Startup Series: Hoxton Farms’ Cruelty-Free Fats
Max Jamilly, CEO and Co-founder at Hoxton Farms. And today, we're talking about fat.
Hoxton Farms, a London-based startup, grows and sells animal fats without animals. They aspire to be an ingredients provider; cultivating fats via bioreactors and selling cruelty-free and sustainable fats to other food brands, starting with meat alternatives.
It's been a challenging time for the alt-meat space, and we were eager to hear how Max feels the industry will develop and the role Hoxton Farms can play therein. He's also got a vision for how Hoxton Farms can expand beyond that initial market over time. Hoxton raised a series A led by Fine Structure Ventures and Collaborative Fund in late 2022, in which MCJ is proud to have participated. So grab a plate and let's dig in.
Episode recorded on June 26, 2024 (Published on July 18, 2024)
In this episode, we cover:
[1:37] Intro to Hoxton Farms
[2:36] Founders' background: Max Jamilly and Ed Steele
[5:51] Meat alternative industry: Challenges and opportunities
[9:00] Expansion potential beyond meat alternatives
[12:56] Cost parity with traditional animal fats
[17:08] Scalability, production, and commercialization plan
[18:51] Consumer appetite for meat alternatives
[24:49] Regulatory environment and labeling requirements
[32:56] Hoxton Farms' pork fat cultivation process
[34:48] Potential for genetic engineering in cultivation
[40:18] Overview of Hoxton's facility
[42:48] Capitalization and financing history
[46:13] Importance of branding and merchandise
[47:21] Hoxton Farms is hiring!
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Cody Simms (00:00):
Today on MCJ's Startup Series, our guest is Max Jamilly, CEO and co-founder at Hoxton Farms. And we're talking about fat. Hoxton Farms, a London-based startup, grows and sells animal fats without animals. They aspire to be an ingredients provider. Cultivating fats via bioreactors and selling cruelty-free and sustainable fats to other food brands, starting with meat alternatives. It's been a challenging time for the alt-meat space, and I was eager to hear how Max feels the industry will develop and the role he feels Hoxton Farms can play therein. He's also got a vision for how Hoxton Farms can expand beyond that initial market over time. Hoxton raised a series A led by Fine Structure Ventures and Collaborative Fund in late 2022 in which MCJ is proud to have participated. So let's dig in. But before we start, I'm Cody Simms.
Yin Lu (01:02):
I'm Yin Lu.
Jason Jacobs (01:04):
And I'm Jason Jacobs. And welcome to My Climate Journey.
Yin Lu (01:10):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (01:15):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
(01:29):
Max, welcome to the show.
Max Jamilly (01:30):
Hey, Cody. Great to be here.
Cody Simms (01:32):
We are going to talk about fat. Sounds great. So tell me quickly, what is Hoxton Farms?
Max Jamilly (01:37):
Fat is great. At Hoxton Farms, we grow real animal fat, but without the animals. Our cultivated fat comes from stem cells and it's an ingredient to make meat and meat alternatives taste incredible and look and cook just like the real thing.
Cody Simms (01:54):
And how did you decide this is the thing you wanted to do?
Max Jamilly (01:57):
I think food is the coolest thing in the world and it's one of the most powerful levers for changing the world that we have. I'm a cell biologist by background. I spend most of my career growing cells, which I was not allowed to eat, but I'm also really into food and I always wondered what they tasted like. So when my co-founder Ed and I realized that we had this incredible combination of skills and an ability to create a new category of food by growing and scaling cultivated fat for meat and meat alternatives, it became the right thing to do. And four years later, here I am and here's Hoxton Farms.
Cody Simms (02:33):
And you've known Ed since elementary school I think.
Max Jamilly (02:36):
Yeah. We go way back. And when I say way back, nursery school, 30 years, our families know each other. We weren't quite talking about making cultivated fat in the schoolyard, but almost. And we always thought about starting a business together. We had a few less successful ideas and in 2020 it was the pandemic, the world was falling apart. So we thought what better time to leave our jobs and start Hoxton Farms together.
Cody Simms (03:02):
And you mentioned that you have been growing cells in many different ways. Share a little bit more about your background there. And I believe you have a PhD in synthetic biology from the University of Oxford. So you're no slouch when it comes to this stuff.
Max Jamilly (03:16):
I'm a biologist by background and specifically I spent my career before Hoxton Farms doing synthetic biology, so building new things using tools from biology. I did an undergrad and a master's at Cambridge UK, first in biotech and then in business. Then I headed over to the other Cambridge in Massachusetts to work on using synthetic biology for industry. That company was acquired by Ginkgo Bioworks, one of the big perhaps notorious synthetic biology companies at the moment. But by then I was in Oxford doing my PhD. I spent my PhD using synthetic biology for something very different to food. I was doing drug discovery in leukemia, a childhood cancer actually, and trying to work out how to treat it better. But funnily enough, the cells I was growing and the science I was doing to work out what made them grow is really similar to the way that cells grow in animals that we eat for food.
