Pressure is building for Impossible Foods to do an initial public offering so investors can buy Impossible Foods stock.
Manhattan Street Capital of San Francisco offered shares during the summer, through a special investment vehicle, quickly raising $27 million. The fund’s offering statement said it would charge 1.5% of the principal each year for its management of the holding.
Only accredited investors were invited to the fund, with a minimum investment of $100,000. The offering is listed as complete. Manhattan speculated while doing its offering that Impossible would be filing an S-1 and begin the process of going public in “weeks or months.” Since then nothing has happened.
Why No IPO for Impossible Foods Stock?
There are good reasons for Impossible Foods to resist an IPO. This starts with CEO Patrick Brown, a former professor of biochemistry at Stanford.
Brown says he created Impossible Foods to support the environment, not just make money. While at Stanford he promoted the open access movement, which puts scientific papers online rather than publishing them through paid journals. He says he’s more interested in solving the problem of meat, the environmental destruction it causes, than making money. He told a Techcrunch event last October that he didn’t see an IPO on his “near-term roadmap.”
Brown calls CFO David Lee his “investor whisperer.” Lee was formerly CFO of Zynga (NASDAQ:ZNGA), a games company known for Farmsville. During the pandemic, Lee has switched the company from supplying restaurants to supplying grocery stores. As part of that effort he brought in a manufacturing partner, privately-held OSI, which agreed to create a dedicated, enclosed production room for it at its Chicago plant.
The Brown-Lee combination is like other entrepreneurial combinations, where the CEO is focused on the mission and the CFO on the business.
So far, Impossible has seen nothing but success. Its initial capital raise in 2011 was $9 million. Since then it has raised $1.5 billion. Its most recent raise of $200 million in August was led by venture fund Caotue, valuing the company at $4.05 billion. A March round of $500 million valued it at $3.67 billion and included celebrities like Serena Williams, Katy Perry and The Daily Show host Trevor Noah.
Impossible started with a burger product, upgraded it, then began producing fake sausage and pork. It claims its products require 4% of the land, 13% of the water, and create 10% of the emissions of animal meat.
A Rocky Road
Impossible’s main rival, Beyond Meat (NASDAQ:BYND), has had a rocky road in the market since coming public in May, 2019.
The share price exploded after the $25/share IPO, from $46 to almost $235 in less than two months. Shares then fell steadily to a pandemic low in the 60s but have since more than doubled. Beyond opens for trade Oct. 5 at around $166, a market cap of more than $10 billion.
The Wall Street Journal recently described a frenzy around Impossible shares, with investors around the world seeking out employees and existing investors. As part of that story, Lee said the latest private rounds will likely be Impossible’s last or second-to-last before it goes public.
The Bottom Line
Your shot at getting into Impossible Foods is coming.
But it’s likely that when it comes public, its go-go days will be behind it.
Management seems focused on having a profitable business, with firm control over its mission, before inviting the public into the tent.
The company doesn’t disclose sales figures, except to say they grow month-by-month. It has successfully managed the transition from restaurant to retail, publishing a cookbook with $3 from every copy going to the No Kid Hungry charity.
I’d be happy to buy Impossible Foods stock after its IPO, once the initial frenzy is over and I have numbers on which to base a valuation. That looks to be a year away.
On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Write him at [email protected] or follow him on Twitter at @danablankenhorn.