CHANGING FOOD FOR GOOD
We Are Nicoya
Nicoya is investing in a more sustainable food system, focusing on:
• Life-Style Brands
• Food Infrastructure
Nicoya is an impact investor, investing in a more sustainable food system.
We are driven by our commitment to making a meaningful impact on people’s lives, their health, and the planet. Nicoya is where emerging, revolutionary food concepts are crafted and developed before landing on consumers’ plates. Together with passionate entrepreneurs, we are part of the force transforming global food systems.
At Nicoya, we turn ideas into reality. We draw upon our deep industry knowledge in FMCG, brand strategy, and finance to make informed consumer-driven investments in ambitious startups within the food industry.
We target scalable and commercially viable companies that are reimagining food production, meals and distribution. As active investors, we partner with startups early on in their journey and guide them through the complex industry landscape. We streamline startups’ acceleration path by developing their product proposition and route-to-market strategy to deliver branddriven growth.
At Nicoya, we are fueled by consumer behavior and data. Companies often forget that the consumer is the one in the driver’s seat – not the other way around, a mistake that often results in product launches that fail to resonate with consumers. That is why consumer insights are always at the core of both our investment decisions and the acceleration journey of our portfolio companies.
We are Nicoya. Changing food for good.
Julienne
• Continued on “Path to Profit” project across all business to reach profitability faster
Summary of key highlights and milestones achieved through March to June 2024
• Made major interventions in subsidiaries to increase effectiveness
• Follow-on investments in selected portfolio companies
• NAV Q2 2024 397 MSEK (-21 % Q/Q)
• Combined portfolio revenue forecast 2024 1050MSEK (excl Oda Group)
CEO PERSPECTIVE
Dear Investors,
In response to tighter capital markets, many companies, including those we have invested in, have had to adjust their activities and cost structures to extend their cash flow. This has resulted in lower revenue and valuations, creating a paradox where insufficient growth makes it difficult for companies to attract new capital. This challenging environment has been very hard on some of our investments and has forced us to make many tough decisions. Throughout the quarter, Nicoya has worked diligently across the portfolio, implementing costreduction measures and focusing our resources on companies with the highest potential for success. While this approach may have shortterm negative impacts on our portfolio and NAV, we remain confident that our long-term investments will generate significant value over time.
At the end of the second quarter of 2024, our Net Asset Value (NAV) stood at 397M SEK, reflecting a decrease of 21% since the previous quarter and 26% since the beginning of the year. Clearly, the management team and I, as meaningful shareholders, are not pleased with this performance. However, following the tight capital markets and the very tough prioritization we have had to do between our investments, some of this decline was expected and we are confident that we can now move forward from this setback. We can build from a stronger position and platform to create value over the next coming quarters regaining the initiative and creating a positive momentum. We have confidence in our portfolio and our ability to generate value with Nicoya, but we need to raise funds to materialize this.
There are many signs that the capital markets are recovering, including decreased inflation, lower interest rates, and a recovery in consumer purchasing power. After lots of hard work, our portfolio is well-positioned to seize the opportunities in these improving markets and create significant value in the growth sectors where it plays. While early-stage investors like Nicoya, often face short-term challenges, Nicoya’s strategy is long-term, with focus on investments in companies and innovations driven by mega-trends and expanding markets. Regardless of macroeconomic conditions, the need for transformation of the food system is immense and growing. Consumers and society are requiring a shift from polluting diets and ultra-processed products to more sustainable, cleaner, and healthier food options. In Europe, we see consumers’ spending on health and well-being continue to rise.
Our focus this year is two-fold. Firstly, to actively support our most promising investments while advancing our pipeline of new opportunities. With market valuations currently being lower, there are attractive opportunities to invest in groundbreaking innovations at fair prices. Secondly, to capitalize on an improving economic outlook and a highly relevant sector, Nicoya will initiate a fundraising round this autumn. Strengthening our financial position will allow us to unlock and execute on opportunities within our existing portfolio, as well as selectively pursue new investments in our focus areas. You will receive more detailed information about the upcoming fundraising in separate communication.
