Meati Secures Bridge Funding Amid Financial Crisis

Colorado-based alternative meat startup Meati has successfully obtained bridge funding that allows it to sustain operations while negotiating a larger funding round. This development temporarily alleviates a looming financial crisis that put the company’s future in jeopardy, as reported by AgFunderNews.

The situation escalated in late February when an undisclosed lender significantly reduced Meati’s available cash by two-thirds, following what is known as a technical default. This default stemmed from the company breaching a financial covenant tied to its revenue and gross profit, despite being current on its payments.

Warning Signs for Employees

In light of the situation, Meati issued a WARN notice to its staff on March 7, indicating that production would halt on May 6 (tomorrow) and all 150 employees would be terminated unless the firm could secure additional financing.

Employees have remained informed about the company’s initiatives to overcome this crisis through regular all-hands meetings. Despite the uncertainty, the staff has continued to show up for work during these challenging times.

CEO’s Response to the Crisis

CEO Phil Graves has been collaborating with the board, investors, and key stakeholders to identify a viable path forward since the bank’s abrupt cash sweep on February 28. While Graves has not commented on the latest developments, insiders express concerns over the decisions made by the lending institutions.

‘Gut-wrenching’ Decisions

The bank had reassured the company at the end of January that no cash would be swept unless fraud was involved. According to a source, the sudden cash withdrawal shocked the organization, especially after recent retail distribution gains and revenue growth fostered a sense of optimism among staff.

Path to Profitability

Meati, a prominent player in the meat alternatives market with $365 million in funding from backers like Grosvenor Food & AgTech and Prelude Ventures, has faced four rounds of layoffs in recent years to streamline operations and expedite profitability. Despite these challenges, executives have noted positive trends, including a recent line of breakfast patties launched by Graves.

Strategic Retail Growth

Meati’s products are now available in over 7,000 locations throughout the U.S., including major retailers such as Kroger, Whole Foods Market, and Wegmans. The company has seen a substantial increase in distribution—up 130% year-over-year—while implementing strategies to ensure products are readily available and well-marketed across stores.

Rethinking Future Goals

Graves acknowledged that the previous leadership had set ambitious targets, including a projection of $1 billion in retail sales within five years. However, he emphasized the need for more realistic goals moving forward.

“We recognized some overly exuberant goals had been publicized in the past. Today, we are focusing on grounded objectives. The market demands can we demonstrate profitability not in ten years, but rather within 12 to 18 months?”

Graves also pointed out that incoming capital and high-caliber talent had inadvertently led to an overly complex and siloed organizational structure, urging for a shift back to a more agile, scrappy startup mentality.

Further Reading:

Meati plans “gut-wrenching” mass layoffs amid “bank-induced crisis.”