*Editor’s Note: This article was updated on February 3, 2019, to include comment from MycoTechnology CEO Alan Hahn.
Food tech startup MycoTechnology has raised $30 million in Series C funding in a round co-led by existing investors S2G Ventures, Middleland Capital, as well as ADM Capital’s Cibus Fund, and the family office of the Müller family, behind the dairy group.
Tysons Ventures, Bunge Ventures, Continental Grain Company, existing investor Kellogg’s Eighteen94 Capital, and DNS-Hiitake also participated. This brings the company’s total funding to $82.6 million. Other investors include Tao Capital, Closed Loop Capital, and Health for Life Capital.
“The building of the syndicate of investors for Myco has been a purposely built group to pull together the ‘A’ team of investors. The blend of venture capitalist and large strategic food companies provide outstanding support for our strategic direction, innovation and growth,” CEO Alan Hahn wrote to AgFunderNews in an email.
Hahn declined to comment on whether the Muller family investment hints at a future venture in the dairy space. The company has 20 different products in the pipeline, but the specifics are still under wraps.
The Colorado-based startup has developed a novel organic food processing platform that uses mushrooms and fermentation to remove bitterness from food and drinks. The newest application of its technology involves tackling the funny taste that plant-based protein ingredients can bring to product formulations.
MycoTech CEO Alan Hahn told Food Navigator he is planning a public stock exchange listing in 2021.
MycoTechnology will use the new funding to expand and accelerate its R&D project execution, opening up an opportunity to explore the different ways that its technology can meet consumer demand to bring new and novel ingredients to the market.
“We are excited about the strategic and customer validation of this round. Myco has proven itself to be a platform and a products company. Investors in this round represent over $100 Billion in revenues and market caps. Myco’s platform is proven to solve many of the food industry problems as it tries to feed the changing consumer preferences,” S2G Ventures’ chief investment officer and managing director Sanjeev Krishnan said in a press release announcing the funding.
“Representing one of the largest privately held dairy companies in Europe, we are excited to become an investor in MycoTechnology and its two key products, ClearTaste and PureTaste. Both the reduction of added sugar in FCMG as well as alternative dairy proteins are themes that we at Mueller are monitoring quite closely. An investment into a technology that addresses both topics in an innovative and seminal matter made sense for us on various levels,” said Martin Goeggelmann, head of the family office of Mr. Mueller, owner of the famous German/English dairy brand Mueller.
Through a system dubbed MycoSmooth, the startup puts foods through a seven to 21-day sterilization, inoculation, myceliation and drying process using mushroom roots. The mushroom mycelium, as the roots are also known, are trained to consume unwanted aspects from foods. The food product is first inoculated with the mycelium then left to ferment and later dried to remove the mycelium. So far, it’s tackled coffee, chocolate, and green tea.
“We have developed a food processing platform leveraging filamentous fungi to ferment inputs in an aqueous environment to create novel new foods. The process is analogous to brewing beer. We can adjust the inputs, the fermentation environment, change the species of fungi and change the downstream process to create a virtually unlimited pipeline of novel new ingredients,” Hahn said.
The company claims that its flagship product, ClearTaste, is the world’s first organic bitter blocker that helps companies reduce the amount of sugar in their products by blocking bitterness.
Its second product, PureTaste, is a plant-based protein which it claims cleans up the taste profile of plant-based protein, leaving manufacturers with a more easily integrated protein ingredient. PureTaste is a proprietary blend of pea and rice protein fermented with Shiitake mycelium o improve the flavor, functionality, bioavailability, and nutrition of the protein blend. It also claims that PureTaste is one of the few plant-based proteins with a perfect 1.0 PDCAAS score, containing all essential amino acids needed for maintaining health.
“Protein is the most essential nutrient we consume and the consumers are looking for a more sustainable source of non-animal based protein. PureTaste Protein is one of the most sustainable sources of plant base protein that is complete, meaning it has all the nine essential amino acids in the right amounts and ratios. We consider PureTaste Protein as the new gold standard for highly sustainable, complete protein and is allergen friendly,” explained Hahn.
The company claims that PureTaste has proven functional in extruded grain-based products, bread, snack foods, beverages, sauces, dairy alternative frozen desserts, and processed meat applications. It’s also free of the eight major allergens milk, eggs, fish, shellfish, tree nuts, peanuts, wheat, soybeans.
The company has also worked on a natural gluten removing technology that they wrote about in a March 2015 whitepaper.
“Our competitors vary based on which ingredient you look at such as our Organic bitter blocker, ClearTaste. ClearTaste works very well in sugar reduction and salt reduction applications so the real competitors are salt and sugar which are low cost and functional. The overuse of salt and sugar has resulted in health issues such as hypertension and obesity and Type 2 diabetes and consumers are pushing back so there is a lot of momentum to reduce their use and ClearTaste is positioned well to be one of the solutions.”