(04:17):
And so towards the end of my PhD, I spent a couple of years working in early stage biotech venture capital, learning about how things work on the other side of the table. I spent some time working at a precision fermentation business making dairy proteins for milk and cheese and that business is doing really well now. But that takes us up to 2020 when Ed and I realized it was the right time to start Hoxton Farms. And Ed's background is in maths. He's a mathematician. He knows how to take really big data problems like scaling up an ingredient and optimize them to make them really cost-effective. So that's what we brought to the table together. But of course now all this amazing technical work is done by our brilliant team and we're there leading the company and sending lots of emails.
Cody Simms (05:08):
Okay. And so looking at the space overall, the whole background you just described sounds like the background that someone would go and say, "I'm going to grow salmon steaks," or, "I'm going to grow new pork chops." There are a lot of companies trying to create meat to eat in a lab, but you decided to take a different approach, which is not to grow the actual protein itself or the end product, but to grow a part of the overall food ecosystem, which is the fat that gets put into foods. How did you decide that was the thing you wanted to focus on?
Max Jamilly (05:51):
We made a really fundamental decision to grow fat as an ingredient. And there are two parts to it. There's growing fat ... Not say muscle, which is the other 80% of the pork chop or something else. And then the second part is the business model. It's the ingredient business model rather than selling the finished product. So maybe I'll start with fat. If you think about a pork chop or a steak roughly, it's 10 to 20% fat and 80% protein. Now the kinds of products that we make are what's called hybrid products. They're a combination of some cell-based ingredients and some plant-based ingredients. The plant-based meat out there right now is fully plant-based. It's got plant-based oils or fats and plant-based protein. The plant-based protein actually performs pretty well. It provides structure and bulk, often a bit of flavor, but it's the plant oils.
Cody Simms (06:48):
These are typically ... I think I know. A pea protein usually creating the protein structure and then the fat, maybe some kind of coconut oil or soybean oil. And you get some negative feedback that these types of products basically promote monocropping and promote growing an excess of a certain type of plant to solve a different human food problem.
Max Jamilly (07:13):
Yeah. You're quite right. Your typical plant-based meat product is pea, soy or wheat protein plus coconut palm or vegetable oil. Doesn't sound very appetizing. And it doesn't taste great either. 50% of consumers don't repeat purchase today's meat alternatives and the main reason is taste. After that it's health and price. And then actually fourth on the list is sustainability. The effect of those ingredients being often heavily monoculture or tropical crops on the planet. And then lastly, people think about the effect on animals as well. The problem that we can fix with fat is taste above all because taste is what's wrong with today's meat alternatives. They don't smell and sizzle and brown like the real thing and that's where the fat comes in. And if you think about this hybrid that's 20% fat and 80% protein, we only need the 20% fat to make a massive difference to the finished product.
(08:17):
Fat as an ingredient. We call it low inclusion, high impact. With a small amount of fat, you can go a really long way. Compare that to making cultivated muscle, which would be the 80% of the pork chop. You need to make 80% of it. And even then it doesn't do that much better than plant protein because muscle is for structure and protein's pretty good for structure. It's fat that's for taste and plant oils are really bad at taste. This is the big reason for focusing on fat. It's that fat is the magical difference that makes satisfying meat alternatives and with a small amount we can allow consumers to get the best of both worlds. They can enjoy a meat alternative without having to compromise on taste.
Cody Simms (09:00):
So this is a little bit of a tricky needle to thread. Let me make sure I can spit this back. So it sounds like the real goal or aha was plant-based meats don't cook or taste quite right. We are going to thus grow an animal fat sans animal to apply to plant-based meat. The implication of that is your plant-based meat is no longer a vegan meat even though no animals were harmed in the making of that meat. Is the ultimate goal to help grow the plant-based meat ecosystem further? Is that where you see Hoxton Farms being able to contribute? And if so, it sounds like you're expecting there to be a consumer appetite that doesn't really care about necessarily veganism, it just doesn't want to eat an animal. Help me understand, make sure I'm articulating the why or the outcome here appropriately.
Max Jamilly (09:55):
It's fascinating, isn't it? We're creating a new category and it's when you're creating those new categories that common logic or vocabulary don't really work. We are creating a world where the meat, or call it meat alternatives that people eat are a combination of ingredients from cells and ingredients from plants. And frankly, there might be some ingredients from animals in there too, but the alternatives that people eat will be better for them, better for the planet, they'll be affordable and they won't need behavioral change because they'll taste really damn good as well. Now what we make is vegetarian but probably not vegan. It's vegetarian because it comes from animals, but it's cruelty-free like today's eggs or dairy. And in fact, I'd say it's a lot more cruelty-free than traditional eggs or dairy, which are pretty nasty industries. What we make is not vegan in the traditional sense of the word because it comes from animals, but I don't think the term vegan is fit for purpose anymore.
