Matilda Ho was banned from the kitchen for the first 25 years of her life. Her mother’s rule was simple: cooking is what you do when you fail at school. She now runs China’s first food tech venture fund.

I’m joined by Matilda Ho, Founder and Managing Director of Bits x Bites — a $100 million fund vintaged in October 2020, 15 companies backed, Series A and B, and a board seat as a condition of every check. Her LPs are sovereign funds from Singapore, the Middle East and China, agrifood strategics, and family offices.

Her argument is that the food system cannot be fixed at the checkout. She spent five years at BCG and IDEO advising food companies, and one project — working out how likely a Chinese meat processor was to have another scandal — turned up roughly half a million food safety incidents a year. She built an online grocery to fix it one shopper at a time, then concluded that would take longer than her lifetime. The leverage was upstream.

What she found upstream is a manufacturing advantage most investors outside China have not priced. Seventy percent of the world’s vitamins, two-thirds of its amino acids and more than 80% of its stevia are already made there — much of it in brownfield plants with fermentation tanks sitting idle. Where European biotech founders cannot fund scale-up, she can buy it cheap.

She is equally blunt about what does not work. Beyond Burger’s peas travel from Canada to Suzhou to California, and the margin never survives the trip. China already has tofu — clean, plant-based and 2,000 years old. So she funds certainty over moonshots: functional ingredients, animal health, matcha. And in a market where government money is now the largest source of innovation capital, her first exit was a stake sold to a provincial government vehicle.

In this episode we discuss:

• Why the food system cannot be fixed at the checkout, and what changes upstream
• Half a million food safety incidents a year — the consulting project that exposed them
• Biomanufacturing as China’s unpriced edge: overcapacity, brownfield sites and idle fermentation tanks
• Why alternative meat fails on unit economics in a country that already has tofu
• China’s “visible hand” — how government money became the largest source of innovation capital
• Selling a portfolio company to a provincial government vehicle, and why DPI beats IRR in China
• Why she will not write a check without a board seat
• Backing wartime CEOs, and what a decade of bad hires taught her about founder diligence

Featured guest:

• Matilda Ho, Founder and Managing Director at Bits x Bites

Listen Next:

AgTech Profits Meet Planet: Where Climate Impact and VC Returns Align

Discover More from SRI360°:

• Explore all episodes of the SRI360° Podcast
• Sign up for the free weekly email update

Key Takeaways:

• Fixing food at the checkout does not scale. Matilda built an online farmers market and learned that people only change how they eat after a life event — a birth, a diagnosis. A movement, she says, but not a viable business model. The leverage sits upstream in the supply chain.
• The supply chain is the problem. In China a vegetable passes through roughly seven hands before it reaches a table. A third of food rots on the farm, another third in transit, and the rest is wasted in fridges and warehouses.
• China’s arithmetic is brutal. Around 20% of the world’s population and under 7% of its arable land, feeding 1.4 billion people. More than 85% of soybeans are imported, mostly to feed chickens and pigs.
• Biomanufacturing is China’s quiet edge. Europe’s biotech founders struggle to fund scale-up. China has the opposite problem — overcapacity, brownfield sites and idle fermentation tanks, plus the plant managers who know how to run them. 70% of global vitamins, two-thirds of amino acids and over 80% of stevia are already produced there.
• Cost is king and taste is king. Beyond Burger’s peas grow in Canada, get processed in Suzhou, then travel to California for final formulation. The gross margin never works. And as she puts it, China already has tofu — clean, plant-based, cheap, and 2,000 years old.
• Government money is now the largest source of innovation capital in China. Local governments run fund-of-fund structures and back specialized GPs rather than investing directly. Her own first exit was selling a stake to a provincial government vehicle at Series B, in year five of the fund.
• In China, DPI matters more than IRR. IRR can be manipulated; cash returned to LPs cannot. Most domestic funds have only a five-year life, which forces short-term decisions. Her USD fund has ten to twelve years.
• Back wartime CEOs, not peacetime ones. Growing revenue tenfold when money was free is not a replicable track record. She looks for humility, grit, and founders who keep going when 99% of the signals say stop.
• Software alone does not work in agriculture. Farmers will not pay for something invisible. Her Beijing crop-model company had to bundle seeds and inputs with the software; two-thirds of its revenue now comes from selling the inputs.
• Drones changed the economics for smallholders. A tenth of the chemical input, up to half the water saved, and profits up around 30% on cash crops — plus a whole new job class of drone operators. Most growth is now outside China, in North America, Brazil and Argentina.
• Agrifood is under-invested. It accounts for less than 5% of total venture funding. Her ambition is that generalist fund managers eventually treat it as a sector worth a seat.

Additional Resources

Matilda Ho LinkedIn: https://www.linkedin.com/in/matildaho/

Bits x Bites LinkedIn: https://www.linkedin.com/company/bits-x-bites

Matilda Ho on X: @matildajyho

Bits x Bites: https://bitsxbites.com/

Matilda Ho’s TED profile: https://www.ted.com/speakers/matilda_ho

Related SRI360° Episodes:

Beyond the 2/20 Model: Disrupting VC & 25% IRR from Climate Adaptation in Southeast Asia