Meati Foods, the US-based producer of protein alternatives, is at risk of going out of business after an undisclosed lender withdrew funding.
A Worker Adjustment and Retraining Notification (WARN) was filed with the Colorado authorities on 7 March saying Meati Foods had been forced to close its manufacturing facility in Thornton, Colorado, as a result of the financing constraints.
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Meati Foods, which produces meat-alternatives using mycelium as the protein source, added that 150 workers are “being permanently terminated” as a consequence. The first batch of staff will be cut on 6 May, the company said.
“We are taking this action because our lender unexpectedly removed cash from our accounts and took control of remaining cash reserves on Friday, February 28, and the action was not reasonably foreseeable,” Meati Foods explained in the WARN filing.
“Based on this action, we do not have sufficient funding to continue operating.”
It was not clear who signed off the WARN notice as the signatory was blanked out.
Despite the WARN notice, a source familiar with the proceedings told Just Food that Meati Foods continues to operate, with production at Thornton still ongoing, but the company was obliged to file the notice because of the implications for jobs.
The job cuts are not set in stone, however, provided Meati Foods’ talks on raising new financing are successful, the source said.
Meati Foods’ undisclosed lender cited in the WARN filing had taken action after the company failed to meet revenue and margin targets laid down as a condition of a previous financing arrangement, even though the business had almost doubled revenue last year and increased distribution by 130%, the source explained.
The WARN notice continued: “The result of the lender’s unexpected action is that we have to shut down our manufacturing facility.
“We are notifying you of this decision as soon as it was practicable to do so, taking into account the great difficulties we face in projecting staffing needs under these unprecedented circumstances.”
Meati Foods was co-founded by one-time CEO Tyler Huggins and chief technology officer Justin Whiteley, producing its signature “steak” from mycelium, the root structure of fungi commonly found in mushrooms.
Early last year, Phil Graves was appointed CEO to replace Huggins, who transferred to the company’s chief innovation officer.
According to Just Food’s records, Meati Foods secured $150m of funding in mid-2022 from a Series C round to finance the construction of what management called its “mega ranch” in Thornton.
That took total funding at the time to $228m.
Contributors to the Series C included venture-capital firm Revolution Growth and Cultivate Next, a fund owned by the fast-food restaurant chain Chipotle Mexican Grill. Grosvenor Food & AgTech also took part.
Acre Venture Partners, Congruent Ventures, Tao Capital, Prelude Ventures and VC Bond Capital had all been prior investors in Meati Foods via Series B and A financing rounds in 2021 and 2020, respectively.
