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An Interview with Dr Catherine Tubb, Synthesis Capital's New Director of Research

• Synthesis Team • Interview

Rosie Wardle (RW): First, welcome to the Synthesis team Catherine! We are delighted to have you on board as our new Director of Research. So, to kick things off, tell us about your career to date. You are already well known in the food tech sector as the author of RethinkX’s report “Rethinking Food and Agriculture 2020-2030”, but many people may not know that before that you also spent a decade in equity research.

Catherine Tubb (CT): Of course! After finishing my PhD in Computational and Organic Chemistry at Cambridge University, I joined the independent Equity Research house Sanford Bernstein. My focus was covering the European Chemicals names including BASF, Bayer, Yara, K+S, Akzo Nobel, Air Liquide, and Linde. Because of the agricultural focus of many of these companies – across crop protection chemicals, seeds, and fertilizers – I spent a lot of time looking more generally at the drivers behind supply and demand of agricultural commodities. I was fascinated by how such an important sector was also so opaque. At the time there were six (now four!) large crop protection companies globally, and this oligopolistic control was evident in some of the practices we saw. At the time we were also seeing extremely high soft commodity prices due to the perfect storm of a global recession, the growth in demand for biofuels and the growth in demand for soybean from China for use as pig feed. There was a lot of discussion in the markets at the time about the promise of biofuels – which I found extremely worrying due to the impact on the price of food! This interest ultimately led me to the role at RethinkX.

RW: Your PhD is in organic and computational chemistry. How relevant is your academic training to understanding the complexities of alternative protein technologies?

CT: Food and alternative proteins are all just chemical molecules when you think about it. Knowing the chemical language around molecules is helpful when we are thinking about food. The skills around reading and interpreting scientific literature and research continued to be important to my work at both Bernstein and RethinkX and will be at Synthesis too. However, there is a lot I don’t know, and that is part of the excitement of this nascent industry that is moving at such a fast pace!

RW: The report you authored at RethinkX is seminal for our sector. For any readers who aren’t familiar, can you give us an overview of RethinkX and the thesis of the report?

CT: RethinkX is an economically focused disruption think tank, focusing on understanding the dynamics and the systemic nature of disruption across key market sectors. It was founded by Tony Seba and Jamie Arbib.

At RethinkX we used a specific framework for thinking about disruption pioneered by Tony Seba. RethinkX has now brought out reports around most of the five foundational sectors it believes will be disrupted by technology in the 2020s. These sectors (and the report publication years) are transportation (2017), food (2019), energy (2020), as well as information (which has already undergone a huge disruption) and materials.

At the heart of it is that technological cost curves fall exponentially; these technologies converge to enable products, businesses, and services with certain functionalities at a certain cost simply not available before. Meanwhile, these disruptive products start to be adopted by the market, and at the same time continue to get better and cheaper. The other main point is that this adoption happens along S-curves – something which forecasters often get wrong – and goes far quicker than you would expect.

For food we focused on (and defined!) precision fermentation (PF) as a core disruptive technology. Part of this is because for a technology or product to be truly disruptive it needs to have the potential to be both cheaper (which we believe PF could be) and better than the incumbent. We felt PF had enormous potential here because it can make the exact same molecules as you find in animal agriculture and could also function as an enabling technology to make molecules needed to grow cultivated meat.

The point about the disruptive industry being cheaper and better is still core to the investment landscape today and is currently a key barrier to full adoption for products across the plant-based and cellular agriculture space.

For a technology or product to be truly disruptive, it needs to have the potential to be both cheaper and better than the incumbent

- Catherine Tubb

RW: Since you authored the report, has the industry been developing as you expected? Have there been any surprises over the last few years?

CT: Some parts of the industry have, and others haven’t! Our assumption that the cost of the technologies would continue to fall is still happening. Our main forecast for the cost of precision fermentation would reach cost parity with bulk animal proteins by 2023-25 - roughly $10/kg. This is something that we see the industry working towards and I still feel confident in. Indeed, assuming we will see hybrid products enter the market first (where PF proteins or cultivated meat is mixed with plants), the cost may not need to come down that low to compete in some products areas.

The second part of our forecasting is around adoption modelling. While demand for alterative proteins is growing, there continue to be supply side challenges, these are capex intensive businesses that need time and investment to be built up.

I have been surprised about how fast the technology behind cultivated meat has progressed. Also, the sheer number of companies in this space. Even in 2018 when I started looking at it the number of companies was around 40. Now, we are in the hundreds and maybe thousands, with companies starting up across the whole ecosystem and across the whole value chain!

Disruption is still inevitable. At RethinkX I spent a lot of time trying to understand the dynamics of the incumbent beef, dairy, and leather industries. These industries operate on extremely thin margins, which means any slight change in demand can have disproportionate impacts – this means that once we get to the tipping point, change will be fast. I still believe these economics are not understood in the market and will be key to the disruption of the current food system.

RW: What drew you to Synthesis Capital – why did you want to join the team?

CT: I was introduced to Rosie and Costa when I joined RethinkX due to their extensive knowledge and contacts within the alternative protein sector.

For me they were (and still are!) important thought partners in the sector, with an unparalleled network. Since then, I have maintained contact and couldn’t be more excited to join the team. Costa and Rosie are some of the first investors in the space and as such are central to the alternative protein investment ecosystem. Coupling that with David (whose team I also worked with at RethinkX) and his impressive knowledge about the science in the space, they really make a formidable team.

RW: Tell us about your role at Synthesis and what you will be focused on.

CT: As Director of Research, I will be leading the team’s research programme both across our internal (the team, our LPs and portfolio companies) and external stakeholders. At Synthesis Capital we have a best-in-class team of industry thought leaders, and we are excited to share that with our stakeholders.

Internally I will help implement and create some data sources to aid the investment process, as well as leading the research on the overall market side (think adoption forecasts, market impacts). I am excited to get bring in some “big picture” thinking so that we constantly consider how these technologies may have further implications beyond food. In addition, as we start to build our internal data on ESG impacts, I would like to incorporate that into my research. The role will be ever evolving though!

The technologies we are seeing as being so disruptive in food also have implications across other sectors like materials. I am excited to see these cross-sector impacts!

- Catherine Tubb

RW: What excites you most about the potential for the alternative protein and food tech sector?

CT: The disruptive potential for thus sector is truly astounding and will have huge and far-reaching implications for the world, socially, economically, environmentally and for our health. I am particularly excited about how the food disruption will intersect with other disruptions we are seeing in transportation and energy for example. This will really allow for the true decentralisation of food production, which is has far reaching implications for sustainability.

My previous role to joining Synthesis was Head of Textiles at Planet Tracker, as such I also have an interest in the Materials sector, and as many of the potentially disruptive technologies can also be used to make materials (such as leather replacements), I am excited about the potential impact of food technology across sectors!

RW: Are there any areas of technology which particularly interest you?

CT: Cultured meat has to be the most exciting. The ability to make meat outside of an animal has so many implications - how can you not be excited?! Beyond that some of the new technologies we are seeing being used commercially (such as 3D printing), and that also can be used across alternative protein technology verticals are exciting.

RW: Thanks Catherine for taking the time to answer these questions today – I’m sure everyone reading will be looking forward to seeing more content from you soon!

CT: Thanks Rosie!

by Catherine Tubb, Director of Research