Why Chinese Alt-Protein VC Dao Foods Is Now Focused On Ingredient Startups

Dao Foods, a China-focused alt-protein VC, is now turning its attention to supply-side solutions in the country’s burgeoning food tech ecosystem. After backing a number of consumer-facing startups in its first incubator cohort, the company is now welcoming its second group made up of five novel protein ingredient suppliers, from upcycled okara to microalgae. 

Dao Foods has just announced its second cohort of China-focused startups, made up of companies who are offering novel ingredients to support the production of sustainable animal-free proteins in the country. The latest investment is part of Dao Foods’ plan to back 30 China-focused alt-protein startups within the next 3 years. 

‘We need supply-side solutions’

Albert Tseng, co-founder of Dao Foods, says that its incubation program is now turning to “support more supply-oriented companies that are using science and technology to cultivate novel proteins that offer new functionality and scalability.” 

“In our Incubator’s first cohort, the majority of our companies were consumer-facing companies that have been directly introducing exciting new alternative protein foods in the market,” Tseng explained. “We need both demand- and supply-side solutions, and we are seeing more and more innovators spanning this spectrum across different regions of China.” 

Dao Foods’ incubator offers mentorship, funding and workshops to entrepreneurs developing sustainable food solutions that are focused on the Chinese market. Its latest cohort is based across different regions in China, including Shanghai, Shandong and the Special Administrative Region (SAR) of Hong Kong. 

Novel protein and ingredient suppliers

One of the startups that Dao Foods is backing is Shanghai Protein, which is upcycling okara, the soybean pulp byproduct of tofu production, into a sustainable protein powder that can be used to make healthy protein-rich food products. 

Also based in Shanghai is ShiShen Food Technology, a company collaborating with the Shanghai University of Traditional Chinese Medicine and the Chinese Academy of Sciences to develop Chinese medicine-driven functional vegan-friendly food products and ingredients. 

“The game changers will be those entrepreneurs who know how to conquer the stomachs and minds of China’s mainstream consumers,” said Dao Foods co-founder Tao Zhang, who went onto highlight that mass consumer adoption of sustainable proteins in China will require China-tailored solutions, such as the products that their cohort of entrepreneurs are developing. 

The other companies to join the incubator include Qingdao-based Blue Canopy, a mycelium fermentation and precision fermentation ingredients supplier, and Geb Impact, the Hong Kong-headquartered startup fermenting microalgae for alt-protein products like vegan meat substitutes. 

For the first time, Dao Foods is also supporting a cross-border cell-based company from the U.S., Cultured Decadence, which says that China will be a core part of its business strategy. The firm is the first American startup dedicated to culturing shellfish. 

‘Creating a hub of alt-protein entrepreneurs’

Speaking with Green Queen Media, Tseng says that Dao Foods’ ultimate goal is to “create a hub and critical mass of alternative protein entrepreneurs” through its investments and incubation programs. 

“Chinese consumers are curious about alternative proteins, but the market is still very early, as evidenced by the plethora of limited time offerings. We are looking for entrepreneurs with products and marketing plans that have a chance for long term success with local Chinese mainstream food service partners and retailers,” he continued, citing Starfield as one of the homegrown success stories. The company, which makes seaweed-based vegan meat, has collaborated with fast food giants like Dicos to launch nationwide. 

“Our portfolio companies can learn from each other and help each other better understand the various consumer segments of the diverse Chinese market.” 

Lead image courtesy of OmniFoods.