2021 - an overview of VC and M&A deal activity for the Bird & Bird Corporate Group
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VC and private M&A activity continued on an upward trajectory during 2021. We saw funding trends move from short-term working capital injections needed to shore up companies in response to the coronavirus pandemic, to a more long-term trend with increased interest in innovative companies supporting the shift towards more flexible and tech focussed ways of living and working. Just as startup funding reached record highs through to the end of the year, on the M&A side, global markets rocketed as pent-up growth strategies reached fruition.
Bird & Bird’s Corporate Group has supported a number of exciting high-growth businesses which are developing innovative new products and services addressing issues affecting health, wellbeing, and sustainability. Ranked once again as a Tier 1 firm for VC and a market leader in M&A in the Legal 500 guide for 2022, we have had the privilege of being able to gain a strong vantage point on emerging trends by working with companies at the cutting edge of their fields.
Sustainable alternatives in the food sector continued to attract healthy amounts of investment amid the pandemic, which has severely impacted the meat supply chain, and continues to rise with more and more people choosing sustainable life choices. It is estimated that demand for plant-based meat alternatives reached $7B in 2020 — an increase of 27% from 2019, according to one report- [1] and it is forecast that the global meat substitutes market will grow from $5.37 billion in 2021 to $10.80 billion by 2028, exhibiting a CAGR of 10.48% in the forecast period.[2] Bird & Bird has acted on a number of VC and M&A transactions in the past year in this sector, including the following:
- Advising Plant Meat, the makers of super-realistic plant-based meat alternatives, in connection with:
- its £11m Series A Round led by investors Lever and BGF. The round also included the conversion of various existing loan notes and a secondary transaction.
- the manufacturing, licensing and supply agreements for the production and distribution of their new products. This involved complex IP licensing provisions, as well as careful attention to the logistics of the manufacturing, storage and supply terms as production was based in Switzerland with UK based sales.
- Our Singapore office advised Nutrition Technologies, an insect protein manufacturer with operations in South East Asia, on its Series A funding to raise USD$8.5 million.
- Kavli on its acquisition of Finnish company Verso Food Oy. Verso Food Oy (under the name Härkis) has developed a unique technology to produce meat-replacement products from the fava bean and have since established themselves as the market leaders in Finland for fava bean products. The acquisition strengthens Kavli's investment in vegetarian and sustainable food products.
- Nutreco on its investment in food tech start-up ENOUGH, a producer of ABUNDA® mycoprotein by fermenting fungi using renewable feedstocks to make a sustainable source of food protein.
Bird & Bird’s Corporate Group has also seen growing interest in the use of sustainable crops (particularly seaweed) in the development of alternative use applications for organic materials. Whilst seaweed has long been an important industry in Asia, mainly as a food source, seaweed aquaculture is gaining traction in the UK as a nascent industry which poses exciting opportunities for meeting climate change challenges and enabling resource efficiency as bioplastic, biofuel and animal feed additives.
Bird & Bird remains eager to work with clients in the sustainable sector and has been involved in a number of related transactions, including:
- Advising Horizons Ventures’ investment in a startup called Notpla. Notpla – as their name suggests – have created a sustainable packaging alternative to plastic using a material made from seaweed and plants that biodegrades naturally and is edible.
- Advising a client on the use of algae to create a synthetic leather to be used by major fashion houses as an alternate material for vegan customers.
Investments in the research and development of controlled psychedelics for the treatment of mental health conditions increased significantly in 2021, particularly in Europe, with forecasts that the sector would exceed $2 billion during the year. The sharp spike in interest was stoked by more and more public companies becoming involved in this industry and promising scientific and clinical results. We share L.E.K. Consulting’s predictions of continued increases in levels of investment in the sector overall, growth in related support areas such as healthcare and digital services, greater scrutiny of clinical results, further strong European investment footprints as more companies go public, and growing interest from more traditional biopharmaceutical investors as well as established pharmaceutical companies.[3]
With cannabis being approved for medical use in 2018 in the UK, and the continuing development of exploiting CBD’s (or cannabidiol) therapeutic properties, we are seeing new and interesting ways in which CBD is being applied in the healthcare and retail sectors. Bird & Bird has assisted the following clients in this market:
- Advising OTO International, a premium CBD brand, on their pre-series A fundraising, including an application to the UK Future Fund and their series A fundraising, including a fundraising on Crowdcube.
- Bird & Bird’s team in Germany and Australia advised publicly traded Australian Elixinol Global Limited on the acquisition of leading German CBD company, CannaCare Health GmbH, Hamburg, by a Dutch subsidiary. The companies expect that the market volume for CBD products in Germany could increase to $600 million by 2025. Elixinol is one of the world's leading companies in the hemp industry, focusing on hemp-based dietary supplements, foods and cosmetics.
- Advising the Dementia Discovery Fund on a £12m fundraising by NeuroGeneus alongside Johnson & Johnson Development Corporate, F-Prime, Advent Life Sciences, and Life Arc. The deal also included a licence of IP from Kings College London.
Finally, innovations in the transport sector really started to gain traction in 2021 with increasing focus on green alternatives, charging solutions for electric vehicles and alternative modes of transport. As well as continuing to support leading car manufacturers and multinational automotive suppliers with their international reorganisations and strategic growth, we have acted for Urban-Air Port in connection with its development of a drone airport that is looking to revolutionise how we could travel- apparently it isn’t as far off as we think!
[1] https://www.cbinsights.com/research/future-of-meat-industrial-farming/
[2] https://www.fortunebusinessinsights.com/industry-reports/meat-substitutes-market-100239
[3] https://www.lek.com/insights/ei/investment-surge-psychedelics-treatment-mental-health-conditions