(11:01):
If you speak to a lot of vegans today, they're vegans for ethical or sustainability reasons and what we make is ethical and sustainable. Of course there are vegans for religious reasons and they may be less comfortable eating cultivated fat. Across the board though I don't care whether it's vegan and I don't care because the target market is not vegans. 90% of people who buy meat alternatives are flexitarians. They eat meat, but they're trying to reduce the amount of meat that they eat. Primarily because they think of themselves their own health, but also because they care about the planet and about animals. Those are the people we're selling to. They don't look for a vegan label. In fact, some of them are turned off by a vegan label because it suggests a compromise, it suggests it might not taste good. And from a sustainability perspective, vegans are not our target market because they're a solved problem, they're not eating meat. And of course to be the most sustainable, not eating meat is the best thing you can do. The issue is that most people aren't going to give up meat entirely.
(12:06):
I think there's a good analogy with electric vehicles. Most people agree that driving an EV is better than a traditional combustion vehicle for the planet, but very few people were willing to make that switch when EVs were expensive and practical and un sexy. Then great alternatives came along that meant you didn't need to compromise. You could have your cake and eat it, and all of a sudden EVs have become really widespread. We're trying to do the same thing with meat alternatives and this is the magic of fat. With just a small amount of fat, you can flick that switch and make them incredible.
Cody Simms (12:40):
And do you believe you get to a world where pound for pound or kilogram for kilogram, your lab-grown fat or cultivated fat is price competitive or even cheaper than the end-to-end similar amount that came from an animal?
Max Jamilly (12:56):
Yes. Taste is king here, but price is just as important. If we don't get price right, these products cannot become mass adopted. Our cultivated fat at scale will be the same or cheaper than the production cost of traditional fat in an intensive farm. And that makes sense, right? It's an incredibly efficient process. We only grow the stuff that we eat. We grow it at very high densities and in facilities that are really well controlled. It's actually remarkable that we can match the price of traditional pork because the traditional pork industry is hundreds, maybe thousands of years old and it's really heavily subsidized in most markets as well. So I predict that over time those subsidies will wane. The cost of doing traditional intensive agriculture will spike significantly as the climate changes and our product will become even more cost competitive. Now, the consumer probably isn't buying cultivated pork fat. They're buying a product that contains what we make. And so the biggest challenge or biggest goal is making a B2C product that's at cost parity with its traditional equivalent. That's a way of saying our hybrid pork chop or pork belly needs to cost the same as the conventional pork belly, but we're getting there too. And that comes from, again, just driving the cost down, making really great formulations.
Cody Simms (14:26):
So it strikes me that obviously in the immediate term it's all about getting the technology right and scaling up production. But in the medium term you have to be able to beat out plant-based oils and plant-based fats from a taste and quality perspective such that your meat alternative companies will want to switch to you and can figure out the marketing language of how they discuss their product. They maybe can't call it a vegan product, et cetera. But there's a category there that can and you're hoping or betting will emerge. That's this hybrid meat alternative product. But it strikes me if at long-term, if you can get to cost parity with an animal fat itself, your product could also go into other processed foods and other categories that need meat fat in them, not just an alternative pork chop, but a canned stew for example I would think.
Max Jamilly (15:26):
Your on the money. We are an ingredients company. We want to sell our awesome ingredient for as many applications as possible. Meat alternatives is one of the beachheads, but it's by no means the only place where fat gets used for food. And indeed, there are interesting markets outside food too. So within food, putting aside meat alternatives, we've shown you can use our pork fat in real meat applications like sausages. In bakery, in confectionery and soups and sauces and flavorings. We're working on an incredible broth for noodle soup, which I strongly recommend. Then outside human food, there's pet food. Enormous market. Very different market structure. Something we're super interested in and beyond food. There are markets like cosmetics which heavily depend on traditionally ingredients derived from fats and now they have to use substandard and also less sustainable alternatives. Even taking a step back, we've built a platform for making any ingredient with cells cost-effectively and scalably, and so it doesn't just have to be fat. We can make other cell types too and we're beginning to explore those on top.
Cody Simms (16:43):
Fascinating. But obviously to get to that point, you have to have enough market penetration that you can scale your technology and scale your production methodologies and thus the hybrid meat alternative space in the beginning because presumably you have some interested buyers in that category. Can you share a little bit more there on what the commercialization pathways look like in the immediate term?
