Down to Cook is raising a Crowd SAFE at a $6 million valuation with a 20% discount. Investors may have mixed feelings about this valuation. $6 million is a relatively low price for a company that offers a unique product, is already generating revenue at a decent growth rate, and has already secured distribution with a major grocery, Whole Foods. However, Down to Cook generated just $250,000 in revenue in 2021, so $6 million represents a 24x revenue multiple. That’s much higher than an average direct-to-consumer food brand, particularly one that is still quite young. While there’s reason to believe that Down to Cook’s price is justified, this deal isn’t a steal.

Demand for plant-based meat alternatives is growing steadily because Americans are eating less and less meat. In the past year, 23% of Americans reported eating less meat than they had previously as of 2020, and the trend is likely to continue. Those who are eating less meat identified health concerns as the biggest reason they’ve cut back, which aligns well with Down to Cook’s promise of offering plant-based meat alternatives that are healthier and more natural than heavily processed options like Impossible Foods and Beyond Meat. 

Given this growing interest in flexitarian, vegetarian, and vegan lifestyles, it’s no surprise that the market for plant-based “meat” is expanding. The U S market was valued at $1.1 billion in 2020 and is estimated to grow to $2.6 billion by 2027, with a healthy compound annual growth rate of 13.9%. 

There’s a lot of buzz and demand in this industry, but it’s important to note that a $2 billion or $3 billion market is still tiny compared to the traditional meat market, which was valued at $170.4 billion in 2020. Plant-based meat alternatives are becoming more prevalent, but trendiness begets competition. This market may still be a bit too small and too competitive for Down to Cook to succeed. 

Down to Cook is led by CEO Trishna Saigal and her husband Joseph Richards, who serves as COO. Saigal is a seasoned food formulation scientist. She holds a PhD in chemical engineering from Carnegie Mellon and spent about six years as a product development scientist at The Clorox Company and Ripple Foods. In her most recent role as head of product development at Ripple Foods, Saigal was specifically focused on high-protein, plant-based products like vegan milk and yogurt. She has a great deal of experience creating innovative plant-based food products, which prepared her very well for founding Down to Cook. 

Richards also lends valuable experience to Down to Cook. Richards graduated from Carnegie Mellon with a PhD in statistics and subsequently co-founded a machine-learning software startup that was ultimately acquired by General Electric. After the acquisition, he stayed on for almost three years at General Electric as a vice president of data and analytics. His experience as a startup founder with a successful exit can provide valuable insight as Down to Cook scales. 

The Down to Cook founding team offers a highly qualified balance of food science and entrepreneurship expertise, ideal for a company in the plant-based meat industry. The company is still young and lacks any other team members. Filling out the team, particularly in sales and marketing, should be a priority as Down to Cook grows. But for the company’s current stage, this team is well positioned to lead and succeed.

Down to Cook offers very clear differentiators from most plant-based meat alternatives in terms of both health and actual product makeup. Health-wise, Down to Cook is allergen-free, fully vegan, and all-natural with zero artificial colors and flavors, fillers, added sugar, genetically modified organisms, or preservatives. Trendy alternative-meat options, including Impossible Foods and Beyond Meat, can’t say the same. It takes a great deal of artificial engineering to make non-meat products look exactly like meat. Down to Cook also relies explicitly on vegetables (vegetables must be added to the Adda Veggie mix to create the meat-like mixture), which makes it seem more obviously “healthy” for parents and other health-conscious shoppers. 

In addition, Down to Cook’s Adda Veggie mix is markedly different from other plant-based meat alternatives in terms of actual form. Down to Cook draws a parallel between Adda Veggie and Hamburger Helper. Both are boxed mixes that can be combined with another ingredient (in Down to Cook’s case, chopped or riced vegetables) to create a meal. Down to Cook is shelf-stable and not refrigerated, so it’s easy to ship for e-commerce orders, easy to buy in the supermarket, and easy to store at home. 

A downside to Down to Cook’s product is that it’s not quite as convenient as a ready-made veggie burger patty. Customers need to prepare their own vegetables and combine it with the Adda Veggie mix, which may be more work than some want to put in. Overall, Down to Cook is just below average in terms of differentiation. 

Down to Cook was founded in 2019 and has grown slowly but steadily ever since. The company originally offered its Adda Veggie mix in farmers markets to garner initial traction. Down to Cook then added online sales, with nationwide distribution via Imperfect Foods in addition to Amazon and direct-to-consumer sales on the company’s website. Adda Veggie began selling in local retail stores in 2021 and is about to launch in 50 Northern California branches of Whole Foods. Down to Cook also has another important revenue stream: food services sales, particularly in partnership with universities. This channel was quiet for the last two years due to COVID-19, but Down to Cook anticipates that it could make up as much as 60% of total revenue by 2023. The company has already launched pilot deals with Cornell, Ohio State, Dartmouth, Cal Poly Pomona, and Kent State. 

