Target Global VC
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Target Global VC

Got milk? Why we are backing Imagindairy, the dairy solution of the future

By Dana Bublil

Imagindairy co-founders: Tamir Tuller, PhD; Eyal Afergan, PhD; and Arie Abo, PhD. Photo by Yaniv Koppel

Imagine milk with the same taste, texture and nutritional value of cow’s milk but without the cholesterol, lactose or complex process of raising and milking required to produce it. And not a cow in sight.

Through precision fermentation of fungi and yeast it’s possible to produce milk proteins identical to cow’s milk. Our latest investment in the alternative food and drink sector, Imagindairy, has developed a groundbreaking technology based on artificial intelligence and synthetic biology, that does precisely that.

Why does this matter? 14% of the world’s greenhouse gasses are produced by cattle — more than that produced by all the vehicles on the road collectively.

Animal-free dairy products are fast becoming more advanced. Most of us will already be aware of the proliferation of foods on the market that seek to replicate or replace meat, fish, and dairy. Some of us will also have tried them, particularly as an increasing number of people around the globe embrace vegetarianism or veganism as a healthier and more sustainable lifestyle option.

What many of us are less aware of, though, is the growth of ‘cell-based’ agriculture and precision fermentation technologies, both tools which are in their infancy but that have the potential to replace up to 35% of the traditional meat market within the next 20 years. It’s a market that’s developing rapidly worldwide and what may surprise many is that one of the biggest hubs for this innovation is Israel, which is (also) home to Imagindairy.

The market for milk alternatives, such as almond and soy milk, is worth approximately $2.5 billion in the U.S., and it is expected to grow by 9.8% by 2023. Across the Atlantic, more than 25% of British consumers are now using plant-based dairy alternatives, and the UK’s plant-based milk market is valued at more than $350 million, which comprises about 8% of total milk sales in the U.K.

The necessity for alternatives and, in particular, the creation of alternative dairy solutions has highlighted the boom in mass-produced solutions for consumers at an affordable price. Target’s current portfolio also includes MosaMeat and ForSea which are meat and seafood companies, respectively.

Last month an event which connected the entire value chain from around the world gathered to map out the future of protein. Among the leading startups, corporates and investors in the field, Imagindairy took part. The milk industry will probably be the fastest in terms of time-to-market with consumer products, so it makes sense to elaborate on this latest investment.

Proteins are identical to cow’s milk proteins

Imagindairy was established in 2020 and employs 20 people. Through use of microorganisms and the combination of AI and synthetic biology it enables the very efficient precision fermentation of fungi and yeast, producing the same dairy proteins found in milk from a cow — but without the cholesterol, lactose, and complex process of raising and milking cows.

The startup’s unique technology is based on 15 years of research led by the company’s co-founder and CSO, Professor Tamir Tuller of Tel Aviv University. The research indicates that its process is significantly more efficient than other methods based on protein expression in microbial systems. Professor Tuller’s team of nearly 40 multidisciplinary researchers, alongside the company’s scientists, has already demonstrated an improvement of 50 times in production yield within two years.

Unlike plant-based milk alternatives, Imagindairy’s proteins are biologically identical to their counterparts and therefore can produce dairy products that are identical in taste and texture to those produced using cow’s milk. With this offering, Imagindairy is able to collaborate with dairy companies and offer dairy-free proteins to dairy branded companies looking to expand their product lines and diversify their product portfolios.

Why is it important?

The “first cow” was domesticated 10,000 years ago, and since then, technology has been mobilized to produce more milk from it. However, the result of this industrialization has seen the aforementioned 14% increase in the production of greenhouse gasses by cattle.

In addition, the cows pollute the drinking water, require a lot of soil to grow and resulting in extensive use of antibiotics. This is all without mentioning the moral aspect of producing dairy: in order to produce milk from cows, they must be constantly pregnant, give birth to calves that are taken from them without suckling, and so on.

Global demand for alt-protein has been on the rise, with some predicting the market will be worth as much as $4.4 billion by 2026. This is being driven by population growth, diminishing agricultural land, and shifting dietary patterns.

What we’re most excited about

We met Imagindairy after more than two years of extensive research into the alternative-milk market across Europe and Israel. One of the things we were most surprised to discover was that the number of local startups in Israel that are engaged in the ‘alt-protein revolution’ is second only to the United States.

Our research happened to coincide with the peak of the Covid-19 pandemic, which spurred a wave of heightened consumer awareness over the dangers and volatility of the animal supply chain, as well as the environmental and health concerns related to animal food production.

Upon meeting Eyal and his team, we were thrilled to discover that Imagindairy’s non-GMO, no cholesterol and lactose-free solution is uniquely placed to deliver the same texture, nutritional value and flavor of its cow-based counterparts. The company’s advanced computational and molecular biology technologies have enabled it to develop cost-effective processes that overcome considerable barriers in the emerging precision-fermentation industry.

Events of the past few months have solidified our conviction that Imagindairy’s offering is not just a “nice to have” for people looking to make lifestyle changes but a much-needed solution that various segments of the market require. Most recently, the US has been facing an acute shortage of infant formula, while Russia’s invasion of Ukraine has exacerbated the supply chain crisis which the pandemic put into motion.

As with any truly transformational product, there are undoubtedly challenges to overcome including how to make these products accessible to as much of the world’s population as possible, while ensuring cost-effectiveness in large production scales. What’s certain is that we’re confident that this is the right team, at the right time, with the perfect vision to create a product that will leave a lasting impact on how we consume dairy in our ever-changing world. We can’t wait to see what the future holds.

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Target Global

Target Global

International #venturecapital firm with €3b+ AuM. Focusing on fast-growing #tech companies across their lifecycles. #targetteam https://www.targetglobal.vc/