We are now actively working on re-capitalizing Nicoya. We know we have a lot to prove, and we are committed in doing so.
Thank you all for your continued support.
On behalf of the Nicoya team
Christopher Slim CEO and Co-founder
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Portfolio Overview: Q2’24
Deloitte market perspective
The first half of 2024 has been marked by political and economic volatility. Investment activity on the market is however picking up some speed. For Nicoya, the quarter has been a mix of both challenges and opportunities. Source:
With over half of the global population heading to the polls this year, and some central banks commencing interest rate reductions, inflation has proven to be more persistent than anticipated creating a challenging environment for growth companies. Investment activity is moving at a solid pace. During Q2, certain foodtech-like companies like Vitamin Well has successfully advanced, attracted investors, and sealed substantial transactions (with a valuation of SEK 35 billion). Conversely, others, such as Mycorena and Tebrito, have encountered difficulties in raising sufficient capital, leading to bankruptcy. This indicates that the market movement is highly firmspecific rather than systematic and that the quarter has been a tombola of challenges and opportunities.
Deloittes comments on Nicoya quarter
Since the previous quarter, the fair value of all Nicoya’s holdings are down some SEK 102m in total. No holding is up in fair value during the quarter. The estimated fair value of Nicoya’s holdings decreased by around SEK 102m (-19%) during Q2 2024, resulting in a total portfolio valuation of SEK 433m, with net investments of c. SEK 4m during the quarter. Additionally, the total negative FX impact amounts to around SEK 3m. Its noted some SEK 20m downside protection is offered via the liquidation preferences, primarily related to Splendid Spoon and Vertical Harvest (assuming that the valuations of Splendid Spoon and Vertical Harvest remain unchanged). Note that the valuations of Unlisted Assets out of scope have remained unchanged in all instances except for Oda Group where the updated valuation has been provided by Nicoya. By and large, the fair value of Nicoya’s portfolio companies on an 100%-basis is estimated at c. SEK 3,410m and the NAV as per Q2 2024 comes in at SEK 397m, adjusted for net debt (or equivalent) of SEK 36m. Ultimately, the NAV is down some 21% on a Q/Q basis.
Portfolio Overview: Q2’24 (con’t)
Transactions during the quarter
During the quarter, some of Nicoya’s holdings have successfully shifted their focus toward profitability and are tracking according to plan. Others are still encountering both fundraising and operational challenges. Several financing rounds have occurred during Q2. Foodiq closed an extension of the Serie A funding round per Q4 2024 of around EUR 1m with participation from one investor. Moreover, two investors invested in a convertible note of some EUR 1.1m. There has been an "extension" of the Q4 financing round (at a discount) in El Taco Truck of c. EUR 5m with participation from internal investors. Farmers & Chefs closed an external funding round of some SEK 10.0m with participation from Ica Impact Invest AB. Moreover, Revel Foods invested in a convertible note in Farmers & Chefs of SEK 1.6m and Inika of some SEK 0.6m. Additionally, Revel Foods converted the total convertible amount of some SEK 3.5m (SEK 2.5m from Q1 and SEK 1.5m from Q2) in Oatlaws, increasing its ownership to 72.0%. Furthermore, Nicoya issued a convertible note during the quarter of c. SEK 2.1m, where the total amount comes in at SEK 43.9m as per the Measurement Date.
Portfolio value change
While focusing on core holdings is the best strategy to create value for shareholders in the long term, it may have negative impacts on our portfolio short term. Foodiq is down following a pivoted business model entailing uncertainty/risk and closing of extended fundraising round. Revel Foods weighs on second quarter NAV, limited funding is impacting sales estimates and forecasts going forward. Oda mark-down is negatively impacting NAV, reflecting a heavily discounted round led by Kinnevik during the quarter. See key drivers to the Q2 NAV decline illustrated in the value bridge.
