Nature’s Fynd Raises $350M, Will Debut In Retail This Fall

Fungi-based meat and dairy alternative maker Nature’s Fynd today announced it has raised $350 million, marking the fermentation industry’s largest ever funding round. The Chicago-based company will use the capital to expand its production capacity and grow its product portfolio ahead of the retail debut of its dairy-free cream cheese and meat-free breakfast patties this fall.

What is Nature’s Fynd?

Nature’s Fynd produces meat and dairy alternatives made with Fy, a fermented fungi-based protein first discovered by the company in Yellowstone National Park’s geothermal springs. Originally launched in 2016 as an ingredient supplier, the company turned its focus to CPG last year, finding that branded products were “the best way to tell the story about what Fy is,” co-founder and CEO Thomas Jonas told NOSH. In March, the company received a GRAS no questions letter from the FDA for use of its Fy protein in food products.

The company is looking to breakfast for its initial product launches of dairy-free cream cheese and meatless breakfast patties, which are set to debut at retailers this fall. The products launched direct-to-consumer in February in a “Breakfast Bundle” for $14.99, and sold out in 24 hours, according to the company. CMO Karuna Rawal said the dual product release was meant to “showcase Fy’s remarkable versatility” across different product categories.

“The successful launch of our Fy Breakfast Bundle…clearly showed that we can meet our consumers’ expectations for delicious meat and dairy alternatives with no tradeoffs,” Jonas said in a press release.

Who is investing?

SoftBank’s Vision Fund 2 led the round, with new investors Blackstone Strategic Partners, Balyasny Asset Management, Hillhouse Investment, EDBI, SK Inc. and Hongkou also participating. Previous investors Danone Manifesto Ventures, ADM, 1955 Capital, Bill Gates-founded Breakthrough Energy Ventures and Generation Investment Management, co-founded by Al Gore, also took part in the round.

The latest funding round brings the company’s total capital raised to over $500 million. The company secured $45 million in venture debt and equipment financing from Oxford Finance and Trinity Capital in December, also raising $80 million in March of 2020 and $33 million in 2018 under its previous name, Sustainable Bioproducts.

What will the new funding be used for?

The new funding will also go toward scaling the company’s production capacity ahead of the retail launch. Nature’s Fynd opened a 35,000 square foot facility in Chicago in June 2020, utilizing robotics and automation to produce Fy. Still, the company is using co-packers to manufacture the finished products for retail.

Nature’s Fynd also said it aims to expand to new geographies including Asia next year, as well as establish foodservice partnerships at quick-serve restaurants.

With the goal to develop products spanning “from breakfast to dinner and everything in between,” the company said it will also utilize the funding to grow its portfolio. Its Fy protein can be converted into solids, powders and liquids, according to Rawal, potentially lending itself to a wide array of products. Among these is a dairy-free yogurt, which was featured on an episode of “60 Minutes” earlier this year, though the company has yet to formally announce a launch for this product. The company’s GRAS submission to the FDA listed several additional applications for its fungal protein such as poultry analogs, meal replacement products, fruit and vegetable juices, soups and soup mixes, baked goods and baking mixes, and fats and oils.

What’s the opportunity?

Fermentation-focused companies brought in $587 million in investment last year, according to The Good Food Institute, with fungi proving to be a particularly popular ingredient in this category across meat and dairy alternatives. Pioneered by Quorn with its U.S. retail debut in 2002, fungi-based meat alternatives have gained momentum in recent years amid the growing interest for alt-meat products that utilize scalable and sustainable ingredients beyond pea, wheat and soy. Perfect Day, which previously held the record for the fermentation industry’s largest funding round at $300 million, has recently grown the ingredient’s adoption in dairy alternatives, supplying its animal-free whey protein to vegan ice cream lines for brands such as Nick’s, Graeter’s and Brave Robot.

Nature’s Fynd is among several well-funded fungi-based food startups that are gearing up to take on the retail and foodservice channels. Earlier this month, mycelium-based alt-meat brand Meati raised $50 million ahead of a foodservice launch of its whole cut chicken alternatives set for 2022, while AtLast Food Co. secured $40 million in April to scale production and grow the retail footprint for its alt-bacon made using mycelium.