Max Jamilly (17:08):
Definitely. As a B2B ingredient supplier, our revenue model is selling ingredients to our customers. Those customers combine our ingredient with other ingredients in a formulation. They manufacture a finished product and they sell it. So primarily we depend on selling the ingredient. Although with early customers, we may do a revenue share on the sale of the finished product as well. We're working over the next year as we gear up for our commercial launch with these B2B customers to co-develop incredible products. That means holding their hand as they learn how to use our fat, which is mostly a straight swap into their existing manufacturing processes and then also they work with our chefs to make incredible finished products that really show off just how good the fat can be. We're already working with big CPG meat and meat alternatives companies with their own in-house brands in the UK, in the US and particularly in Asia, which is where we're focusing for our commercial launch in 2026.
(18:15):
We're doing paid partnerships with those customers. They are using the ingredient that we're making at our pilot facility here in London and we're gearing up to do small commercial trials. By the end of 2025, we will get regulatory approval, which is one of the preconditions for us to sell the product, and then those products that we're making with these B2B partners will go to market initially in premium food service, which is a good fit for our small scale costs and small scale production, and then as we grow, we go into more mass food service and then of course into retail as well.
Cody Simms (18:51):
And where are we in the consumer appetite for meat alternatives? I think the business struggles of in particular Beyond Meat and Impossible Meats, which are public companies that are traded wholly on that space are quite well known over the last call it year and a half, two years. What is the actual market development looking like across the range of products that are out there?
Max Jamilly (19:19):
Meat alternatives don't look as rosy as a market as they did a couple of years ago, that's for sure. I'll say as an ingredients company, it's nice that we can play in multiple different markets. But this particular one, meat alternatives where we spend some of our time is not doing well and really that proves our value proposition. So to be more specific in the US the market is just about flatlining. In the UK and Europe it was contracting, now it's flat. In Asia, the market continues to grow robustly, but it's probably in a younger phase of growth. The biggest reason that consumer interest in meat alternatives has waned is taste. Many consumers ... I said before, 50% of them cite that the reason they don't repeat purchase is the products just don't taste good enough. Next to that, it's price. People talk a lot about the idea of meat alternatives being ultra processed as well, and some of them are uncomfortable with the number of ingredients or whether they're actually very healthy.
(20:26):
Now, what this means is that meat alternatives companies know they need their products to taste better and the way that they do that is by using ingredients like cultivated fat. In many ways ... I don't know if you've eaten meat alternatives recently, lots of them don't taste that good. It's remarkable that this is still an $8 billion market worldwide given how much people have to compromise. They often have to pay more and eat something that doesn't taste as good and doesn't work in the recipes that they know and love, and yet they still buy meat alternatives, which to me demonstrates an incredibly strong latent demand for something that is better for them and better for the planet. With cultivated fat, we can satisfy that. But it will take a few years to recover.
Cody Simms (21:09):
What do you think the space will look like five, 10 years from now?
Max Jamilly (21:12):
People will still eat steaks. People will still enjoy premium traditional meat. That market, which has taken a very long time to build up is going to disappear slowly and then quickly, but a decade from now, it'll definitely still be around. But stepping away from the premium whole cut steak, something like 70% of the meat that we eat is structured meat alternatives like bacon and pork belly and sausages. Some of those will be hybrids combining plant-based ingredients and cell-based ingredients, and then the unstructured meat alternatives, things like nuggets and meatballs and burgers, a really big proportion of those will contain cell-based ingredients. That's why cell-based ingredients can make the biggest difference the quickest. Because they bring taste and health and functionality that plant-based ingredients just can't. So many times a week we'll be eating meals and the protein center of plate in that meal will contain some cell-based ingredients and of course when it's a proudly fatty dish like a pork belly or bacon, it'll be Hoxton Farms' fat.
Cody Simms (22:24):
I remember when I was growing up ... And I don't know if this is true. But the rumors were that McDonald's hamburgers weren't 100% beef, that they had soy and other things in them. Again, I don't know if that was true or not. But it seems like the idea that certain products can be a blend of ingredients has certainly been around for a while now.
Max Jamilly (22:44):
Yeah. You're right, and that cuts both ways. If it was a rumor during your childhood that McDonald's was like cutting their burgers, I'm sure people didn't think that was a good thing and so this plays into consumer acceptance. How do you convey that combining different ingredients can make a product even better, especially when you're competing with traditional meat, which consumers perceive to have only one ingredient? You turn over a burger and a high quality burger might just say ground beef, salt and water on the back or maybe even just ground beef. The hybrid in the best case might say plant protein cell-cultivated beef fat and salt, and that's going to take some consumer acceptance. But generally people are comfortable eating new things if they taste good because they vote with their stomach and if they're affordable and I think we can therefore tackle that issue without falling prey to what McDonald's might have done in the '90s.