Key drivers of NAV decline are Revel Foods and Foodiq, followed by Oda Group being down some SEK 18m since the previous quarter, as provided by Nicoya.
Source: Deloitte analysis and Client information
Valuation Methodology
Nicoya’s Unlisted Assets are valued using IFRS13 and the International Private Equity and Venture Capital Valuation Guidelines (“IPEV Guidelines”). The approach includes making an overall assessment to establish the valuation methods and points of reference that are deemed most relevant and appropriate in determining the fair value of each respective Unlisted Asset.
The price in a recent transaction at market terms generally provides an important reference point and basis for the valuation of a specific Unlisted Asset, as well serve as a calibration tool for the other valuation techniques. This is particularly true for those Unlisted Assets that are at very early stages, where traditional valuation techniques may be less applicable and accurate.
However, the price of a recent transaction is generally supported by a secondary valuation technique. The price in a recent transaction may lose relevance over time as market conditions and circumstances change. At each measurement date, possible changes or significant events are assessed and evaluated , leading to a change in fair value where deemed appropriate.
The valuation techniques applied include the market approach, including forward and trailing revenue and profit multiples of select comparable listed companies (“Peer groups”) for each Unlisted Asset; milestone analysis for more early-stage investments; and other techniques were deemed necessary and in line with the market participant perspective.
Nicoya has engaged Deloitte Financial Advisory to perform the independent valuation of each Unlisted Asset on a quarterly basis.
There have not been any significant movements in peer multiples since last quarter. Its noted that multiples are generally down since Q1 2024 across all peer groups, except Producers. The existing peer groups have remained unchanged in all instances.
The peer groups are used as a basis to determine the fair value of each holding. In line with Q1 2024, the peer groups Indoor farming and SaaS are excluded from our analyses as the relevant Unlisted Assets are out of scope. For the Foodtech peer group, there has been a slight decrease in the overall share price, being down some 1% on a Q/Q basis (down c. 15% on Y/Y basis).
Moreover, the median NTM EV / Sales multiple has decreased by c. 0.2x since Q1 2024. While the NTM sales estimates are generally down, the enterprise value development comprises a mixed bag among peers.
In line with the previous quarter, the market multiple for Foodtech, which is applied as a basis in the valuation stems from the median multiple as per last quarter adjusted with the median increase in the NTM EV / Sales multiple on a Q/Q basis of negative 6.2%. With this methodology, the NTM EV / Sales multiple is down since Q1 2024, which is deemed reasonable and in line with general market sentiment as compared to the case where variation within the peer group excessively distorts the applied multiple.
For the High-growth disruptors peer group, the NTM EV / Sales multiples are essentially unchanged since the previous quarter with a slight decrease of 0.1x. When it comes to the share price development, a quarterly decrease of c. 14% is noted. However, there has been an increase of c. 14% in the average share price on a Y/Y basis.
For the Delivery / meal kits peer group, the average share price development is down some 18% on a Q/Q basis (down c. 30% on a Y/Y basis). Moreover, the median NTM EV / Sales multiple is generally unchanged compared to Q1 2024.
For the Producers peer group, the median NTM EV / Sales multiple is slightly up some 0.2x since the previous quarter. The share price development is down some 16% on Q/Q basis (down some 43% on a Y/Y basis). Compared to Q4 2023, both the enterprise value development and the NTM sales estimates comprise a mixed bag for both the Delivery / meal kits peer group and the Producers peer group.
