Our investment in Hyfé Foods
Hyfé Foods makes a high protein, allergen-free mycelium flour from food industry waste water
We’re thrilled to welcome Michelle and Andrea to our ecosystem! They are cofounders of Hyfé Foods, a Chicago-based ingredient technology company that produces low-carb, protein-rich, and allergen-free fungi flour by using fermentation to up-cycle water byproducts from food and beverage manufacturing. We invested in the oversubscribed Pre-Seed round alongside The Engine, Blue Horizon, Caffeinated Capital, Lifely, Gaingels, FoodHack, and angels.
Hyfé’s patent-pending technology platform uses wasted sugar water streams to grow mycelium - the roots of mushrooms - as a clean, alternative protein source, ideal for use in the manufacturing of low-carb, protein-rich flour. In a biomass fermentation process, much like the process used to brew beer, mushroom roots are grown in upcycled water feedstocks and the resulting couscous-like pearls are turned into flour. The diverted wastewater prevents greenhouse gas emissions.
Given their business and product — an up-cycled food product that is better for you and reduces the impact of the food system on climate — Hyfé Foods is a strong fit for our thesis.
Access to Healthier Foods
In today’s press release, Hyfé shared that, “Flour is a food staple that for years has contributed to chronic disease due to its high levels of refined carbohydrates and prominence in diets across the globe.”
Hyfé’s flour and flour products will be low-carb, high protein, allergen-free, gluten-free and neutral (flavor). Other “healthy” alternatives in the market today cannot offer all of these characteristics at once.
In addition to the health benefits, enabling localized mycelium production benefits humanitarian efforts to combat food shortages, as industrial-scale growth of the protein is decoupled from agriculture.
Climate
According to the Institute of Food Technologists (IFT), the U.S. food processing industry is the third most water-intensive sector, generating an estimated 1.4 bn liters of water waste annually.
Hyfé enables a climate change resilient, water conserving, CO2 mitigating source of inexpensive, accessible protein. Hyfé delivers the only mycelium fermentation process that upcycles wastewater from the food and beverage industry. This means that their cost of production is significantly lower than fermentation-baed companies who incur about 50% of production cost from sugar feedstocks.
Consumer interest in alternative proteins and high-protein flours
Hyfé sits at the intersection of two trends. Consumers today are seeking less-processed alternative proteins. In addition, consumers are increasingly interested in ketogenic, paleo and gluten-free diets for healthier lifestyles. Consider the data:
Better-for-you (BFY) food segment cornered a 26.9% share of global health & wellness foods segment in 2020. USA, Canada, Japan, China and Europe accounted for market size of US$155.1bn in 2020 and are projected size of US$201.5bn by 2027 (3.8% CAGR)
Gluten Flour Market $5.6bn 2020 (CAGR 8.1%)
Global Gluten-Free Tortilla Market ($22bn 2020 CAGR 5.6%)
According to a 2021 BCG report, Alt-Protein could be a $290B market by 2035
Other market trends:
Pandemic supply chain issues have caused all-purpose flour shortages, opened up consumers interest in alternative flours.
There are rising sustainability concerns and the increased demand from consumers for climate-positive products.
Hyfé can help food and beverage companies achieve Net Zero Emission Pledges by offsetting emissions that they would have otherwise had from wastewater and other agricultural sources.
Hyfé does not depend directly on agriculture for their production, meaning they are somewhat isolated from the instability due to supply chain issues, climate change and political conflicts.
On the prior point, political instability threatens food production. Ukraine is considered to be the world’s breadbasket, producing about a fifth of the world's high-grade wheat and 7 percent of all wheat. What does this mean in real life? A food insecurity expert recently predicted that there is just 10 weeks of wheat supplies left in the world due to the Russian invasion (Business Insider).
With complementary backgrounds, engineers Michelle and Andrea teamed up last year to co-found Hyfé Foods. Combined, they have 20 years of experience in manufacturing, bioengineering in wastewater treatment, IP protection, and the commercialization of gas fermentation processes, having worked at Exxon Mobil and LanzaTech.
Because we believe the future of food must be sustainable, supply chain efficient, and better for you, we’re excited to join the Hyfé Foods journey.
Read more about Hyfé Foods here.
Would love to feature you in ClimateRaise for the next fundraising round !
So proud to be part of the SCC team! Great post!