Yin Lu (23:48):
Hey, everyone. I'm Yin, a partner at MCJ Collective, here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established and a bunch of hiring has been done. Many early stage investments have been made as well as ongoing events and programming like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, art workshops and more. Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (24:49):
Okay. You've mentioned Asia is a focus for you right now. You said the market is continuing to grow there currently. I assume there's some regulatory reasons why Asia also is important. Can you talk about the overall regulatory environment of growing meat in a lab and what the adoption cycles look like for that?
Max Jamilly (25:10):
Regulation is fascinating. I never quite thought I'd say that Cody, but it's such an interesting combination of business and scientific factors in our space. And of course it's so critical in our ability to go to market but then also build a motor around our market position once we're approved. Cultivated meat like any novel food needs, regulatory approval before you can sell it. That would be the same for new ingredient for chocolate bars or something. But of course for something as new as what we make, it's a little bit more involved. In each country cultivated meat or fat needs separate regulatory approval. Although we make fat tissue, the approval process is the same as for the cultivated meat companies who grow muscle. So far, just a few cultivated meat products have been approved. A couple of them in Singapore, both from bird cells, one is cultivated chicken, one is cultivated quail, and also a couple in the states both cultivated Chicken. Australia, Israel Switzerland, the UK are not that far behind and the EU is hurrying along in its own way as well.
(26:19):
Specifically at Hoxton Farms, we're in the process of applying for regulatory approval in the US, the UK and Singapore. Right now, our regulatory work is led by Vítor who was the first person in the world to get cultivated meat approved anywhere. He did that at his former role in Singapore. And we're expecting to get approval by the beginning of 2026 if not before. There is political risk for approval as well. I never thought as founder of a tech company, I would be spending so much time talking to regulators and politicians, but we need to guide them through this process. We need to deal with the agricultural lobby, big meat who are trying to prevent cultivated meat from entering the market and competing with them. It's a really fascinating challenge, but it's fun.
Cody Simms (27:07):
Now as an ingredients company, how much of the regulatory burden falls on you and how much falls on the partners who are putting your ingredient into an actual consumer product?
Max Jamilly (27:17):
Almost all of the burden falls on the ingredient, which is a good thing. It means we can get our ingredient approved and then our customer is free to use it. And that's the same with all of the other ingredients that the customer might be using. In some markets labeling, which is the final part of the approval depends on the finished product, not just the ingredient, so we might have to approach the labeling authority hand in hand with our customer, but we've got a good plan to do that in those markets.
Cody Simms (27:47):
Labeling meaning if you are able to call it plant-based or vegan or this, that and the other?
Max Jamilly (27:53):
Yeah. It seems like a small thing, but what the hell do you call it? The products in Singapore in the US on the menu and on the retail pack are called cell-cultivated chicken, and we think it's very likely our products will be called cell-cultivated pork fat. The pork bit's important because our first product is pork fat. It comes from pigs, it tastes like pigs, and we want to keep that species identity. But we do have to work that out. Is it going to carry a vegetarian label? There's a big question.
Cody Simms (28:23):
So that would be the thing that shows up on the ingredient label on the back, and then presumably there's also the whatever kind of stamp thing they can put on the front that would be the equivalent of USDA organic calling it something. I would guess there needs to be a definition of what this category looks like too.
Max Jamilly (28:39):
Or maybe initially the category is undefined and we work out the definition based on the market response. We know that we want the product to carry the Hoxton Farms brand, even though we're a B2B Intel inside type model. We think that the cultivated fat or whatever it's called at market is going to be one of the big driving factors behind the consumer purchasing decision. They're going to look for cultivated fat and that probably means looking for the Hoxton Farms stamp on the menu or in the grocery store aisle. But there are questions to keep working out here. People have been launching new foods for a really long time and you have to get it right because people are obviously concerned about what they put inside their bodies, so we're thinking about it really carefully.
Cody Simms (29:24):
Now, you are a venture-backed startup, so to some extent there is a world where you see a potential near monopolistic pathway to your company where you can be the category owner of the cultivated meat space. What creates moats around your technology here that might allow you to do that?
Max Jamilly (29:49):
It's so interesting applying venture models to food because traditionally it hasn't been done that much. And regulation and tech are two of the biggest ways that we can build moats that food companies formerly couldn't. In the past, tech didn't mean that much in food because it was very easy to reverse engineer some food. You could take the sausage and work out how the sausage was made and then make your own. Cultivated fat is really difficult to make. We've got a very deep tech stack combining a lot of hardware, biology, and software IP, including a big pattern on the bioreactors that we use to grow the cells, which was granted earlier this year. Together, all of that tech builds a big moat that we think would make it impossible for anybody to grow fat in a particular way into the scale and cost and quality that we do. Or if they tried it would take them a very long time to catch up.
