What makes a vegan frozen pizza start-up ‘investable’?
UK start-up One Planet Pizza makes ‘pizza with purpose’. Made by hand in Norfolk, the vegan pizzas are designed to be healthier than their conventional counterparts – both in terms of human and planetary health.
From a nutrition standpoint, One Planet Pizza’s offerings contain at least 50% less salt and sugar, and 40% less saturated fat, compared to traditional pizzas. And with 100% plant-based ingredients, the company claims its pizzas have a 20% smaller carbon footprint.
Beginning in co-founders Mike and Joe Hill’s kitchens, the start-up has since expanded to produce more than 500 pizzas a day, which are sold in Ocado, Wholefoods, and in 500 stores across the UK and Europe.
The start-up has benefited from funding to get it to where it is today. This includes a crowdfunding funding campaign back in 2016, input from Heather Mills’ VBites Ventures in 2019, and earlier this year, VC fund Veg Capital announced it had become a strategic investor.
So what attracted Veg Capital to the frozen pizza brand? The VC fund’s head of Investor Relations, Simi Valecha Johnson, shared her take on the investment at YFood’s London Food Tech Week.
A not-for-profit investment company
Veg Capital is a new player on the VC scene. Headed up by Veganuary managing director and co-founder Matthew Glover, the specialist private venture fund provides Angel, Seed and Series A funding – typically ranging between £50,000 to £250,000 – to early-stage businesses in the plant-based space.
“Veg Capital is a VC fund with a very big difference,” explained Johnson, referring to the fund’s not-for-profit status. “All profits that are made will be donated to charities that are working to raise awareness of animal suffering and promote plant-based eating.”
To be eligible for Veg Capital funding, start-ups must meet its criteria. The VC fund invests in four key areas: innovative forms of production with protectable intellectual property; plant-based replacements for meat, dairy, eggs, or seafood; advanced fermentation and tissue engineering to produce animal products from the cellular level; and distribution and systems that increase access to vegan products.
One Planet Pizza falls into this last category. It is the first, and leading, frozen vegan pizza company in the UK, explained Johnson. “They are on a mission to create delicious pizza for everyone. They call it sustainability without compromise, or ‘pizza with purpose’.
The dough is made from Italian pizza flour, the tomato sauce is naturally thickened with chia seeds, and where possible, all toppings are sourced locally.
Under its ‘zero to landfill packaging’ pledge, One Planet Pizza’s pizza boxes are 100% compostable and all other packaging 100% recyclable. Further, all recyclable waste is shredded on site and used to produce new eco-friendly packaging for the brand’s online pizza orders.
A promising start-up
The father-son team approached Veg Capital in early 2020, Johnson recalled. “They were looking for a strategic investor who was going to buy out their current majority shareholder.
“The buyout was due to [the duo’s] interest in a different business strategy [compared to] what their primary shareholder wanted.”
What impressed Veg Capital, according to Johnson, was the duo’s plan to scale over the next five years. Indeed, they had already grown their team of two to 10, expanded to Europe, and in January this year, One Planet Pizza responded to the COVID-19 pandemic by launching its own D2C home delivery service known as OPP.
The European frozen pizza market was valued at €2.86bn in 2017 and is estimated to reach €4.69bn by 2025. One Planet Pizza’s plan is to take a 0.15% share of the market in the next five yeara. At that time, the start-up should be a £20m business, said Johnson.
The pizza disruptor had also analysed its competition and highlighted its advantages to Veg Capital. When compared to pizza brands White Rabbit, Daiya, Oumph, Fry, Goodfellas, and UK supermarket own-brand, One Planet Pizza is the only one to carry a health claim, have 100% recyclable packaging, and a personalised D2C offering. Further, One Planet Pizza has the highest selection of gluten-free pizzas (3) and 11 vegan options – compared to the second highest White Rabbit, which has just two.
However, One Planet Pizza was priced in the premium range. “They showed us how this could be improved with scale, as well as new equipment purchases, to drive down costs,” Johnson told delegates at the online event last week.
Their brand awareness also ‘had a lot to be improved on’, she continued. “But they had a very strong marketing plan and relevant hires in the team that was going to tackle this.”
Behind the investment decision
Overall, Veg Capital saw the Hill duo building a great business, and noted it was already ‘doing very well’. Four primary reasons led to Veg Capital’s decision to invest in the company, Johnson revealed.
Firstly, One Planet Pizza had proven traction for its steadily growing business. The Hills had innovated in their routes to market through a successful D2C model in order to grow revenues amid the first coronavirus lockdown. “They had adopted to changes in consumer behaviour due to COVID,” explained the investor relations chief.
Secondly, Veg Capital ‘liked the team’: “We found them to be honest, credible, hardworking people driven by a purpose aligned with our own.”
The VC fund also saw an opportunity to be a larger shareholder in a company willing to work with their strategic investors to grow and adapt as they scaled, we were told. “We brought our expertise to strengthen their vision and were a good fit.”
And finally, One Planet Pizza had demonstrated that ‘first-mover advantage’, she recalled, of being the UK’s first vegan frozen pizza company.
