The cattle ranches of Texas have a long history of providing protein for hungry consumers in the US and farther afield. Houston-based startup Qualitas Health wants to continue that tradition – but it’s raising algae rather than beeves.
Qualitas — which sells omega-3 supplements under the iwi brand — has raised $10 million in the first close of a new funding round to expand its algae-derived product offering into alternative protein.
Malta’s PeakBridge VC is leading the round while existing investor, Israeli infrastructure company Minrav, is upping its stake in the startup. Mexican agrifood conglomerate Arancia is also participating in the round along with several “private investors,” according to a Qualitas statement.
The startup produces what it claims to be a “proprietary, clinically proven, high-absorption” source of omega-3 fatty acids which are vital in the nutrition of humans and other animals. It markets its omega-3 product direct to consumers under the iwi brand as dietary supplements in the form of soft gels and ‘gummies.’ Iwi products are also sold via retail in over 5,000 US outlets.
CEO Miguel Calatayud told AFN that iwi products stand apart from competing supplements because they are made from “plant-based, patented, long-chain omega-3 with exceptional absorption and therefore performance, as demonstrated in third party clinical studies.”
“Also, ours have no aftertaste,” he added.
Aside from its nutritional and aesthetic qualities, iwi’s omega-3 is produced more sustainably than many of its rivals, Calatayud claims.
“We grow our algae in deserts using non-arable land and saltwater, utilizing the sun as our main energy source whilst we consume CO2 and release oxygen,” he said. “Iwi was born, and is grown, in the USA, helping rural communities.”
Qualitas has algae farms in Columbus, New Mexico and Imperial, Texas, as well as an extraction facility south of the border in León in central Mexico.
On vast, football stadium-sized ponds in the middle of the desert, the startup cultivates Nannochrolopsis. In addition to containing numerous minerals, vitamins, and fatty acids like omega-3, this microalgae genus is “one of the few existing plants that contains all of the essential amino acids” required to build proteins, according to the startup.
This explains why Qualitas is now looking beyond omega-3 supplements to the burgeoning alt-protein space. While some of the new funding will be used to boost the brand presence of iwi’s omega-3 line in the US, the startup will also be investing in resources to get its new alt-protein product to market by 2022.
Beyond that, some capital will be deployed to carry out research around surfactant properties and other possible functional applications for its products, as well as broader clinical studies around existing and potential health indications of these formulations.
The startup’s science-led strategy, sustainability focus, and launch of direct-to-consumer channels last year helped to persuade investors to come aboard amid the chaos of Covid-19, in Calatayud’s view.
“Covid-19 added another layer of complexity due to the uncertainty of the markets, making investors more cautious about doing any investment – and when they did, choosing very strategic fields, companies, and management teams,” he said.
“In our case we are plant-based; sustainable; we have market-proven products with very strong technology, IP protection, and clinical study support; and we have a multi-disciplinary team with a very successful track record.”
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