Boss of plant-based THIS "quite surprised" following £500,000 single ticket crowdfund investment

InterviewPlant-Based FoodTech

Sales are set to hit £20m this year and THIS sells around £1.4m worth of meat-free foods each month to consumers through supermarkets and restaurants.

“I was quite surprised,” says Andy Shovel, the co-founder of UK plant-based startup, THIS, when he discovered that a single investor had invested half a million pounds- a Seedrs record- in a single ticket investment in its latest crowdfunding raise.

The unnamed “private individual” is a THIS customer who “really likes our product, our brand, so he’s ended up piling in”, says the 34-year-old, who set the business up with friend Pete Sharman in 2019.

FoodTech stocks might be having a hard time on the public markets, but privately backed, London-based THIS is powering forward, storming supermarkets with its plant-based meatballs, lardons and chicken mainly targeted at meat lovers wanting familiar tastes and textures.

Sales are set to hit £20m this year and THIS sells around £1.4m worth of meat-free foods each month to consumers through supermarkets and restaurants.

By end of this year, annualised revenues are expected to reach between £25m to £30m within just the third year of trading, says the co-founder.

THIS isn’t hitherto profitable, as “we’ve favoured high growth” albeit “not going Silicon Valley-style with haemorrhaging cash”, says Shovel.

The plan is to swing into the black in mid-2024, he adds.

2022 is a “super busy” year, says Shovel, who is a former meat lover who stopped eating meat after he and Sharman flogged a previous business Chosen Bun to a major Domino’s Pizza franchise in 2016 for seven figures.

New products and three new categories will be launched this year, while next year is all about expanding across Europe.

THIS is currently undertaking a funding round, wanting to raise £10m (part crowdfunding via Seedrs; part VC funding).

It has already raised nearly £6m on Seedrs in the current round, topping the £4m target.

In total, the startup has raised over £20 million to date, giving the business a valuation of £150 million.

The advantages of a crowdfunding raise, says Shovel, are THIS can cement its “relationship with lots of advocates of the brand” and "it’s nice to have a diverse cap table," he says.

“I am not a person who wants to build businesses with like just one lead investor and they have all the say and nobody else has any say”, he adds.

On his advice for budding entrepreneurs starting a THIS-like business today trying to raise capital, Shovel says: “Start with angel money, rather than VC.

‘”I think the first round should probably be individuals you can reach out to on LinkedIn or if you have any contacts in your wider network, somebody you know who knows somebody that is rich.

“That’s a good way of getting a first-round done under a million pounds.

“And then I would recommend that a startup gets to the point of a prototype or MVP (minimum viable product) with that round. And utilise all the tax benefits like EIS (Enterprise Investment Scheme) with that first round as well.

“And once they get to the point of having something, they have got something to show for themselves, and they have got some more substance that a VC could build some conviction around, then it might be time to go to VC funding.

“And I would also recommend that that very first round is a convertible note, rather than a priced equity round, because things tend to change very quickly at the beginning in terms of the value of the business.

“So, if you do a priced equity round right at the beginning, you might be underselling yourself because three months later you might have made a big breakthrough and the business is worth much more.”

The £10m expected to raise by THIS will be used, says Shovel, to grow its 60-strong team, above-the-line marketing (likely TV) and internationalise the business next year.

It is also building a £3m innovation centre in London, which will house research and innovation development work, and have a commercial kitchen.

Its products are now sold in Waitrose, Tesco, Sainsbury's and other major supermarkets and are also served in restaurant chains including Caffe Nero, and Honest Burger.

Shovel believes that plant-based is still the horse to back amongst alternative protein technologies, such as cell-based and precision fermentation.

On cell-based, he said it has been its “own worse enemy in some respects”.

He said: “A lot of the founders in the space have over-promised and under-delivered in the last few years, it has kind of cultivated some scepticism because I think a lot of investors have been burnt when they’ve been told that products will be on the shelves in supermarkets by 2021 or whenever and they just haven’t come. I think TBC for me on cell-based.”

On precision fermentation, he says people are packaging it as new but it’s not a new technology.

On the recent woes of FoodTech stocks, he says there has been a “correction” in the market.

“What has happened is a correction to the world of the rational. They were probably irrationally valued.

“I am quite pleased that investors are looking more rationally now.”

But he points out that Oatly and Beyond Meat have grown sales faster than 95 per cent of other businesses he knows in the last few years.

On Beyond Meat, he says he is a “big fan” but the burgers are “too high in saturated fat”.

On the million-dollar question about the founders' exit of the business and whether it will go public or be acquired, he is tight-lipped.

THIS, he says, has not had formal offers to buy the business but has received some “meaningful inbounds” enquiries from potential acquirers.

“I don’t know what kind of exit event we might have if we continue to be successful that is. That one is really TBC if I am being honest," he adds.