Being scrappy: operating in a capital-constrained environment

With softening demand in the alternative protein space, companies planning expansions are becoming more mindful of capital needs – and of investor expectations for prudent spending. As a result, some are turning to contract manufacturing or other ‘asset-light’ models, such as equipment leasing. But not all approaches, like licensing, suit emerging products – especially those still finding their footing in the market.

The challenge for a new food product is multifaceted. Companies must grapple with consumer acceptance and demand alongside the complexities of scaling manufacturing. It’s one thing to deploy existing technology – or even trial a new one – in an asset-light framework, but many food processes remain in flux, often requiring substantial changes. This raises the question: should you outsource the very elements that might constitute your company’s competitive advantage? Are those parts of your core business offering? Going light could also hinder speed or complicate coordination among internal teams. So, what’s the answer? How do we move forward in today’s generally capital-constrained environment?

Going light can be a strategy – but it is not the strategy, nor is it a one-size-fits-all solution. It’s a broad concept, covering a range of business models. Instead, I prefer to think outside the box. I like the term ‘scrappy’ – it evokes determination and resourcefulness. It’s about operating beyond the consulting buzzword of ‘asset-light’ and
its associated frameworks.

While keeping food safety and sanitary design at the forefront, it’s helpful to define your minimum viable product – not only in terms of your food item(s), but also your facility. What are the core elements of the product? Can you limit variations or avoid complex processes and still deliver? Can you tweak the process to run on more
widely available equipment rather than highly specialized machinery?

Going light can be a strategy – but it is not the strategy, nor is it a one-size-fits-all solution. I like the term scrappy – it evokes determination and resourcefulness

For the facility, this may be the right time to be frugal – without overly constraining future expansion. Should you build a smaller line? Can you substitute different equipment? What about manual versus automated operation? What equipment is core to your process? Generally, it makes sense to keep that core equipment in-house. But what about infrastructure needs? Think compressed air, water, and wastewater – as-a-service. Yes, your operational costs may rise, but you won’t be tying up capital in non-core yet essential infrastructure.

Flexibility is your ally. Maybe an equipment manufacturer has a canceled order, or there’s an upcoming liquidation auction. Even used equipment could work – although take care to ensure it meets your requirements and doesn’t come with hidden costs due to deferred maintenance or high replacement needs. Recalling your definition of a minimum viable product, being flexible might allow you to use equipment that isn’t your ideal, but can reasonably (and safely) get the job done. You might also consider outsourcing some non-core steps – such as packaging or rehydrating a product.

As for the facility itself, being open-minded about location and other criteria can unlock more capital-efficient options. While I’m generally cautious about building a sanitary, food-safe facility in a space of unknown origin or non-food use, there are creative workarounds. One is the ‘box-within-a-box’ approach: construct your production area so you can fully control its environment. This is especially useful when cold or refrigerated spaces are needed.

That said, one area where you should not cut corners is design and engineering. Good design anticipates future costs and mitigates engineering pitfalls – like ensuring refrigeration won’t affect the slab, or preventing condensation that could lead to microbial growth. Be transparent with your design and engineering partners. It’s far more effective to design with budget and constraints in mind from the outset than to attempt to ‘value-engineer’ downward later – something that can
be both difficult and frustrating for all involved.

Building a food manufacturing facility with ample capital is an ambitious endeavor. Doing so with constrained capital is certainly more challenging – but far from impossible. By focusing on a well-defined minimum viable product and embracing strategic planning, resourcefulness, and efficiency, it is possible to scale manufacturing – even in lean times.

David Ziskind is the Managing Partner at Mach Global Advisors. He helps companies planning for or have recently secured Series A or B funding to launch emerging or first-of-a-kind projects successfully. This article is republished from the Q2 2025 edition of Protein Production Technology International, the industry's leading resource for alternative proteins. To subscribe to all future editions, please click here