Fungi-Powered Ingredients Startup Michroma Promising To Remove Petroleum From Food Colorings Raises $6.4 Million In Venture Funding

San Francisco-headquartered startup, Michroma, which uses fungal biofactories to produce natural food coloring and flavors, has amassed $6.4 million in a recent venture-backed seed round, and is currently in talks with consumer heavyweights, including Danone, Grupo Bimbo, and NotCo, to bring their sustainable products to the market over the next two years upon the FDA approval.

Co-founded by Ricky Cassini and Dr. Mauricio Braia in 2019, Michroma leverages precision fermentation, an increasingly popular technology to recreate proteins at scale, in order to extract high-performance colorants from mushrooms.

“We are leveraging the power and versatility of filamentous fungi with our synbio platform. By combining a unique fungal chassis strain with precision fermentation, we are capable of producing high-value complex molecules with high yields previously unseen in the biotech industry,” Dr. Braia said in a statement.

The company has so far developed a novel red colorant that’s temperature-resistant and stable across the entire food pH spectrum, called Red+, with blue and white variants still in development.

These characteristics, Michroma claims, allow its colors to survive intensive processes like pasteurization, cooking, and extrusion — a major advantage compared to other natural dyes, such as betalains, carminic acid, and anthocyanins.

Other natural alternatives however, insects for example, are not suited for vegan consumers, or even worse, U.S.-approved synthetic colors that are typically made with petroleum for confections and baked goods pose significant health risks. Most recently, public health advocates and scientists are urging the FDA to further ban Red 3, a petroleum-based synthetic dye that’s already barred from being used in cosmetics, from food, ingested drugs and supplements.

These advantages bode well for Michroma amid rising consumer demand for clean label, natural products, market researchers anticipate, as the $2 billion global natural food color market is expected grow at a 7.4% CAGR over the next decade, reaching $4.1 billion by 2023.

“Our vegan, Kosher, and Halal certified products are more stable than current natural solutions,” Cassini said, “and we’re more efficient as we can produce in our bioreactors within four days, which results in a 90% reduction of water usage. We also control all the conditions in the growth media, eliminating the usage of pesticides and agrochemicals.”

Sustainability is also at the heart of Michroma’s business since it feeds fungi with residuals from the agricultural industry. “Mushrooms are the best decomposers in nature,” Cassini added. “That way, we can recreate waste into high-value ingredients.”

Favorable Trend Towards Biotech

After raising its seed funding, led by Supply Change Capital, a food tech VC backed by General Mills
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’ venture arm 301 Inc, with additional participating investors — global food conglomerate Dr. Oetker-backed Be8 Ventures; and CJ CheilJedang, a $23 billion Korean behemoth supplying fermentation-based bio-products worldwide, Michroma plans to double the number of its employees, currently at 15; expand R&D to develop natural flavors down the road; and further industrialize its fungal platform.

Other investors include FEN Ventures, Boro Capital, The Mills Fabrica, Portfolia’s Food & Ag Tech Fund, New Luna Ventures, Siddhi Capital, Groundswell Ventures, and HackCapital; and angels investors Allen Miner, Jun Ueki and Steve Zurcher from the Keiretsu Japan Forum, Guillermo Rosental, Franco Goytia, Pablo Pla and Mat Travizano. Existing investors are SOSV’s IndieBio and GRIDX.

Supply Change Capital’s Managing Director, Noramay Cadena, who became a board member of Michroma as a result of their investment, commented: “”We see compelling market and consumer potential for Michroma’s fungal platform to create next-generation natural ingredients, from colorants to flavors, that are healthier and more sustainable while maximizing production efficiency. We are excited by the speed and skill with which they are building out their capabilities. Even more so, in light of the current disruption of supply chains globally, we believe Michroma is laying the foundation for the sustainable ingredients of the future.”

Michroma currently outsources its production in Europe, and expects to clear the U.S. regulatory hurdles within the next two years, mirroring the FDA’s current stance on cultivated meat, according to Cassini. “There’s a trend towards biotech right now, and both sectors are similar in production process — one is fermenting mammalian cells, and the other is the fermentation of bacteria, yeast or fungi,” he explained. “But there’s also a specific process to approve colors in the U.S.” to ensure safety.

“My dream is,” Cassini said, “is to distribute our natural ingredients with companies around the world.”