.

We did the diligence equivalent of a deep-sea dive before investing in New Wave Foods, and what we learned about the shrimp supply chain alone could be fodder for multiple blog posts. We’ve summarized some of our learnings below, but the most important takeaway for us as investors was that New Wave Foods was the company we wanted to back in this space.

When we first met the team at New Wave Foods, we were immediately impressed with their thoughtfully developed intellectual property, drive and sense of mission, paired with combined decades of experience in the food industry. CEO Mary McGovern has significant leadership experience in the food industry, building consumer brands such as Maxwell House, Post Cereals and Ocean Spray. She has been deeply focused on the plant-based food industry in recent years, spearheading the branding of several successful plant-based businesses as managing director of a brand consultancy. Mary is perfectly complemented by co-founder and CTO Michelle Wolf. An engineer who is passionate about protecting the world’s oceans, Michelle has focused her career thus far on creating an environmentally responsible and commercially viable plant-based alternative to ocean shrimp. She was recently recognized for her work as a Forbes 30 Under 30 honoree (in the food and drink category) and is the driving force behind New Wave Foods’ product development and efficient scaling.

New Wave plant-based shrimp is a 1:1 swap for ocean shrimp in any recipe and delivers these additional benefits:

  • Sustainable: responsibly sourced with complete traceability

  • Cholesterol-free: compared to ocean shrimp (which has nearly two-thirds of the recommended daily limit per serving)

  • Non-allergenic: none of the top 8 allergens; in addition, people who have shellfish allergies or eat kosher can enjoy New Wave plant-based shrimp

Plant-based protein is winning market share at a rapid clip, with 44% of U.S. consumers identifying as flexitarian (vs. ~5% identifying as strict vegetarian) and meteoric growth for red meat replacements such as Impossible Foods and Beyond Meat. Modern consumers are increasingly aware of the significant health and environmental downsides of mass-market seafood (the kind you typically find in the grocery store), and the seafood supply chain for shrimp in particular abounds with severe health, social, and environmental problems. A few cases in point:

  • High carbon footprint: in addition to the high carbon footprint associated with importing shrimp, shrimp cultivation contributes to the accumulation of atmospheric CO2 via the destruction of key carbon sinks. Mangroves account for about 15% of all oceanic carbon sequestration and, pound for pound, can sequester four times more carbon than rainforests. About 40% of mangrove forests have been lost since 1980, and shrimp farming (which accounts for more than half of shrimp imported to the U.S.) is the single greatest culprit.

  • Severe ecosystem pollution: streams of chemicals, antibiotics, and other waste from shrimp farms pollute groundwater and coastal estuaries, damaging the foundation of wetland ecosystems (which are, without exception, carbon sinks). The health of these wetland ecosystems is not only critical to local flora and fauna, but to global climate sustainability.

  • Unsustainable depletion of critical marine populations: fish stocks used in the feed for shrimp deplete an important ecosystem constituent, harming the health of marine food chains as a whole. Shrimp farmers also catch young wild shrimp to stock their shrimp farms, further eliminating local populations of fish.

  • Material health risks: in addition to having higher cholesterol than most ocean fare, there are numerous health risks associated with consumption of ocean-based shrimp. Unintentional excess consumption of antibiotics due to high levels of antibiotics used in shrimp farming can lead to a range of associated health impacts including digestive problems, importing or breeding antibiotic-resistant pathogens, and generally harming one’s microbiome. More than 400,000 Americans become ill every year from consuming bacteria such as salmonella and campylobacter that live on shrimp and other foods. This issue is particularly acute in the U.S. because fish rejected for contaminants by the EU (which has more a stringent testing protocol for imported shrimp) is often repackaged and imported to the U.S., resulting in a disproportionate amount of contaminated shrimp in the U.S.

  • Rampant fraud and corruption: while the U.S. FDA rightly prohibits using antibiotics in shrimp farming and forbids the import of antibiotic-containing shrimp, fraud and non-compliance by bad actors in the shrimp supply chain often thwart these efforts. The FDA tests about 1% of all imported shrimp for antibiotics, drug residue, pathogens, and other contaminants, with approximately 15% of stocks tested shown to contain illegal antibiotics and 12% testing positive for other unsafe drugs and chemicals. Randomized tests at points of purchase (e.g., grocery stores, restaurants) reveal that approximately 50% of shrimp contain harmful substances and do not meet FDA standards.

  • Severe human labor violations: worker abuse—especially of children and migrants—is prevalent within the global shrimp industry. Child labor and forced labor are often rampant on shrimp farms and shrimp-fishing ocean vessels, according to research from the Solidarity Center, while migrant workers in the shrimp trade are often subject to stolen wages and being sold into debt bondage.

    Our research pointed to a firm conclusion: consumers deserve a responsible, humane, healthy, sustainable, and tasty alternative to ocean shrimp and other seafood. We're beyond excited to announce our Series A investment in New Wave Foods and embark upon this journey with Mary and the New Wave team. Finally, we look forward to enjoying New Wave plant-based shrimp in many restaurants soon!

    Thanks to Andrew Schoen, Jordan Shapiro and Jess Ou for contributing to this piece and to the Cornell Venture Capital Club for initially bringing this opportunity to our attention.