Peer group composition and multiples
a glance
Portfolio Companies at
Portfolio companies
SEKm combined revenue 2023 (portfolio assets excl. Mathem) countries with sales
N!CK’s is a leader in better-for-you snacks and sugar elimination eliminating the gap between indulgent and healthy
Milestones Achieved H1 2024
• Continued cost-control delivering positive cash balance of years first six months is ahead of plan
• Nick's is selling in 29 of the largest 30 grocery retailers in the US
• Successfully launched new protein bars under campaign “taste just like candy”
Foodiq is a disruptive product development and manufacturing platform for plantbased solutions – all natural, no e-codes and clean-label
Milestones Achieved H1 2024
• Applied for protection and reconstruction to turn around Järvenpää factory and enable onboarding of new customer projects
• Developed a new business model of MLC technology sales and licensing
• 1st MLC project initiated with 1st machinery expected to be sold (pilot line) in Q3 and the first MLC line in Q4 2024 (€3.4m of sales in total).
1,5
El Taco Truck
El Taco Truck is the No1 premium challenger brand disrupting the Tex-Mex category. Offers all-vegan product portfolio for an authentic Mexican experience.
Milestones Achieved H1 2024
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Revel Foods
Revel Foods is a “next-generation” House of Brands company for the markets of tomorrow, delivering profitable growth by maximizing synergies
Milestones Achieved H1 2024
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and
Mathem is the leading Swedish online grocery shop, with convenient delivery model –leveraging the strong trend of in-home shopping & consumption.
Milestones Achieved H1 2024
• Completed merger with Oda
• Fundrasing with strong anchor demand of 500 MSEK from main shareholders including Kinnevik
• Continued focus cost cutting and target EBITDA positive 2025 on group level
• Recruited new CEO Chris Poad with experience from Google and Amazon
Splendid Spoon
Splendid Spoon is a meal delivery service in the US that provides fully prepared, plantbased, healthy meals by subscription and on-demand offerings.
Milestones Achieved H1 2024
• Successfully merged with frozen food provider Mosaic
• Splendid Spoon to continue operating under own brand with Mosaic producing all of Splendid's Noodles, Soups, Dishe and Smoothies and fulfilling east coast orders for Splendid
$7m sales YTD, inline with plan
Vertical Harvest Julienne Bruno
InsightMe
InsightMe is a SaaS platform, enabling companies to swiftly gain actionable consumer and market insights, to achieve brand-driven growth and discovering the next generation of food.
Milestones Achieved H1
Peas of Heaven
Peas of Heaven is developing and manufacturing the next generation plant-based everyday foods, making it easy for more people to initiate plant-based habits.
Milestones Achieved H1 2024
Financial Report
Investment Company Summary as of 30 June2024
Income Statement for the period ended 3o June 2024
Balance Sheet for the period ended 30 June 2024
Article: Food Security For
All
Food Security For All
A rising matter leading to new products and markets
“A new food system with new solutions is needed, that allows for stable and accessible food supply, is more resource efficient, causes less carbon emissions and environmental harm, and promotes healthy lifestyles for all.”
Following global supply chain shocks, food price inflation and political instability, many countries and regions around the world are putting Food Security and Food Sovereignty on top of their agendas. A new food system with new solutions is needed, that allows for stable and accessible food supply, is more resource efficient, causes less carbon emissions and environmental harm, and promotes healthy lifestyles for all. For solutions that can meet these needs, new markets await.
Food Security is having reliable access to sufficient quantities of affordable, nutritious food whereas Food Sovereignty is the right of people to healthy and culturally appropriate food produced through ecologically sound and sustainable methods and the right to define their own policies, strategies and systems for food production, distribution and consumption.
Food security and sovereignty concerns are driven by political and economic factors, as well as factors like climate change, population growth, and income growth. These factors are both affecting our ability to produce and supply food and on the same time increasing the demand for even more food.
