Food, says Matías Muchnick, is having a subprime moment.

The former JPMorgan banker’s damning verdict on the global nutrition industry is informed by his experience of watching Wall Street during the global financial crisis in 2008.

“Whenever I started digging into the food industry, it had exactly the same red flags,” he says. “Very few companies selling overly complex products to very disconnected consumers, where regulators became the regulated.”

Muchnick’s answer was to start NotCo, a company that sells plant-based substitutes for meat and dairy products. Now one of Chile’s most innovative new companies, NotCo sets itself apart from its alternative food competitors by using a computer algorithm to suggest unusual plant combinations that mimic meat and dairy sensations. Cabbage and pineapple, for example, are part of a counter-intuitive recipe that helps NotMilk to taste and look as close as possible to cow’s milk.

“Taste is king — and is the first, second and third priority of this industry,” Muchnick says.

After an initial experiment with vegan food in 2012, Muchnick founded NotCo in Santiago in 2016 with two partners. “Chile is a country that, even though it’s in Latin America, behaves really like an American environment, where contracts are generally met, where the law really protects you as an entrepreneur,” he says.

His first product was NotMayo, a plant-based substitute for mayonnaise that sold briskly, helped by the little-known fact that Chileans are the world’s third biggest per capita consumers of mayonnaise. The recipe included chickpeas and lupin flowers — the latter “had the amino acid extraction that replaced eggs in the emulsion”, explains Muchnick. “Very good-tasting mayo.”

Funding from Kaszek Ventures, Latin America’s largest venture capital firm, quickly followed.

“As soon as we met Matías and he shared with us his vision, we were completely bought,” says Nicolás Szekasy, Kaszek’s co-founder, recalling that NotCo achieved a 10 per cent share of Chile’s mayonnaise market with only seven employees and a few hundred thousand dollars in seed capital. “That was proof to us that these guys could not only dream big, but they could also get things done.”

With the extra money, NotCo quickly scaled up its manufacturing capacity and attacked the Chilean mass market. It then launched additional products such as NotBurger, used by Burger King to make the vegan Rebel Whopper sold in Chile, and NotMilk — whose eye-catching packaging features a drawing of a cow with a thick black line across it. Dairy farmers were so alarmed by this new competitor that they launched a lawsuit trying to prevent the use of “milk” in NotMilk’s name.

The plant-based business has even ventured into Argentina — home of the juicy, grass-fed steak.

NotCo does not disclose sales or profitability data but it says its revenue has never grown by less than three times, year-on-year, and Muchnick expects it to quadruple this year.

This sort of growth has whetted investors’ appetites over three funding rounds. Amazon billionaire Jeff Bezos’s family office was among the investors in a 2019 round, which raised $30m and helped to pay for expansion into the US, where NotCo has started selling NotMilk in stores in the Whole Foods chain, owned by Amazon.

Muchnick has moved to New York to oversee the US expansion and, towards the end of this year, NotCo hopes to become Chile’s first start-up valued at more than $1bn — although it is not seeking additional funding at present.

Such a valuation would not be exceptional in the alternative food sector. Swedish plant-milk maker Oatly aims for a $10bn flotation this year and, in 2020, venture capitalists, angel investors and big food companies placed $3.1bn of bets on 170 alternative protein start-ups, according to the Good Food Institute, a US lobby group.

While rivals such as Beyond Meat are also trying to make plant-based substitutes for meat and dairy products, NotCo believes that its patented AI technology will give it an edge.

According to Muchnick, there are 400,000 species of plants waiting to be exploited. The algorithm has been trained to search a vast database of edible plants to find combinations that replicate meat and dairy products — both the taste and the look and feel.

“What we develop is the real understanding of food,” says Muchnick.

How far can the algorithm extend the product range? He smiles. “I tasted a [replica] soft ice-cream. It is just unbelievable. And that was created [in] only two or three months, it’s crazy. What is the limit? I don’t know.”