- Superbrewed Food, a high-profile biomass fermentation startup, has postponed raising capital to retrofit an ethanol plant in Minnesota and is now working with a manufacturing partner so it can still enter the market this year with its ‘postbiotic’ protein.
- Animal-free dairy company Remilk just made a similar decision.
- Superbrewed Food recently tied up with cheese-maker Bel Brands (Babybel, Laughing Cow) to supply it with a nutrient-packed Non-GMO ‘postbiotic’ ingredient from bacteria.
- It has also struck deals with several other CPG companies in categories from dairy-free cheeses to yogurt, baked goods, and beverages with launches planned this year.
- Superbrewed Food’s ingredient has 80-90% protein, a PDCAAS (protein digestibility) score of 0.91, high levels of B vitamins including B12, minerals including iron and zinc, a neutral taste, natural white color, excellent pH and temperature stability, and good emulsification properties.
Why it matters
There is a dearth of fermentation capacity for startups looking to get to commercial scale, but investors are reluctant to provide the capital—which can cost up to $150 million for a greenfield precision fermentation site according to some of the comments on the US government’s recent biotech and biomanufacturing initiative—until they are more confident of a return and see market validation.
As the chief investment officer of Synonym Bio—which partners with synthetic biology companies and capital providers to enable fermentation at scale—noted at the recent Fermentation Enabled Alternative Protein event in San Francisco, “There’s still too much reliance on the market story without demonstrated market traction. Many companies feel like they should be able to raise infrastructure funds with a venture capital-like risk profile and these things don’t work.”
Superbrewed Food founder Dr. Bryan Tracy told AFN that CPG companies had expressed strong interest in his product, billed as “the most nutrient-dense protein source on the planet.”
But he added: “It’s going to take more time to raise the necessary capital to get the plant in Minnesota up and running. The past year and a half hasn’t been very helpful in that regard with what’s been happening generally in the markets. There are also some pretty significant investments into this space and really significant valuations for companies and I think people are waiting and seeing if they can deliver.”
He stressed: “We spent so much time on de-risking the technology. We know how to produce our ingredient, we’re not aspiring for new strain improvements, but it is challenging right now to raise significant sums for big capital projects.”
‘Banks don’t give you loans on first of a kind plants’
Debt financing is more suitable for such projects, said Tracy, who has thus far raised $25 million in equity funding, “but banks don’t give you loans on first-of-kind plants. Raising money for that first plant is such a monumental challenge, and you have to use lower-cost capital assets.”
To enable it to get to market this year, he said, Superbrewed Food’s manufacturing partner will “dedicate portions of its existing production capacity and anaerobic fermentation to production of our ingredient at scale.”
So why build out its own plant in Minnesota at all?
According to Tracy: “The plant in Minnesota was a dry grind ethanol facility that was modified to make other bio-based chemicals. What’s really attractive about it is that it has the ability to make a clarified sugar feedstock that’s adequate for our fermentation so we wouldn’t have to pay a premium to buy highly-purified glucose.”
Biomass and precision fermentation are not the same
Unlike many precision fermentation companies that are left with large amounts of microbial biomass at the end of each batch that is either thrown away or sent to the animal feed market, Superbrewed Foods has a co-product—butyric acid—for which there is an established market, he noted.