Compound Foods
https://www.compound-foods.com/Investors
Change is coming for the global coffee industry, says biotech entrepreneur Maricel Saenz. Disastrous climate conditions are already impacting yields in coffee-producing countries, threatening producers’ livelihoods and causing damage to a significant percentage of crops each season. Soon, we’ll be paying more for a product that is declining in supply and quality — unless we do something about it.
As the founder of Compound Foods, Saenz is committed to recreating coffee, without the beans, using biotechnology. Her goal is to ensure we have options as we lessen our dependence on a crop that is not, as it is currently grown, sustainable with upcoming climate patterns and predictions. Compound Foods has just announced raising a seed round of $4.5 million from Lowercarbon Capital, SV Latam Capital, Humboldt Fund, Climate Cap, Collaborative Fund, Maple VC, Petri Bio, One Way Ventures, strategic angels (Founders of Plated & Thrive Market), and other investors. Maricel, an On Deck Founder Fellowship alum, spoke with us to share the past, present, and future of her mission to create an alternative that is better for the environment and tastewise, hits all the marks.
Compound Foods is not your first entrepreneurial venture, can you take us through what has led you here?
Maricel: I am originally from Costa Rica, and I went to school in Canada to study business. In my last year of university, I took a class where I was paired with engineers, and we came up with a project that became a startup. It is still running, by the way, out of Toronto — two of the engineers took it over. I knew from then that I wanted to be an entrepreneur and pursue impact-driven work.
I didn’t feel ready at the time straight out of college, so I worked in consulting for a couple of years. It was a great way to learn how to build businesses. And from there, I enrolled in Singularity University in the Bay Area, and founded my first startup Nextbiotics with an incredible co-founder who was finishing his Ph.D. at the Doudna Lab. We were a great fit: he was on the technical side in a lab on synthetic biology, and I focused on the commercial side, spending three years learning how to lead a team of scientists. I stepped down from my role as CEO of that startup in early 2020 because I wanted to pivot to address climate change from my unique foothold in the biotech space. I credit my time at Nextbiotics with giving me confirmation that my path forward will always be as a non-scientist in a scientist world.
It’s so interesting that you say that. Can you share what has drawn you to the biotechnology field?
In the last few years, there have been so many transformational advances in biotech:our enhanced capacity to read and write DNA through sequencing and synthesis technologies, the ability to edit genomes and engineer organisms, and the capacity to produce engineered organisms, or their outputs at scale are just a few. I remember being at SynBioBeta, an annual synthetic biology conference, and the guest speaker Eric Schmidt (former Executive Chairman of Google) shared his sentiments that in the ‘80s all his excitement focused on software, and now he was excited about biology. I share that excitement, and love being in this space seeing how these fundamental scientific advancements are being applied to solve the world’s most important problems. What I bring to this space is the knowledge and creativity to bridge the gap between what scientists can create and what people really want, and package it all together to create amazing products.
You are leading Compound Foods to first create an alternative to coffee, a mission that is quite personal to your background. Why?
I was raised in Costa Rica which is in the coffee belt (the countries around the equator that have the perfectly suited environmental conditions for industrial coffee cultivation). Because of climate change, those conditions are rapidly changing. In Costa Rica we're experiencing higher temperatures, intense rainfall, and rampant pests. The yield of coffee is going down, and the quality of coffee is going down too. This is matched with a growing global trend for specialty coffee, in which people want higher quality coffee.
This is changing to the point where we expect to lose 50% of the land currently growing coffee. Most people think the effects of climate change will happen 20 years from now, but just a few weeks ago, in Brazil, there was a frost that led to a huge loss in their crop and a 30% surge in the global price of coffee. Brazil produces 40% of the world's coffee, and it’s now at risk.
On one hand, the coffee crop is really vulnerable to climate change, and we’re going to have a shortage of supply. And on the other hand, the production of coffee is itself a contributor to climate change. When we look at the demand side, we need 140 liters of water to create a cup of coffee. And one kilogram of coffee produces 17 kilograms of carbon dioxide. By comparison, that's more than poultry, swine, fish, and eggs — all these products we’re already trying to replace with biotechnology.
We are dedicated to finding a solution that can use less water and produce less carbon. Although it's early, we know that we can bring that down by around a tenth of what coffee currently is. So the way I think about it is like if I get, you know, 1% of the population to drink our product, there's so much carbon that we're taking out and so much water that we're saving.
What brought you to On Deck and to the community? How has it been valuable?
