Tao Zhang (left) and Albert Tseng(right).
High carbon emission from the meat industry is beginning to worry the Chinese government as well. A while back, China's Heath Ministry announced an ambitious plan to halve meat consumption by 2030 so to reduce greenhouse gas emissions. Social and environmental entrepreneurs are now flocking into one of the world's biggest meat-loving countries. Following the footsteps of investors Bill Gates, Sir Richard Branson, and Sergey Brin, it's probably just a matter of time before China gets its own version of Memphis Meats or Impossible Foods. Dao Foods is here already riding that wave.
Founded by Tao Zhang (Dao Venture) and Albert Tseng (Moonspire Social Ventures), two impact investors and social entrepreneurs. Dao Foods aims to push non-animal alternatives into the China market, with a current focus of Shanghai and Beijing, an exciting prospect.
Xiao long bao and shengjian made with "clean meat"? A girl can dream.
SmSh: From what I’ve read, Dao Ventures has already supported more than 1,000 SMEs (small-to-medium-sized enterprises) in China and overseas. In general, what criteria do enterprises need to meet in order to catch your attention? Could you give us one or two examples?
Albert Tseng: Indeed, Dao Ventures has supported more than 1,000 SMEs in China and overseas, mainly in the cleantech and environmental space. Dao Foods is a new initiative that we started because we learned about the impact of the global food system on the environment and on human health. We believe that consumers in China, in particular, millennials, are increasingly aware of this and will soon be demanding more healthy and environmentally sustainable food options. As one part of our strategy, Dao Foods is establishing a North America / China investment fund to invest in promising China-based ventures, in particular those that are creating plant-based products that are so tasty, so healthy, and so affordable that they "crowd out" demand for less healthy and less sustainable animal products like meat, dairy, and eggs.
An example might be a product company or restaurant in Shanghai or Beijing that is successful within the vegetarian market (only 5% of the Chinese population) but may wish to expand into the mainstream market.
Tao Zhang: We tend to focus on ventures at the early start-up stage that would need catalytic acceleration support and capital, positive and quantifiable environmental and / or social impact, as well as a viable and scalable business model. Dao Foods would be a good example on this front. Another example would be an environmental education service and product company called Ecofroggy (环宝蛙) with a focus on Chinese primary school students ages 7-12.
SmSh: Dao Foods is co-funded by investors and entrepreneurs from pretty diverse backgrounds, could you share with us briefly how the collaboration come about?
AT: My co-founder Tao Zhang and I have been working in the social enterprise and impact investing space for many years, and see business as a powerful way of achieving social impact at scale. When we learned about the impact that animal agriculture has on our health and on the environment, we got excited about how consumers could be a part of the solution through their food choices. We approached New Crop Capital, based in New York because we wanted to combine their deep expertise in helping to launch twenty-one plant-based food companies with our expertise and networks in China. We are extremely excited about our mission-driven team and partners and doubly excited about the massive opportunity in front of us.
Photo courtesy of Beyond Meat.
SmSh: What is the current scale of plant-based food companies in China?
AT: China has a long history of plant-based protein products, in particular, soy-based products for the religious vegetarian population. We believe that in order for plant-based meat and protein products to be successful in the mainstream market, these products need to be improved by taking advantage of more modern food science technology to better compete in taste and texture against animal-based products. If we combine the "art" of traditional Chinese methods of plant-based food production with the "science" of Dao Foods partner networks, we believe that we can mainstream and popularize these products well beyond the mere 5% of the Chinese population that is vegetarian.
We see Shanghai / Beijing (and other Tier 1 cities) as our main initial markets where the populations, in particular, millennials, are almost ready to try new and innovative food products, such as plant-based meat. Internationally, plant-based meat companies such as Impossible and Beyond Meat, are making plant-based meat cool, fashionable, and mainstream and Dao Foods thinks that cities like Shanghai are a perfect place to introduce these types of new food innovations to China.
SmSh: Plant-based meat is getting cheaper and more available in developed countries, usually in the form of the burger, sausage, bacon or other western-style meat products. China has a relatively smaller market for these products, is that a concern for Dao Foods in terms of importing product varieties? Do you think they will be less attractive to Chinese meat lovers?
AT: We believe the demand for western-style food products such as burgers will continue to increase, particularly in urban centers where interest in international products continues to grow. However, we also believe that plant-based meat can be formulated and produced to fit any style of cuisine, including the wide variety of Chinese regional cuisines. Dao Foods will be working with companies to better understand the market and how to best introduce products that Chinese consumers want.
White Castle's Impossible Slider
SmSh: Will labeling practices, such as the V-Label in Europe, accompany plant-based meat into China's market as well?
AT: Dao Foods will certainly be working with a large host of stakeholders to help us move consumers to a more sustainable and healthy plant-based diet. The V-Label initiative seems to have had a lot of success in Europe, so it would be great to see something similar in China. There are also other great organizations such as WildAid and GoalBlue that are building awareness of the many health and environmental benefits of plant-based eating. We are excited to develop partnerships with all these organizations who share a similar mission and vision for China.
SmSh: Have Dao Foods set a goal for how large a share of China’s market you plan to reach, how big of an impact you plan to achieve?
AT: China is the second largest meat market in value after the US, estimated to be worth USD 200.4 billion in 2016. We at Dao Foods realize that the innovation and change that we are trying to achieve will take some time to reach scale, but in the short term, even a small slice of that growing market is still a huge opportunity!
Photo curtesy of WildAid.
SmSh: Finally, what's the best way for food startups in Shanghai to get in touch with Dao Foods?
AT: Dao Foods hopes to partner with promising companies to provide growth capital and to use the Dao Foods partner networks in the US and China to provide strategic advice and business acceleration services. The target for the establishment of the fund is in the second half of 2018. Dao Foods is currently meeting with ventures that fit the Dao Foods investment thesis. Interested companies should visit our website where there is a "Call for Entrepreneurs" form as well as contact information for our Dao Foods team (firstname.lastname@example.org).