(30:47):
The other moat here is regulation. Once we are approved products that aren't approved, we'll have a long way to go to catch up. And then the last thing here is our customers are difficult to acquire, but then they're very sticky and that becomes a big moat. It takes work to get a juggernaut CPG multi to change its formulations, but when they do, they become addicted to your ingredient. Even if it's 10, 20% of the final cost of materials, they can't make the product without our ingredient. The products are successful, so they need our ingredient, and that high switching cost becomes a massive moat for us as well. There are product types like pork belly that will be impossible to make without cultivated fat, and so we see that as a really long-term defensible monopoly, which is common to build in specialty ingredients in food.
Cody Simms (31:42):
Who should I think about when I think of large primarily ingredient focused companies?
Max Jamilly (31:50):
So there are some big ingredients and flavor houses. Some of them public, some of them private. People like IFF, AAK, Givaudan. Essentially all of the foods you buy in supermarkets contain flavorings or ingredients from those three companies or some similar ones. Remarkably for ingredients companies, they have margins in the 50 to 70% range like software because these are cheap to make, but at low inclusion, they have high impact just like cultivated fat and these guys trade at very big multiples as well because they're very defensible for the reasons I just explained. Although they don't have the tech that we do. We add the extraordinary defensibility that come from patents that you only get in biotech companies. This is where we're creating a new model of company value in food. It's this combination of biotech and food. It's taken people a while to get used to that model, but fortunately we're not the only company doing that. Others have done it successfully before.
Cody Simms (32:56):
Okay. Let's get into how the sausage is made, so to speak. Do you start with some kind of animal stem cell and grow or manipulate it from there? What does the actual cultivation process look like?
Max Jamilly (33:09):
So cultivated meat one-on-one. You take cells from an animal, you put them in a fermenter and convince them that they're still inside the animal, so they grow in just the same way and then they grow into meat and you harvest them at the end. Maybe I made that sound simple, so I'll zoom in a little bit. At Hoxton Farms, the process for making cultivated pork fat starts with stem cells, which we borrow a tiny handful of from a pig. We take the stem cells into our facility and we immortalize them. Immortalizing them means that they grow forever in the lab. We never have to go back to the pig unless we want a different breed or a different species or something. So to start the process, we take a tiny number of cells and we put them in this fermenter and feed them a mixture of sugars and salts and proteins, all of which come from plants. It's essentially what a pig would've eaten, but we digest it a bit before we give it to the cells.
(34:08):
The cells that we take from the pigs are the stem cells, which are the natural precursor to fat tissue. All they're doing is what they would've done in the pig anyway. In our process, they spend about a week growing and then another week or two developing into fat tissue. Fat tissue is the same as what you get in a pork chop from the butchers. It's fat inside cells all connected together with some protein. This grows in our fermenters, our bioreactors, and at the end of under three weeks, that's what we harvest and we simply wash it and sell it to our customers. That's the process.
Cody Simms (34:48):
I didn't hear you say that ... Obviously we talked about you've got a PhD in synthetic biology. It doesn't sound like you're doing genetic manipulation of the tissue or any of that though. If there's something going on there, certainly love to hear more about that too.
Max Jamilly (35:02):
The first product, Hoxton Farms cultivated Pork fat number one is not genetically engineered. Now that's because it will improve consumer acceptance. People have a way more open attitude to genetic engineering and food and it's actually very common in the US and UK in particular now. However, we're creating a new food. We didn't need to use genetic engineering for the first product, so it's easier to avoid it and it might make our regulatory journey a little easier as well. However, you are right. I'm a synthetic biologist. I firmly believe that dealing with the food security challenges that we face and also making some of the tastiest food we've ever eaten will come from using genome engineering safely and sensitively in our food as it's already been used successfully for quite some time. Genome engineering gives us really powerful levers to make our product more scalable and cheaper, but also unlock new tastes and new nutritional profiles, and that's work that we're already doing at Hoxton Farms and it will become part of our later products. Think a fat that has all the flavor, but half the saturated fat or maybe it has omega-sixes, which normally you can only get from fish or algae or maybe it has twice the melting temperature so you can cook it in a completely different way and unlock new flavors. It's pretty awesome.
Cody Simms (36:30):
Most genetic engineering has been done on plants to date, I believe. I assume there's less of it that's been done in the animal meat category so far. Is that a correct assumption?
Max Jamilly (36:42):
Yeah. That's correct. Most of the meat that we eat is fed genetically engineered crops, which are grown as animal feed. But most of the meat itself is not engineered. That's not because it's not allowed. At least in the UK, certain kinds of genetic engineering are completely permissible in food. It's just the technology is taking a while to develop. And I would say the smart money is not on engineering whole animals to be grown for traditional agriculture, but it's on engineering cells to be grown for the new kind of agriculture, cellular agriculture, which we do.
(37:19):
The biggest difference is the kind of genome editing that you do. The stuff that people didn't like back in the '80s and '90s was taking genes from one species and putting them in another species like bacteria genes in plants, which was pretty crazy stuff. Nowadays, the genome editing that's becoming more widespread is just changing genes which are already in the species that you're growing. It's like flicking light switches on and off, but the light switches are already there. That's a lot safer and it tends to produce results that you could have produced anyway using normal breeding programs, but it just does it in months instead of years.