Figure 1. Food security is being pressed from two sides. There are both factors affecting our ability to produce and supply food as well as factors driving an increased demand for food
Food security for all- A rising matter leading to new products and markets
The rise of the modern food system
Our current food system has at large emerged from World War II, when novel technologies enabled the production and distribution of food in volumes never seen before. This led to population growth supported by a food system that served us well -until we realized the planet’s resources aren’t infinite. Much of humanity’s progress has come at a considerable cost to the environment. Today’s agriculture, fisheries, and forestry practices are far from sustainable. On our current population trajectory it’s estimated that >50% more food will be required to secure safe and nutritious food for almost 10 billion people by 2050(1). Addressing food security in the short and the long term presents a major challenge, if not impossible, if we don’t change our food system.
2. The modern food system has allowed for a constant increase of food production since WWII, in turn enabling and supporting a growing, high-consuming population
Where does the food end up?
As shown in Figure 2, the increased food production goes hand in hand with population growth. But it also shows that we’re producing more food per capita and that it’s constantly rising too. Where does that food end up? Luckily, some of it has gone to increased consumption for those who previously lived on a bare minimum, but that’s not the full story. At large, there are three surplus streams:
1. Food waste. Throughout the value chain, from the farms to our kitchen bins, food waste and food loss occur. The volume wasted and lost makes up ~1/3 of all food produced.
2. Increased demand for meat. Over the past 50 years global meat consumption has more than tripled. To produce one calorie of beef requires 25 calories, while pork and lamb are more efficient, and chicken requires the least amount of calories per calorie produced. By growing feed to animals, instead of food for human consumption, we’ve scaled a highly inefficient way of using energy.
3. Increased consumption per capita. More and more food enters our bodies, both in terms of people catching up to sufficient levels and as an increase in overweight and obesity. In 2022, 2.5 billion adults in the world were overweight. Of these, 890 million were living with obesity (2) .
The food system and climate change spiral
Even if there had been no political instability and the planet’s resources had been infinite, with enough land, water and fertilizer to grow whatever crops and volumes we wanted and eat, waste and raise whatever animal we fancy. Even so, we are heading towards a future with high uncertainty of supply due to an increased risk for extreme weather that may cause draughts, heavy rainfalls, harm farmland, and lead to reduced crop yields and livestock livelihoods. Biological services that food production is
Fig. 3. The risk for extreme weather is increasing. In USA, the third largest agricultural commodity producer in the world, there is an 80% likelihood that at least one decade-long megadrought will hit the regions between 2050 and 2100 (3)
Figure
Food security for all- A rising matter leading to new products and markets
dependent on, such as microorganisms supporting soil health and rain filtration, are also at risk due to climate change. Moreover, these environmental risks are increasing. The current food and agricultural systems and practices continue triggering environmental harm through activities like land deforestation, unsustainable water usage, and greenhouse gas emissions. The food system is responsible for 1/3 of the world's greenhouse gas emissions. It’s clear that the future food system needs solutions that both provide resilience against changing growing conditions as well as stop feeding the climate change monster.
succeed in shifting throughout the value chain. This will require new products and shape new markets, which also means that in every shift lies an opportunity too.
New solutions needed throughout the value chain
So how can we produce 50% more food than today in only 25 years, while at the same time addressing all the challenges at stake? That’s 25 seasons of plantings and harvest. The solution is a mix of already accessible options and high-tech innovations.
• New Protein: By shifting away from animal-based diets to other protein sources we can reduce emissions and free up massive amounts of farmland. Livestock provides less than 1/5 of calories globally but takes up >80% of farmland. Alternative proteins in food and beverage are a global mega-trend that has gained momentum the last few years and that will only increase in importance. Most people still eat meat and dairy, but multiple surveys suggest that many people with Western diets are adopting a less animal-based diet. Between 2017-2022 the market for alternative protein grew by 13% pa and is estimated to continue to grow 14% annually until 2050(4) . New protein sources include plant-based alternatives, cultivated (cell-based) meat, and simply consuming more vegetables and legumes. To offer these sources in compelling ways, we need brands that consumers find attractive and products that are without compromises, ie yogurt or ice-cream with great taste and mouthfeel made without dairy. To achieve this, we need sustainable ingredients available to be used in novel ways, like protein isolates or nutrients, and new production technologies and capabilities.
