‘I do see an investor appetite to improve’: World Fund's principal on what investors are looking for in fermentation

Fermentation is one of the main methods for producing alternative proteins. How does it look to investors?

Precision and biomass fermentation are central to the production of a wide range of meat alternatives, dairy alternatives and alternative proteins.

How do investors see the market for fermentation? With a push to reduce costs, how are start-ups making themselves more attractive for investment? And how does fermentation stack up compared to other alternative protein production methods, such as cultivated meat?

We spoke to Nadine Geiser, principal of climate tech VC firm World Fund, about the potential for the fermentation sector.

How can investors judge a good start-up?​

While now working in investment, Geiser has experience in the world of fermentation, having worked as a biotechnologist.

When deciding whether to invest in a fermentation start-up that is not yet commercially active, she told us, one must look at the organism the company is using, and the fermentation set-up that they have, in order to judge if the investment is worthwhile.

They must be able to match the right organism with the right protein and the right functionality, put it in the right media, and place this through the right process, she suggested.

However, while such scientific experience and knowledge is vital, a company must also have a CEO who can talk about the science behind it in layman’s terms, as well as a viable business model.

What are the opportunities in fermentation? ​

Geiser sees opportunities for precision fermentation in the plant-based market, as it can build up individual proteins with key functionalities that may be able to help to solve ongoing problems in plant-based, such as taste.

For example, fat alternatives work as a way of improving the taste of plant-based meat, and they can be made through precision fermentation.

As an investor, however, she is drawn more towards biomass fermentation, because due to its comparative simplicity (where the whole biomass is the product), it is easier to scale.

Nadine Geiser will be chairing the 'Fast-Tracking Fermentation: Advancing Bioprocessing Efficiency for Improved Unit Economics' panel at the upcoming Future Food-Tech event in London on 2-3 October.​

What opportunities are there to improve the sector?​

In the world of microbial fermentation, Geiser told us, the feedstocks are less complex and costly than in an area such as cultivated meat, where the cell culture media will often use foetal bovine serum. For microbial fermentation, glucose is the main price driver.

Feedstock optimisation is nevertheless something that can be done to boost the sector, namely improving its efficiency, or even finding cheaper feedstocks.

Other ways that the sector can be further developed is through the customisation of strains (groups of microorganisms) by making them more heat tolerant and increasing metabolic efficiency.

Improving bioreactor design could remove the need to use stirred bioreactors, a widely used type, due to different cleaning protocols. In this case, bioreactors could even be made out of plastic.

“Overall, I do see an increased awareness and, at the same time, an investor appetite to improve,” she told us.

Precision and biomass fermentation

Biomass fermentation and precision fermentation are slightly different processes. In precision fermentation, microorganisms are programmed to produce proteins. In Geiser’s words, precision fermentation involves ‘domesticating a microbe.’

In biomass fermentation, however, the microorganisms which reproduce through this process are themselves ingredients for alternative proteins.

Can AI be used to bring down costs?​

So far, very little AI has been successfully used to bring down costs. Some companies are using captured data to model future experiments, but, according to Geiser, this is not strictly speaking AI.

However, she predicted that it could improve in the future. “Companies are very keen on recording high quality data and they're usually recording a lot of parameters for fermentation.”

Public sector investment in fermentation

Earlier this year, the UK government announced plans to put £12m into a new fermentation hub, the Microbial Foods Hub, based in Imperial College London. The hub aims to explore traditional fermentation, precision fermentation and biomass fermentation.

Last year, the EU’s Europe Innovation Council (EIC) announced that it would invest €50m into precision fermentation. 

Is upscaling on the horizon?​

Many of Europe’s key players, Geiser told us, such as Novonesis and dsm-firmenich, use processes that are ‘low volume, high value’. In order to upscale, this needs to change. Many of those companies that have managed to scale do so through ‘low value, high volume’ production. For key players to shift in this direction, Geiser told us, more investment is needed.

One solution, she suggested, is contract manufacturing, where some of the processes are outsourced. This is ‘part of the upscaling journey,’ she told us.

However, “right now when I look into contract manufacturing from a portfolio perspective, I think it's simply still too expensive for the companies to generate attractive margins.” Ultimately, each piece of the value chain will need to be addressed if the costs are to come down.

Where have all the generalist investors gone?​

The meat alternatives sector has seen a dearth of generalist investor interest in recent years, Geiser told us. This is because a wide range of start-ups in the sector, which received investments as far back as 2021, are still working on fixing technical issues.

"It doesn't really speak to a generalist audience that has become a little bit more conservative [recently].”

“This means that it doesn't really speak to a generalist audience that has become a little bit more conservative [recently].”

Cultivated meat, for example, has had a few large investments, but these were mostly internal rounds, she told us.