In October, Unreasonable Group launched a co-investment club for accredited investors to focus on Unreasonable alumni.
Called Unreasonable Collective, the club recently made its first investment—part of a $32 million Series A round in foodtech venture Air Protein, which uses microbe technology to produce meat from elements in the air. (The company describes it as “air-based” meat).
Unreasonable Group runs multiple venture accelerator/mentorship programs for growth-stage social enterprises.
CEO and co-founder Lisa Dyson participated in the 2017 Unreasonable Impact Americas program, a partnership between Unreasonable Group and Barclays aimed at backing growth-stage businesses likely to create new jobs in a green economy.
Diverse Investors and Founders
The idea behind the Collective is to create an avenue through which diverse investors can back impact enterprises run by diverse founders. At least 50% of members have to be women, people of color and/or identify as LGBTQ or from other diverse backgrounds. Companies are drawn from Unreasonable’s network of 250 alumni, called fellows.
According to Pratibha Vuppuluri, head of investments at Unreasonable Group, one big differentiator from other investment groups is that all syndicates are led by established VC firms, thereby giving members an unusual chance to invest alongside heavy-hitters. For Air Protein, the syndicate was led by ADM Ventures, Barclays and GV (formerly Google Ventures).
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“We asked ourselves, what if we had a way of building community-driven investing where individual accredited investors could invest along with large institutional groups,” says Vuppuluri. “It’s one of a few times an individual investor gets to invest alongside places like GV.”
According to Vuppuluri, that effort is helped by the variety of connections Unreasonable already has with VCs. Also, since they stay in close touch with alumni, the folks at Unreasonable presumably have a thorough handle on each venture’s viability.
Building a Community
To create a community and educate members about issues relevant to their investments, the Collective runs such programs as monthly master classes, usually devoted to topics related to investments. There’s going to be one soon on circular economy issues and how they relate to Air Protein. “Jeffersonian dinners”, held every second month, allow members to connect around relevant subjects, like robotics in agriculture. The upshot: “When it’s time to deploy capital, members feel they’re part of a crowd and feel free to ask questions,” says Vuppuluri.
Also, building on a process called “brain trusts”, through which Unreasonable companies meet every month with a group of experts to address key challenges, 12 to 15 Collective members convene with ventures to address relevant issues and get to know the CEOs better.
Unreasonable always kicks off the process by finding VCs to back an investment. After that, the Collective showcases the deal to “anchor members”, who invest more than $250,000 and typically have expertise in particular areas. Then, the rest of the membership, which isn’t obligated to invest, sees the deal. Thus “when it comes down to individual members, the deal has gone through several levels to de-risk it,” says Vuppuluri. The minimum check size is $10,000.
As for the presentations, there’s a basic pitch and Q&A session for interested members and companies every month. After that, members have 10 days to evaluate the deal and ask more questions. There’s then a second call, with three more days to make a final decision. Members pay annual dues; there are no management fees.
So far, there are 45 members, with a waiting list of 75. According to Vuppuluri, the Collective has a few more food-related investments that members should be closing on soon.
Protein from Carbon Dioxide
Berkeley, Cal.-based Air Protein aims to address the climate-harming effects of meat production. To that end, it uses hydrogenotrophs, which are single-cell microorganisms that can turn carbon dioxide into protein, according to the company. The process, which taps NASA research from the 1960s, mixes carbon dioxide, oxygen and nitrogen with water and mineral nutrients, operating somewhat in the way yogurt is produced. Then the company adds elements to make the substance feel and taste like chicken, steak and the like. “It will look like the standard meat you see on shelves today,” says Dyson.
According to Dyson, Air Protein will use the funding to expand R&D, product development and hiring.