• Organic & Clean-label: The modern food system is heavily dependent on chemicals. Both as input to increase crop yields and as additives to food products for conserving, masking or enhancing certain characteristics.
In the future food system, we cannot have chemicals that cause harm in the surrounding environments where they’re being used, or that aren’t good for us when consumed. We need sustainable farming practices and we need food that is clean. Clean-label is about making a product using as few ingredients as possible and using ingredients consumers recognize and consider real. Many surveys conclude consumers are avoiding products with ingredients they consider artificial or believe are harmful.
In 2022, 30% of new products launched in USA held a clean-label claim (5) .
Figure 4. Food security is dependent on that we
Figure 5. Foodiq, an example of a solution enabling local production by feedstock agnostic technology and flexible equipment to make non-dairy plantbased, clean-label products without compromises on taste or texture
Food security for all- A rising matter leading to new products and markets
• Healthy & Nutritious Food: Not only is the current food system bad for our planet. It’s also causing a wide range of issues and lifestyle diseases, such as overweight, malnutrition, heart diseases and diabetes. It wouldn’t have to be so. People should be able to live their lives to their full potential and for that, we need innovations that ensure access to healthy food, food products with improved nutritional profiles, and for them living in surplus to make sure these products are the preferred choices. The market opportunity is massive. The global consumer wellness market is worth $1.8 trillion(6). Private and public sectors are spending too, and of which much goes into the treatment of lifestyle diseases. In 2022, U.S. healthcare spending reached $4.5 trillion or 17% of its GDP with diet-related issues as the leading cause for seeking care (7) .
• Next-generation supply chain: To achieve food security and food sovereignty for all we need solutions across the supply chain. We need solutions to tackle resource inefficiency, circularity, and food waste. We need to broaden our feedstock. 75 percent of the world’s food is generated from only 12 plants and five animal species(8) . We need new resilient crop varieties, sustainable growing practices, and novel production capabilities, such as controlled environment agriculture and flexible equipment easily adjustable to different feedstocks and to local conditions. We need smart and agile solutions that strengthen and diversify local sustainable food supply and production.
Not one size fits all
The solutions mentioned are all relevant on a conceptual level, but not one size fits all. Depending on a region’s access to arable land, who has that access, regional climate, economy, population growth, dietary choices and so on, the challenges and best solutions for that region will look different.
And let’s not forget the human factor. We all have different tastes, preferences and abilities. New technologies and products won't do all the work. We need to ensure people feel good about buying the new products developed and that they are without any perceived tradeoffs. This is very important since humans, even if we have all the facts of the harm we’re causing, are simple individuals that not always (want to) see that we are part of a collective and that our choices combined have an impact on us all.
Reaching food security and food sovereignty for all will be challenging and selecting the right innovations in time will be a delicate work. Governments that have put food security on their agendas have a head start and also give a good indication of which solutions will be prioritized where. Undoubtedly, we need to continue to invest and innovate. The current food system won't be able to continue to serve us. Globally, there is a growing population, a rising wealth, and an increasing need to change. Investing in a novel food system isn’t only the right thing to do, relevant solutions will have the future ahead of them.
Sources:
1. https://opecfund.org/news/how-to-feed-10-billion-people
2. https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight
3. https://www.science.org/doi/10.1126/science.347.6223.707
4. FAO 2022, Health & Wellness Food Market 2023
5. Innova Market Insights 2022, https://www.innovamarketinsights.com/trends/global-trends-in-clean-label/
6. https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/thetrends-defining-the-1-point-8-trillion-dollar-global-wellness-market-in-2024
7. https://www.pgpf.org/blog/2024/01/why-are-americans-paying-more-forhealthcare
8. https://www.fao.org/4/y5609e/y5609e02.htm