NotCo was certified as a B Corp and aspires for its operation in Latin America to be profitable in 2023
NotCo, the Chilean unicorn that produces plant-based food using artificial intelligence, has an ambitious plan in the works to make a name for itself among mainstream consumers, to replicate the success it has achieved in niche segments.
In line with this roadmap, it has just obtained its B Company certification, a system that encourages companies to put their socio-environmental business purpose at the center of their business model, in areas such as government, workers, customers, the community and the environment.
Matias Muchnick, co-founder and CEO of NotCo, sees this milestone as a 360-degree alignment of the company’s goals and is committed to undergoing that assessment annually.
“All the certifications and awards give some validation as to what one has been doing as a company purpose,” Muchnick said from New York in an interview with FORBES. “Here we see an external entity that got into auditing our numbers and our statutes. Even our investors have to sign on to this path that the company is taking, so it is also a way to align the goals of the founding team with those of the investors.”
Much of Muchnick’s schedule over the past seven years has been busy convincing investors to believe in NotCo, but now he’s free to focus on reaching the mass market as the company, backed by funds like Tiger Global and Kaszek, and by tycoons like Jeff Bezos and Marcos Galperín, it has enough resources to sustain its operation in the next five years, according to the CEO, who aspires not to have to raise more investment rounds before an IPO, after having added to their accounts US$70 million from private investors last December.
“We raised that capital not necessarily because we needed it. We wanted it to not return to the private market for five years. That is perhaps our last round of investment before an IPO,” says Muchnick, who is leading an internal crusade to reach profitability early. “We want our operation in Latin America to be profitable in December 2023.”
In fact, he cites the company’s approach to reaching the mass market, which it’s leveraging not just in partnerships with retailers, but with brands like Starbucks and Papa John’s as steps toward that goal. “The more we can penetrate the mass market, the better,” he notes. “Starbucks is saying out loud that the next generation of milk is our NotMilk, that’s a validating agent that allows us to effectively penetrate the mass market.”
In North America, where they have a presence in more than 9,000 retail store locations, they closed an alliance with Shake Shack and are advancing their business with Kraft Heinz, which uses Giuseppe, NotCo’s artificial intelligence algorithm, to launch new products on the market. .
“We have some cheese sheets in three versions, we launched them in a pilot in a supermarket called Giant (Eagle, in Cleveland, USA). The results are impressive, we managed to have the best-selling product in its category with a margin spectacular just four months after it was launched”, says Muchnick. “In March we are going to launch the second product, in June the third and in September the fourth, it was a theory that is being tested correctly.”
All in a task aware that the rules of the game for companies backed by venture capital have changed. The company was forced to lay off 32 people in the middle of last year, 6% of its global workforce.
“The name of the game is profitability. We had to unlearn and learn how to operate the company”, affirms the CEO of Notco. “We have been extremely smart in reading very quickly the reality of the industry. We started noticing it in January of last year, seeing inflation, exchange rates, the geopolitical environment and interest rates through the roof. Here you have to control growth, be a profitable company”.
And he continues: “In 2022 there were many down rounds that were not made public by companies that were sold at egg prices and companies that had money in the account. Now we will really see the ability of companies to survive. 2023 will be a disaster for many companies.”
Meanwhile, global economic uncertainty poses another challenge to that mass-market plan, as Notco does not yet have its own production facilities and its plant-based products are priced higher than conventional products.
“People are making decisions thinking about the budget first,” says Muchnick, who anticipates that more alliances are on the way. “That makes us review our strategy, little by little we have received feedback on how to improve our products. With our platform we develop something useful to change the entire industry. We are a company that was born to redefine the food industry with science and technology adapted to the limited use of our resources”.