Nature’s Fynd, which grows protein by fermenting microbes that originate in the geothermal springs of the US’s Yellowstone National Park, has closed a $350 million Series C round led by SoftBank’s Vision Fund 2.
New investors including Blackstone Strategic Partners, Balyasny Asset Management, Hillhouse Investment, EDBI, SK Inc, and Hongkou Capital also participated. Existing investors include Breakthrough Energy Ventures, the $1 billion fund backed by Bill Gates, Jeff Bezos, and Richard Branson, among others.
The Series C round follows a $45 million venture debt financing completed in December 2020 and an $80 million Series B in March 2020.
The funding will be used to commercialize the Chicago-based startup’s flagship product, Fy, which it describes as a “nutritional fungi protein” that contains all nine essential amino acids in addition to dietary fiber, calcium, and vitamins. At its R&D center in Montana — close to Yellowstone — it creates Fy by fermenting the volcanic microbes, using a fraction of the resources required to support traditional agriculture, by its measure.
In February, Nature’s Fynd launched a limited D2C release of its Fy Breakfast Bundle that contained its Fy-based breakfast sausage patties. It also offered a dairy-free cream cheese that it claims sold out in 24 hours.
“The D2C launch really demonstrated the commercial traction that we could get with our products. Seeing that there was a lot of interest in the marketplace drove the timing [for the funding],” Karuna Rawal, chief marketing officer at Nature’s Fynd, tells AFN. The commercial launch followed Nature’s Fynd’s appearance on an episode of 60 Minutes where Bill Gates and Anderson Cooper sampled its product.
Fy can be created as a solid, liquid, or powder, enabling the startup to create a wide range of products. As a result, narrowing down which foods to create first proved a hefty task.
Nature’s Fynd decided to focus on filling gaps in the current plant-based foods landscape. Based on market research, the startup concluded that consumers were craving a cream cheese that mimicked the richness of dairy without containing any animal products. The importance of protein at breakfast time drove its decision to create a breakfast sausage patty.
The startup is now placing an emphasis on expansion to Asia.
“It’s a growing market in terms of population, but also there is going to be a huge demand for protein. We see that as a huge opportunity because there just isn’t going to be enough protein to feed the world as we go forward,” Rawal says.
For its main commercial rollout, Nature’s Fynd is opting for retailer partnerships in lieu of further D2C offerings. Rawal is unable to share the specifics about those partnerships at this time, but she says the startup is beginning conservatively by focusing on smaller retailers before expanding.
“One of the reasons we are launching this way is so that we can manage that, and we feel pretty confident at this point that we’ve scaled up in our facility and demonstrated our ability to produce at the scale that we need to meet the demands of the market as we move forward,” she said.
As Nature’s Fynd gears up for commercialization and expansion, it may need to tackle questions around consumer education and acceptance. Plant-based proteins made from peas and soybeans have been a natural extension of the veggie burgers consumers already knew; some may be more skeptical of less familiar fermented proteins based on fungi.
Analogizing Fy to nutritional yeast, a product that many consumers are already familiar with, has helped increase consumer understanding; while Nature’s Fynd has also put effort into promoting the product’s “naturality” and health credentials, Rawal says.
Covid-19 put a damper on offering samples and getting Fy in front of consumers, but with pandemic restrictions lifting, she’s eager to connect with the market.
“Ultimately we are a food product, and what matters most to consumers is great taste. We may be able to hook them with our story, but in order to keep them coming back we know we have to deliver absolutely delicious products.”
International Fresh Produce Association launches 2023 Fresh Field Catalyst Accelerator program