Berlin-based fermentation startup Formo has raised a $61m Series B round to scale operations for its animal-free cheese alternatives.
The German foodtech says it has developed the world’s first alternative cheese product made using koji protein, a naturally-occurring fungus typically used in Japanese cuisine.
Who invested?
Investors in the round included existing investors FoodLabs, EQT Ventures, Lowercarbon Capital, Happiness Capital, Elevat3 Capital, M Ventures and Grazia Capital.
New investors included Sazaby League, SevenVentures, Woodline Partners, Indiposa Investments, The Nature Conservancy and REWE Group, one of Europe's largest retailers.
The capital will be used to expand across the DACH region and grow the company's portfolio of products.
Animal-free cheese
Formo uses a process called micro fermentation to create koji protein — a fungus that has been used for centuries to make Japanese staples like miso and soy sauce — which it uses in its alt-cheese products. The process involves using microorganisms that are naturally occurring, rather than the genetically modified microorganisms used by precision fermentation startups like Bosque Foods and Enifer. The koji is then mixed with fats and carbohydrates to make Formo’s soft cheese products.
The company has two products on shelves across 2,000 Rewe, Billa and Metro stores in Germany and Austria: its cream cheese style Frischhain and a camembert-like offering called Camembritz.
The company says that its Frischhain product results in 65% fewer emissions, uses 83% less land and requires 96% less water compared to conventional cream cheese.
But one obstacle standing in the way is the complexity of scaling up as it looks to expand into new markets. "Moving from a lab-scale environment to full-scale production requires significant investment in infrastructure, as well as a reliable supply chain for the necessary inputs," says Raffael Wohlgensinger, Formo's founder and CEO. "While we have a clear path forward, these processes naturally come with technical and operational hurdles, such as optimising fermentation efficiency on a larger scale and ensuring consistent product quality across increased production volumes.
"Another consideration is the speed of regulatory approvals in different markets. While we’re confident in the safety and quality of our products, navigating the regulatory landscape across multiple regions can be time-consuming. That said, we’re already working closely with partners, such as the European Food Safety Authority [...] to streamline this process as much as possible."
Formo is also looking to use some of the new capital to add to its animal-free charcuterie board, and says it plans to develop animal-free casein products too. The casein, which is the protein in milk that gives cheese its texture, will be used to make animal-free alternatives to harder cheese variations.
This new product range will open up other markets. "The US will be our priority go-to-market for precision fermentation products. It is a huge cheese market and allows for swifter go-to-market for products that are made with bioidentical casein," says Wohlgensinger.
The rise of alt cheese
Formo isn’t the only company working on a new way to produce traditional dairy products, but it is currently Europe’s best-funded startup in the alternative cheese space: the fresh round brings the company’s total funding to more than $100m, according to Dealroom.
London’s Better Dairy, the second best-funded with around $24.2m in investment, uses precision fermentation to produce casein that it combines with plant-based fats and other ingredients to make a brie-like cheese alternative. Unlike Formo, however, Better Dairy doesn’t yet have any products on shelves.
Bon Vivant, which is based in Paris and has raised around $22m according to Dealroom, does a similar thing: it uses precision fermentation to produce milk proteins without the need for cows, and sells that protein to other companies that are making alternative dairy products.
