*Editor’s Note: The below was published on August 28. As of October 16, MycoTech’s round had reached $9.2 million, including an investment from Closed Loop Capital.
A company that is using the humble mushroom to improve the taste of everyday food and drinks, has created waves in the venture capital industry this week after holding the first close of its Series A round on $6.7 million. The round involved participation from three venture capital firms: S2G (Seed 2 Growth) Ventures, Paris-based Seventure Partners, and Middleland Capital.
MycoTechnology, a Denver, Colorado headquartered company, is expecting to close off the Series A on $9.2 million after receiving final commitments from at least one more venture capital firm next week, Alan Hahn, chief executive, revealed to AgFunderNews. Hahn and his colleagues, who have been working on the Series A since the end of last year, had considered raising strategic equity capital after getting a large amount of interest from major food and beverage companies.
“We decided not to go that route and just do venture capital as it can be a bit messy with a strategic on the board; they might be able to see information about a competitor, for example, so we decided it was better to have them as customers rather than them sitting on our board,” said Hahn.
The business, which focuses on providing alternatives to sugar and other unhealthy sweeteners and additives, has developed two methods of using mushrooms and fungi to remove molecules that contribute to bitter tastes. MycoSmooth is for using in coffee and chocolate and MycoZyme improves the taste of green tea and natural sweetener stevia, which has a bitter aftertaste, according to Hahn. The company has also recently added other drinks to the list such as cranberry juice and tequila.
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MycoTech ferments agricultural products with its unique strains of mushrooms to improve the taste, which differs the products from others on the market that are predominantly flavor-masking agents, according to Hahn. MycoTech products also have added health benefits too: the mushrooms and fungi add nutritional value through the production of beta-glucans. These are known for controlling, or modulating, the immune system and providing a source of fiber for help with weight control.
The company also recently announced a natural gluten removing technology or wheat — they wrote whitepaper about it in March — and have ambitions to cover 400 agricultural products with its technology, according to Hahn.
“We’re getting regular calls from major companies around the world to help solve some problems with flavors. The R&D we’re doing is really cutting edge stuff and we are coming up with a lot of new products, lots of new innovations and lots of ways to cut sugar out of people’s diets,” he said, adding that the company is also working on “table-top solutions” for consumers, as opposed to only selling the technology to food companies.
MycoTech will use the proceeds of the Series A to expand the team — job openings can be found here — and building a new facility with the aim of moving in early 2017. The business currently has nine full time staff, a number that will probably double over the next two to three months, according to Hahn.
Hahn has held a range of technology roles in the past including for Scale Computing, which he helped grow from inception to a $100 million valuation company over a two year period, as vice president of worldwide sales. At Scale Computing he worked with Peter Lubar, founder and chief operating officer of MycoTech, who established MycoTech in April 2013.
The company initially raised $1.4 million in angel capital from Hahn’s contacts in Silicon Valley, New York and some of the company’s board of directors.
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