Aleph Farms: Cultivated Meat Startup Hits Funding Woes, Adjusts Valuation to ‘Reflect Market Conditions’

Israel’s Aleph Farms, a pioneer of cultivated meat, has lowered its valuation by 73% in its upcoming funding round; the firm says adapting to “changing market conditions” is necessary.

As food tech companies feel the pinch, Israeli-cultivated beef producer Aleph Farms has been forced to slash its valuation as part of an “emergency fundraising” round, according to tech publication Calcalist.

The company has reportedly been aiming to secure $25M from investors “to stay afloat”, though is so far expected to raise only $10M in the coming weeks based on reports from shareholder Millennium Food-Tech.

As per Calcalist, this new round would be based on a valuation of $80-100M, representing a 73% drop from the $300M valuation in its Series B funding round in 2021. Millennium Food-Tech itself slashed the value of its stock in the company by 75%, suggesting that Aleph Farms “does not have sufficient cash reserves to continue its operations in the coming year”.

“Aleph Farms is in the final stages of closing the first round of a fundraising cycle that began in 2024, adding to the bridge investment secured in 2023 – a testament to the company’s resilience and the confidence of its investors,” the company said in a statement sent to Green Queen.

“This funding will strengthen financial stability, extend cash reserves, and enable the launch of the world’s first cultivated beef steak in restaurants, in collaboration with Chef Eyal Shani.

“Like all companies in our industry, Aleph Farms is adjusting its valuation to reflect market conditions in 2024-25, proactively aligning with broader market trends. We view [this] as a natural and healthy adjustment following the enthusiasm of 2020-21.”

‘Our situation isn’t unique’

Since it was established in 2017, Aleph Farms has raised over $118M from investors. This included the $105M Series B round in 2021 (with Hollywood stalwart Leonardo DiCaprio joining as an investor), reflective of the mid-pandemic venture capital boom in alternative protein.

But inflation – a result of both Covid-19 and the ensuing wars in Gaza and Ukraine – and misinformation campaigns from the meat lobby have scuppered the sector’s momentum since. In 2021, cultivated meat startups raised $1.3 billion globally. Last year, however, they secured just over a tenth of that, raising $137M (and only $6M in the second half), according to Net Zero Insights data obtained by the Good Food Institute.

Several firms have ceased operations, while others have been forced to make cutbacks – this includes Aleph Farms, which made 30% of its domestic staff redundant last summer as part of an “asset-light” strategy.

“Like any organisation, and especially one developing innovative and groundbreaking technology from Israel, we are also affected by market conditions and the geopolitical situation. We must adapt to the global economy while focusing on leaner budget management,” the company said.

A spokesperson for Aleph Farms told Green Queen: “I don’t believe our situation is unique – companies in our field must demonstrate a clear path to short-term profitability, alongside low-cost production, and strong customer demand.”

They added: “As we anticipated a few years ago, consolidation is inevitable and represents a natural evolution for an industry like ours. Those who can adapt to changing market conditions will be the ones who thrive in the long term.”

Aleph Farms tightens focus with three-pronged strategy

In the last year, Aleph Farms has been looking to expand its operations globally, after receiving the go-ahead to sell its cultivated beef steak in Israel in December 2023. That was contingent on the company clearing a Good Manufacturing Practices inspection for its production facility, on which there has been no public update yet.

The startup, which has previously outlined its aim to reach $1B in revenue by 2030, is currently awaiting regulatory approval in Singapore, the UK, Switzerland, and Thailand, and has been in “advanced pre-submission consultations” in countries including the US. It plans to eventually expand into Japan, South Korea, Australia, China, and Hong Kong too.

In 2022, it opened a 65,000 sq ft plant in Rehovot, Israel, allowing it to initially produce 10 tonnes of cultivated steak annually, before acquiring another manufacturing facility in Modi’in and signing co-manufacturing deals with ESCO Aster in Singapore and biotech firms in Thailand.

However, it is now focusing on three strategic priorities: optimising production and reducing costs, commercialising its first product and demonstrating market demand, and achieving profitability. “These goals now take precedence over the aggressive expansion of production capacity, which was a central part of our plan in 2021,” the company said.

“In recent months, Aleph Farms has achieved significant breakthroughs, including a 97% reduction in production costs compared to 2022, signing commercial agreements with leading global food corporations, and demonstrating market demand through collaborations with chefs in four countries,” it added.

“Additionally, following regulatory approval from the Israeli Ministry of Health, we are preparing to launch our product in Israel, leveraging an improved production platform and building our brand in collaboration with key industry players.

“Aleph Farms continues to lead the field of cellular agriculture worldwide, driving meaningful change in food systems – towards a safer, more sustainable, and resilient future.”