#GoodMarkets_07: Precision Fermentation

Original Publish Date: Nov 2, 2022 on Revue

“A gene is a long sequence of coded letters, like computer information. Modern biology is becoming very much a branch of information technology.”

Richard Dawkins

TL;DR 💚

We are seeing a significant rise in the number of impactful food startups focusing on precision fermented foods. And it’s likely to lead toward a massive change lower prices, increased food quality, and reduced risks for health from foods that are biologically augmented.

The Rise of Fermentation

Since the beginning of time, humans have been searching for ways to make their food safer and more nutritious. Fermentation is one of the earliest methods we’ve used to do this. It’s believed that as long as there have been human beings on Earth, we’ve been fermenting foods in order to preserve foods and make them last longer.

However, as we moved into an age where refrigeration and preservation techniques were common practice, fermentation fell out of favor as a way of preserving food. But now it’s back, and with a vengeance!

In recent years, consumers have become increasingly concerned with what they are putting into their bodies and how it affects them both physically and mentally. Fermentation is helping to create all sorts of foods — fats, milk, honey, chocolate, and more — largely through ‘pure proteins’ / ‘alternative proteins’.

“Alternative proteins are either plant-based and fermented using microbes or cultivated directly from animal cells. Fermented proteins are made using one of three production types: traditional fermentation, biomass fermentation or precision fermentation.” Fermentation Association

We’ll focus here on precision fermentation, and perhaps visit biomass fermentation — e.g., anaerobic digestors in another article.

The rise of precision fermentation has been driven by these concerns: consumers want to know exactly what goes into the products they buy — and whether or not those products are safe for consumption.

A new trend is emerging in the alternative proteins and food space–where genetics is used to create new foods, which may be healthier and better for the environment than the alternative traditional means.

The impact to the environment from these biologically modified approaches in food production, are showing multiple environmental benefits, it seems.

Major Health and Environmental Trends

In the United States, this interest has been boosted by major media outlets like The New York Times and The Wall Street Journal that have published stories about the benefits of eating fermented foods like kombucha and sauerkraut.

The trend can also be credited to the rise in gut health interventions that have been shown to boost immune function, improve digestion and absorption of nutrients, and reduce inflammation. See NIH study here.

Fermented foods are on the rise, with many of the biggest names in health care — like Mayo Clinic and Johns Hopkins Medicine — conducting research on how various fermented foods may be beneficial for your health and microbiome.

Cleantechnica reported environmental benefits from precision fermentation of milk statistics (Source here)

1. Up to 100 times as land efficient
2. 10 to 25 times as feedstock efficient
3. 20 times as time efficient
4. 10 times as water efficient

The Boston Consulting Group (BCG) also outlines the climate aspect of consumer behavior change, from their excellent Untapped Climate study. They suggest, cutting meat consumption by half worldwide could lower greenhouse gas emissions by 11%, and see this opportunity catalyzed by potentially reaching “peak meat.” The BCG’s findings also point to consumer behaviors shifting more toward health and wellness, which was surprising to me — over environmental considerations.

Precision Fermentation Market

The global precision fermentation market size is expected to reach $11.8 billion by 2028, growing at a 2021–2028 CAGR of 41.5% during the forecast period. This is coupled with trends in increasing demand for eating vegan foods which helped influence the popularity of fermented foods, according to research here.

If you’re curious about the science of fermentation — and particularly around the Agriculture 2.0 thesis: The Good Food Institute has an excellent walkthrough here. I’ll likely do another deep dive on Synthetic Biology at some point.

Recent Raises (Data Source: Crunchbase)

Hyfé Foods

• Description: Hyfé Foods is a biotech company producing ingredients by leveraging fungal fermentation to upcycle water byproducts from food manufacturers.
• Location: Chicago
• Verticals: Biotechnology, Food and Beverage, Manufacturing
• Top 5 investors: Caffeinated Capital, Gaingels, The Engine, Supply Change Capital, Food Hack
• Total Raised: $2M
• PreSeed close $2M (2022)
• Founded in 2021

MelBio (Note: Author is an Angel in this startup)

• Description: MeliBio is a technology-based company focusing on plant biology, precision fermentation, and food science that replaces honeybees with microorganisms as a medium for honey production.
• Location: San Francisco
• Verticals: Biotechnology, Food and Beverage, Nutrition
• Diversity: Hispanic / Latine Founded
• Top 5 investors: Knightfisher Capital, Big Idea Ventures, Collaborative Fund, Alumni Ventures, Joyance Partners
• Total Raised: $7.2M
• Seed close $5.7 (2022)
• Founded in 2020
• https://www.changefoods.com/

Change Foods

• Description: Change Foods is a producer of animal-free cheese and dairy products. Its products are created by leveraging precision fermentation technology, starting with cheese, by harnessing the power of microbes instead of animals to create real dairy proteins and fat and the products are indistinguishable from their animal-based predecessors in taste and texture.
• Location: San Francisco
• Verticals: Biotechnology, Consumer Goods, Food and Beverage, Food Processing, Sustainability
• Top 5 investors: Clear Current Capital, Giant Leap Fund, Route66 Ventures, Better Bite Ventures, Purple Orange Ventures
• Total Raised: $15.3M
• Seed close $14.3M (2022)
• Founded in 2019

New Culture (Note: Author is an Angel in this startup)

• Description: New Culture is a food and beverage company that focuses on revolutionizing how cheese is made.
• Location: San Francisco
• Verticals: Food and Beverage
• Diversity: Women Founded
• Top 5 investors: CPT Capital, Ahren Innovation Capital, Evolv Ventures, IndieBio, Bee Partners
• Total Raised: $28.5M
• Series A close $25M (2021)
• Founded in 2018

Geltor

• Description: Geltor is the conscious biodesign company creating the world’s most advanced designer proteins. We start by imagining and deeply exploring nature’s tree of life and combine biology, protein optimization, and fermentation to create sustainable, high-performance consumer proteins with optimal functionality and benefits.
• Location: San Francisco
• Verticals: Advanced Materials, Beauty, Biotechnology, Food and Beverage
• Top 5 investors: SOSV, Fifty Years, IndieBio, Starlight Ventures, Carvallo Ventures
• Total Raised: $114M
• Series B close $91M (2020)
• Founded in 2015

Thanks!

Copyright 2022, All rights reserved, by Zecca Lehn via @posi2ive. No advice given here (e.g., financial / legal / business / other). All views expressed represent those of the author personally at the time of writing, and not those of any external business entity nor organization.