Down to Cook’s revenues were minimal in 2020, at less than $20,000. That year, Down to Cook posted a net loss of roughly $25,000. However, Down to Cook reports that it grew by more than 10x in 2021, hitting $250,000 in revenue. Its 2021 financials aren’t presented in full, so it’s not clear what Down to Cook’s net income looked like. The company reports 37% gross margin, with a pathway to 50% gross margin by 2023 with reduced labor and packaging costs. 

Beyond distribution and financials, Down to Cook has succeeded in building brand buzz through industry recognition and accelerator acceptances. Adda Veggie was a 2020 NEXTY Award finalist for the best new pantry item, and the company has been recognized with several innovation and pitch contest awards in the last few years. Down to Cook was recently accepted into Chicago’s Food Foundry accelerator, which could be beneficial for food service and retail partnerships. 

While Down to Cook’s overall revenues are still relatively low, the company is clearly on a positive growth trajectory and is taking all the right steps to build its brand, expand distribution, and boost margins.

Down to Cook is a relatively low-risk investment, given that the company has a finished product, is generating revenue, and is making positive steps to boost distribution. It is inherently risky that the company is young and hasn’t generated a great deal of revenue yet. It’s also a risk that Down to Cook has two co-founders and no other employees, as that increases the risk of operational disruption if either co-founder could no longer work on the business. Overall, though, Down to Cook seems to be a stable company with a decent outlook.

More Americans than ever seem to be exploring vegetarian and vegan lifestyles (or at least trying to eat less meat). However, headlines and buzzy new product adoptions make it easy to forget that demand for normal meat still dwarfs demand for meat alternatives. The market for plant-based meat is quite small. Though it is growing steadily, it will take years for there to be enough demand for multiple companies to share significant revenue. Within this small market, there are already well-established household names: Impossible Foods and Beyond Meat. Despite criticism about the health value of those brands’ products, they’re still undisputedly the market leaders. Down to Cook will face stiff competition in this market for years to come, and it’s not certain that there is enough demand for companies like Down to Cook to be able to scale. 

In addition, it’s not a given that Down to Cook can compete in consumers’ minds against options like Impossible and Beyond. Plant-based meat is already a mental hurdle for many shoppers, but at least Impossible and Beyond look and taste remarkably like meat. Down to Cook’s Adda Veggie product more closely resembles veggie burgers of the past, which have been a longstanding and relatively unpopular meat alternative. Adda Veggie also requires more preparation than patty or ground meat lookalikes. Cooks have to chop or rice vegetables, mix them with Adda Veggie, and then cook the “meat” as they normally would. All together, these barriers might further hamper Down to Cook’s ability to compete in this relatively niche market.

Down to Cook is offering an unusual product in a young market that’s already fairly saturated with major brands. However, there are reasons to believe that this company has what it takes to excel at execution and make a name for itself. First of all, the founding team is stellar. The combination of a Carnegie Mellon-trained food scientist with experience in the plant-based protein industry and another Carnegie Mellon PhD who previously sold a startup to General Electric is a big competitive advantage. 

In addition, Down to Cook has an unusual business model with diversified streams of revenue. The company is not solely focused on direct-to-consumer and retail sales. In fact, it expects 60% of overall revenue to come from food service by 2023. Down to Cook has also already established partnerships with five college campuses and is hoping to expand food service relationships through the Food Foundry accelerator. This approach could insulate Down to Cook from the intense competition of the plant-based meat alternatives grocery aisle. Lastly, Down to Cook is demonstrating strong growth (more than 10x year-over-year revenue growth between 2020 and 2021), with several other positive operational signals like a Whole Foods launch, accelerator acceptance, and more. While Down to Cook will have to claw its way upward in a competitive industry, the company may well have what it takes to succeed.

Down to Cook is a plant-based meat alternative startup selling Adda Veggie, a vegetable mix-in that transforms chopped or riced vegetables into a meat-like mixture that can be used as patties, meatballs, nuggets, and more. Down to Cook’s product is well differentiated from traditional plant-based meat alternatives, including  Impossible Foods and Beyond Meat, particularly because it is all-natural. Although the current raise has a high revenue-to-valuation multiple, the price is still a fair deal. The company is led by an experienced food scientist and a former founder with a successful exit. That team might well be able to grow its unique product and business model (including food service contracts) into a successful company. 

But investors should also note that Down to Cook is competing against household names like Impossible and Beyond with a product that is less similar to normal meat and requires more preparation than other plant-based alternatives. Down to Cook is still a small company, with just $250,000 in revenue in 2021, and it has a long way to go to scale in this relatively small and intensely competitive industry. Therefore, Down to Cook has been rated a Neutral Deal. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written on March 9, 2022.