Cody Simms (37:58):
Besides the emotional reaction people may have to genetic engineering of what are the actual downsides or risks that you have to mitigate against as you start pursuing that pathway?
Max Jamilly (38:12):
The real risks of genome engineering in food are extremely slim. It is all but impossible using genome engineering to produce traits in food, which you wouldn't have produced anyway by doing natural breeding. You can just get them more quickly. It is difficult to imagine a world where you made a trait that made the thing unsafe to eat. But that is what the stock gaps are there for. Any new food, even a new cultivar of a crop gets tested to see whether maybe by accident the plants made too much of a toxin or it might turn out that the meat has a lot more saturated fat than people should really be eating. Just like any food has a nutritional label. And those same nutritional standards and also allergen testing get applied to genetically engineered food and also to all of the food that you make, even if it's not genetically engineered using a process like cultivated meat.
(39:14):
The point is the safety standards for food are incredibly stringent. A country like the US probably has the safest food supply in the entire world, and it's because the FDA and the USDA are really good at their jobs. They've got incredibly strict standards and they apply them consistently and apolitically to all of the food that either gets made domestically or gets imported. Those same standards currently do and will continue to apply to cultivated meat, whether or not it's genetically engineered into other kinds of food that might be genetically engineered as well. And they're there to protect consumers and they're already doing a really good job. That's why we are spending a year going through the regulatory process and so we should be. But as long as it doesn't turn into five years because of irrational reasons, but continues to be based on the consumer science and how people actually feel.
Cody Simms (40:09):
Describe your, I guess, for lack of a better term, your cellular farm. What does the actual setup look like at Hoxton Farms?
Max Jamilly (40:18):
I'm here in a phone booth, so I wish I could turn the camera and show you, but I am sitting at Hoxton Farms. We built an incredible HQ in the center of London just a year ago. Hoxton is actually a place. It's right by the City of London, which is the financial district. It is the last place that you'd expect people to be growing cultivated fat, but that's why we love it. We really like doing sales in the city as we put it. Our facility is a 1000 liter facility. It's about 14,000 square feet. We have a fantastic kitchen where we do demos and work with chefs and customers. We have an office, but then the biggest bit by far is our R&D and production facility. In R&D. We're studying every element of the process from the biopsy all the way to the bacon, how to find the best cells, grow them the best, scale them up.
(41:13):
We build the bioreactors right here in our machine shop and then use them in our production facility to produce up to tens to hundreds of kilograms every month of cultivated fat right here in London. And this is just the beginning. We're going to keep scaling up the process maybe with more facilities in the UK, but probably two manufacturing facilities in industrial scale in Asia and in the states closer to the markets where we are launching. So I would encourage everyone to come and visit our facility here. It looks really great. It tastes awesome, and of course you've got a fun bunch of people to meet as well.
Cody Simms (41:50):
Hundreds of kilograms per month. You're starting to hit some scale targets, I would assume.
Max Jamilly (41:54):
Yep. Those are our targets for next year. They are ambitious targets. They will be bigger than almost anybody in the cultivated industry has the ability to make. That's because we've got an incredible scaling technology. We took on the big challenge of not just doing the cells and building the software, but building the hardware as well, and it's been difficult, but it's beginning to pay off. And the second reason that we can reach those scales is because fat is easy to grow. As humans, we know that fat grows faster than muscle. You can stay at home and grow fat, but you have to go to the gym to build muscle. In bioreactors the same thing is true. Muscle cells need complex structuring and exercising on a scaffold to grow, whereas fat cells can grow in a simple suspension inside the bioreactor. That's why we've been able to scale so quickly. That combined with our incredible modular hardware that we build right here.
Cody Simms (42:48):
Can you share a bit about how you've capitalized the company, what the financing history looks like? Anything more there about also what you anticipate? If you're going to be building factories in Asia and elsewhere in Europe. It sounds like there's going to need to be some capital infusion into the company in the future as well.
Max Jamilly (43:05):
Building physical things is a fun and capital intensive challenge. We are in that first of a kind gap where customers need scale and investors need customers, but to scale we need investment and breaking through that chicken and egg is what we are getting really good at. Taking a step back in time though, we started the business in mid 2020. By the beginning of 2021, we'd raised a seed round, which was led by Founders Fund with some other great US and UK investors. Then in 2022, we proved that the technology worked and it was time to raise our series A. That $22 million series A was led by Fine Structure Ventures, which is part of Fidelity and Collab Fund in New York and included other awesome investors like MCJ.
Cody Simms (44:04):
We're super excited to be a part of your journey for sure.
