Terra Bioindustries builds circular economy with upcycled ‘spent grain sugars’ and proteins

Toronto, Canada-based startup Terra Bioindustries is raising a seed round to support small-scale commercial production of a mild-tasting barley protein concentrate and fermentable sugars from upcycled spent grains.

While brewing giant AB InBev has a subsidiary (EverGrain Ingredients) that extracts protein from its spent grains, most brewers still see the protein- and fiber-packed sticky slurry as waste, and rely on farmers to pick it up and use it as animal feed, says Terra cofounder Steve George.

“Today around 70% of spent grain goes to animal feed, 20% goes to landfill, around 9% goes to composting, and less than 1% is alternate use [such as upcycling it into value-added products for human food],” he tells AgFunderNews. “So there’s a huge opportunity out there, regardless of who else is out there [such as EverGrain].”

Protina barley protein concentrate: Mild flavor, appealing price tag

Most companies that are upcycling spent grains are just drying and grinding them, “which I’m all in favor of,” says George, who has a background in industrial process development, while cofounder Ricardo Martinez Villegas has a background in chemical engineering and bioprocess engineering.

“But the problem is that if you use more than a certain amount, the texture of the food you’re adding it to can suffer.

“So then you can go to the next stage of utilization where you’re extracting components from it, and actually not many companies are doing this. EverGrain is the best known, but we’re not doing quite the same thing.

“They are breaking the protein down and hydrolyzing it to make an isolate that works really well in beverage applications, for example, whereas we’re keeping our proteins intact and targeting food applications with a protein concentrate.”

He adds: “The great thing about our protein [dubbed ‘Protina’] is that it has a very mild flavor that works really well in baked goods such as cookies, snacks, breads and in future meat alternatives. It also works a lot better in terms of taste and integration into recipes than [some other plant-based] proteins food companies are testing right now.”

“So we’ve gotten some traction when we’ve put samples out there in the market, as when you run the numbers, although there are some really cool emerging plant proteins out there, most of them are much more expensive than the two main ones people are using now, which are pea and soy.

“Because of our model, we can offer protein at the upper end of the price point for soy, and the lower end for pea protein.”

Barley protein—like most plant proteins—isn’t a complete protein but can be combined with other plant proteins to create a complete protein, he notes.

Recyclose ‘spent grain sugar’: ‘Precision fermentation companies say it behaves exactly the same as glucose’

Terra’s spent grain sugar solution—dubbed ‘Recyclose’—is a mix of C5 and C6 sugars as well as some other nutrients that can support many microorganisms, making it an ideal feedstock for microbial fermentation, claims George.

“The primary components are glucose, xylose, maltose, and some polysaccharides. We’ve sent this to multiple precision fermentation companies that ferment algae, fungi and yeast, and they have all come back with positive results. They say this behaves exactly the same as glucose, providing the same growth and the same quality of the end product.

“The other market we’re targeting for the sugars is actually food. In fact two companies who were initially talking to us about the protein have come back to us and said, ‘I hear you have an upcycled sugar and that’s really interesting to us.’”

Currently, Terra Bioindustries doesn’t separate the sugars, but in future may look at separating out the xylose, which is a high-value ingredient, he says. “Xylose is many times more expensive than glucose.”

The business model

So how is Terra Bio planning to get to market?

The business model will evolve, says George, who has partnered with the Saskatchewan Food Industry Development Centre, Conestoga College, and BioFoodTech PEI to take Terra Bio’s technology up to the pilot scale in order to generate meaningful quantities of proteins and sugars for sampling.

“We were very lucky to find a contract manufacturer who can get us to small scale commercial production next year,” he says, “but right now, the base case is that we are a b2b ingredient supplier, although that’s not how we see ourselves in the long term.

“In the long term, we want to partner with one of the top five breweries, put in a facility right next to them and upcycle all of their spent grains, likely via some kind of a joint venture.”

Seed funding

Thus far, Terra has “bootstrapped small amounts as needed” to fund the business, says George, who had originally planned to use spent grain as feedstock for algae production.

Two years later George and Martinez Villegas decided to ditch the algae and focus on the grains. “We spoke to some mentors about the algae and they said it’s a really cool idea, but your value chain is too big and you’re not going to make it as a business.”

Their focus then shifted to extracting proteins for food applications, and sugars as feedstocks for the precision fermentation industry.

He adds: “We received about $300,000 in Canadian government funding and we were able to access a fractional [outsourced] CFO through a Toronto based program called Latam Start-ups. We’ve been able to get this far much more efficiently than a lot of other companies in our situation.

“Now we’re looking at raising $5 million in seed funding and [armed] with that, the major milestone that we would need to hit is to start commercial production next year.”

Longer-term, Terra is also looking at tech to valorize other forms of agro-industrial waste, he says. “We generate about a billion tons of it, and it’s not being used anywhere close to its full potential.

“If you look at some of its components—proteins, sugars, all kinds of base chemicals—they can supply a huge variety of industries. If you adequately upcycled this waste, the potential is hundreds of millions of tons of products you could put back into the economy.”