A new report released by The Good Food Institute (GFI) reveals that companies including Perfect Day and Impossible Foods have raised US$1.5 billion in the first half of 2020. The report has also outlined fermentation as the “next pillar of alternative proteins,” enabling a wave of innovative products and accelerating industry to new heights.

Globally, 2019 and the first seven months of 2020 were record periods of investment in alternative protein companies creating sustainable solutions to conventional animal-based foods and ingredients. Fermentation companies raised 3.5 times more capital than cultivated meat companies worldwide and almost 60 percent as much as US plant-based meat, egg, and dairy companies. 

Collectively, these alternative protein companies raised US$820 billion in 2019. They raised a further US$1.5 billion in the first seven months of 2020, which is 80 percent more than the 2019 full-year investment total. 

GFI’s fermentation report is the first-ever analysis of the significant role and the potential of microbial fermentation as a third pillar of the alternative protein industry, alongside plant-based proteins and cultivated meat. 

Fermentation tech grows
Fermentation – the use of microbes such as microalgae and mycoprotein – can be used to produce protein biomass, improve plant proteins, and create paradigm-changing functional ingredients, such as Impossible Foods’ heme. 

According to Nicki Briggs, vice president of corporate communications at Perfect Day, the company uses safe, well-established fermentation techniques to create dairy proteins identical to those found in milk, all without a single cow. “The process is much cleaner and more resource-efficient than animal farming,” she tells FoodIngredientsFirst. 

“Fermentation is powering a new wave of alternative protein products with huge potential for improving flavor, sustainability, and production efficiency. Investors and innovators recognize this market potential, leading to a surge of activity in fermentation as an enabling platform for the alternative protein industry as a whole,” says Dr. Liz Specht, associate director of science and technology at GFI.

“And this is just the beginning,” she declares. “The opportunity landscape for technology development is completely untapped in this area.”

“Many alternative protein products of the future will harness the plethora of protein production methods now available, with the option of leveraging combinations of proteins derived from plants, animal cell culture, and microbial fermentation.”

A new category of animal-free products 
The role of fermentation in the alternative protein sphere has seen Perfect Day as the most funded company. Of the total Venture Capital (VC) of US$837 million in fermentation companies, Perfect Day represents nearly half of that, including the largest VC fundraising round in the fermentation industry’s history: its US$300 million Series C funding.

“We use fermentation to make the foods people love while delivering the same taste, texture, and nutrition as conventional dairy without environmental, food safety, or welfare concerns. But that’s just the start,” explains Ryan Pandya, CEO and co-founder of Perfect Day. 

“By working with food and dairy companies to bring a new category of animal-free products to market, we’re building a next-generation supply chain to provide more nutritious, scalable options globally,” he notes.

“Consumers are reaching for foods that are better for the planet and are more conscious of how foods are made and the inputs that go into them. The age-old process of fermentation and being transparent about how we’re harnessing science and technology to create our protein allow us to offer the same texture as conventional dairy, so there’s no compromise for the consumer,” Briggs of Perfect Day explains.

“Plus, our products are kinder and greener than cow-based dairy and are lactose-, hormone-, and cholesterol-free. It’s a proposition that we think appeals to dairy lovers and plant-based consumers alike,” she adds. 

This latest report from GFI shows that globally, fermentation companies devoted to alternative proteins received more than US$274 million in VC funding in 2019 and over 58 percent more in the first seven months of 2020, US$435 million – even as COVID-19 disrupted global markets.

Tackling global issues
According to Briggs, the COVID-19 pandemic has exposed the pitfalls and challenges of conventional – areas that animal-free dairy offers a solution to. 

“While the dairy industry has experienced a glut of supply in the face of COVID-19, driven by long production cycles, centralized manufacturing, and limited processing facilities – Perfect Day holds a unique advantage,” she maintains. 

“We can quickly increase or decrease production depending on demand and can allocate a stable protein supply to wher it is needed most. We also plan to build a turnkey network of localized animal-free dairy protein producers and processors to avoid unnecessary supply chain bottlenecks.”

According to Bruce Friedrich, executive director at GFI, fermentation’s ability to efficiently produce protein could help feed the world, significantly alleviating global malnutrition. 

“Fermentation could enable companies to meet the growing demand for high-quality protein at a cost that is competitive with or lower than that of animal products.”

“Microbes and fermented plant proteins can also provide sensory experiences and full nutritional profiles of animal products but without the range of costs that come with animal production, from contributions to climate change to growing antibiotic resistance and zoonotic diseases,” he asserts.