I joined On Deck Founders after we raised our pre-seed for Compound Foods because I realized I needed support as a solo founder. I was starting to hire — it was the peak of the pandemic — and all of a sudden I realized I didn’t have the reach. I thought to myself, “I don't look like everyone else here. I didn't go to Stanford, I didn't go to Berkeley. I didn't have a huge network of colleagues that used to work at Google that could come to join me.” One of my closest friends had participated in ODF and she mentioned she had found some of the most amazing and smartest people in this network. So I actually joined On Deck because I wanted to tap into this amazing pool of talented, high-potential entrepreneurs, and hopefully find scientists and technical talent as well.
What I absolutely loved about the experience (and want to continue recreating) are the Mastermind Groups that met once a week. It didn't matter if my work with Compound Foods caused me to miss programming or fireside chats, no matter what, I made time for that group. I was with six different people all across different industries (for example, an investor, a founder in AI, and a founder in the mental health space). The weekly meetings were immensely valuable for me as dedicated time for really honest, vulnerable conversations with other entrepreneurs. There was an expectation that you weren't pretending like everything was perfect. We all devoted ourselves to suggesting solutions for some of the hardest things that our peers were working through that week. For me, they really represented that sense of community in practice: having people that are going through the same thing and are willing to help you. It just felt really safe and productive.
Can you tell us a bit more about your fundraising process?
Fundraising is tricky — and this wasn’t my first rodeo. The statistics around raise successes are really bad for women. One incredible resource that I turned to was the All Raise Seed Bootcamp. It was at All Raise that I learned there was a formula — a process to fundraising — and I was shocked because up until then I had been totally winging it.
So for this seed round, I had access to a ton of resources, both from All Raise, On Deck, and knowing what to look for on Twitter. I got myself really organized before the process started. I had a checklist of things that I wanted to accomplish before I even opened my round, including goals around the product, environmental assessment, the financial model, team hiring, and the deck itself. I spent time speaking to other founders in the space and getting their perspectives and advice.
It allowed me to be a lot more confident when the process kicked off: I had done my homework. I think that level of preparation allows you to create a little armor against rejection.
I went to my current investors from the pre-seed round first and luckily, they were all super excited to support me during the seed round as well.
I really wanted to have investors that I thought were aligned with what we were doing. So I also spent a lot of time in those first conversations getting to know them and understanding their values. Did they care about climate change? Did they care about coffee? One of the things that I tell my peers who are also fundraising is: it's really exhausting, you take a ton of meetings, you juggle a ton of excitement and rejection. It’s important to change the narrative in your head and realize it’s an opportunity to talk with really interesting people, even if this is not the right time and place for them to invest, it is still a formative learning opportunity.
Structuring the round was really interesting. In our cap table, we have investors that are super focused on climate. We have investors that care about the biotechnology. We have investors that care about the future of food. We have investors that are principally supporting our go-to-market strategy (with experience investing in other similar products like Impossible, Beyond, Blue Bottle) that can help us get there.
We also ended up with an incredibly diverse cap table, which wasn’t intentional but in retrospect, a function of the people that we were speaking with. We have women, we have Latinos, we have black investors, we have angels that are CEOs of companies that we really admire. It all came together really nicely.
We’re so excited for you and this investment in Compound Foods! Let’s end with looking into the future of what this funding round means for the coming year and the vision beyond.
Coffee is humongous as an industry, and I see it as the first technical problem for us to solve. But we're really focused on building the infrastructure, the technology capabilities to understand what compounds make coffee taste like coffee — and then, can we even improve on coffee flavor? This will allow us to create multiple products in the coffee space. Our first will be released to the market at the end of 2022, which sounds far away but it’s not. It’s really a delicious prototype right now, and we're continuing to tweak it as we focus on how to scale.
Compound was founded with the goal of creating solutions that are better for the planet. In the future, we will look into other crops that are either at risk because of climate change, or that are big contributors to climate change.
//
Compound Foods is hiring for numerous positions, to learn more, click here
Investor's note
"Our daily cup of coffee has a negative impact on our climate. We require more water to produce one kilogram of coffee than what is needed to produce one kilogram of chicken or pork. The increase in temperatures and intensity of droughts has also increased diseases and plagues that kill coffee plants and the insects that pollinate them. Compound Foods produces the best tasting and most sustainable coffee by leveraging synthetic biology and recreating coffee without using the coffee bean. Founder & CEO, Maricel Saenz, holds a deep relationship with coffee, having been born and raised in Costa Rica. She has seen firsthand the direct impact of climate change on producers from around the world, especially those from her home country. I am grateful to Compound Foods, Maricel, and her team as they build the next transformative FoodTech product. We raise our mugs to that!"
-Consuelo Valverde, Founder & Managing Partner at SV Latam
Note: This is part of a series where we talk to On Deck Founders alumni about the companies they’re building and what it will take to propel them to the next level. Consider joining our incredible community of founders who have launched over 1000 companies worth over $9B. Apply here.