Max Jamilly (44:07):
Hell yeah. It's been an awesome partnership so far. And also a big Japanese VC called Global Brain. They have 10 billion AUM in Japan. They've been super helpful in helping us plan this Asian launch. So in total we've raised about $25 million so far. We used the series A to build our pilot facility. With this pilot facility we will hit unit economics, commercial traction and regulatory approval and use that to raise a series B. The series B will help us grow the top line as we get towards commercial scale production of our ingredient and then engaging with our customers and also infrastructure debt. We'll be able to finance our own facilities. But the power of being a B2B ingredient is that we can essentially leverage our customer partnerships and share the capital burden of building manufacturing facilities. Maybe co-run or co-owned by them or perhaps even within their manufacturing facilities physically. That means we can get to big scales without needing to put too much capital into the infrastructure.
Cody Simms (45:15):
To the extreme end of that business model, you would become a licensing company. Do you see that as a pathway for the business maybe in some of the partnerships that you engage in?
Max Jamilly (45:26):
Our core business of making cultivated fat, I plan to own the manufacturing long-term. I think that's how we protect the biggest and most valuable monopoly and also learn the most because the more manufacturing we do, the more data we build, and our machine learning forms a huge moat because it allows us to optimize and customize as well. However, we built a bio-manufacturing platform and you can grow almost any kind of cells in our reactors. And it's very likely that we will license the reactors out to other perhaps similar or perhaps completely orthogonal non-competitive verticals. There are lots of people inside and outside food who want to use our reactors and we'd love to license them out to them long term, which would be a nice separate revenue stream.
Cody Simms (46:13):
Max, one thing we haven't talked about is your amazing merch store on your website. You guys have done a great job with your branding. I mean that.
Max Jamilly (46:23):
Thanks, Cody. That's really kind of you to say. I was at a conference today, so I'm dressed business, but normally I am dripped out in some of the fattiest Hoxton Farms merch that money can buy. We're a B2B company, but even at the early stage, having a brand, it's super important. It's super important because it's how we talk to talent and customers and investors and also, like I was saying earlier, one day we still want to be a consumer facing B2B brand. And who knows? Maybe it'll be the proudly fatty brand we have now, maybe a different one. But we wanted to go through the exercise of building one. We had an awesome time doing it. And then we thought we may as well share it with the broader world. So on our website you can find our merch store where you can buy bags and T-shirts and sweaters and stuff, carrying our awesome logo. You can shout to the world about how much you love cultivated fat. And although revenue is great, all of the proceeds go to charity, so there's no reason not to buy some awesome Hoxton Farms merch.
Cody Simms (47:21):
Oh, that's amazing. Okay. Where do you need help right now for anyone listening that is intrigued by the mission that you are pursuing?
Max Jamilly (47:29):
Great question. There are two areas where I would love to hear from you if you can help. The first is we are continuing to grow the team. We are a biotech company turning into a food company and a food company that's getting ready to commercialize. And that means we're building out our bioprocessing team, so we're looking for very technical people who know how to take a pilot scale bioprocess, whether that's food, chemical engineering, biology, and scale it up to industrial scale. We're also looking for commercially minded people. People who understand B2B, especially ingredient models, whether in food or outside. And have all the excitement and creativity that it takes in a tech forward and regulated market to take something to scale. So talent is number one. And number two is people who want to talk about first of a kind infrastructure, financing, and building big physical projects. Whether that's to commiserate about the difficult things or share cool ideas or talk about how to finance this kind of thing. If you've done that before, maybe in chemicals or energy or even food, then I'd love to pick your brain and maybe share some of the learnings from our side as well.
Cody Simms (48:48):
Amazing. Max, anything else we should have covered?
Max Jamilly (48:51):
I don't think so. That was a really great chat, Cody. Thank you.
Cody Simms (48:54):
I so appreciate you for coming on the show. Obviously, we are proud investors in Hoxton Farms and appreciate all that you do across the portfolio of companies that MCJ has and can't wait to next time I'm in London, come on by the farm.
Max Jamilly (49:11):
Hell yeah. We can't wait to have you Cody. We're so happy to have MCJ as partners and come along. Hoxton Farms is the best restaurant in London. We'll have some really great cultivated products for you to enjoy.
Cody Simms (49:21):
All right. Thank you, Max.
Max Jamilly (49:23):
Sweet.
Jason Jacobs (49:24):
Thanks again for joining us on the My Climate Journey podcast.
Cody Simms (49:28):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs (49:38):
If you'd like to learn more about MCJ Collective, visit us at mcjcollective.com and if you have a guest suggestion, let us know that via Twitter at MCJPod.
Yin Lu (49:51):
For weekly climate op-eds, jobs, community events, and investment announcements from our MCJ venture funds, be sure to subscribe to our newsletter on our website.
Cody Simms (50:00):
Thanks and see you next episode.
