The easiest way for humans to get carbon dioxide is to eat vegetables, and David Tse hopes his protein startup will be a close second.
Tse's company, Novonutrients, is working on ways to use microbes to turn carbon dioxide into proteins that can be used in human food and animal feed. Tse says the startup is currently working on building a pilot plant in the San Francisco Bay Area to produce proteins for companies looking for alternative sources.
To support construction, Novonutrients has raised $18 million in a Series A round of funding from investors including Australian energy company Woodside Energy, TechCrunch has learned exclusively. The final total also includes $3 million that Woodside pledged last year.
Novonutrients has been working for the past year to prepare the pilot plant, including refining the bioreactor design, Tse said. Once complete, the pilot plant will use much of the same equipment as a future commercial-scale plant, making it an important testing ground for designs and microbial strains.
NovoNutrients uses fermentation, like other companies that turn carbon dioxide into more complex molecules. But unlike many of its competitors, it doesn't use the big tanks you'd find in a brewery. Instead, NovoNutrients uses a loop of thin cylinders, which Tze said reduces the amount of energy needed to mix the gases.
To produce these proteins, the company customizes strains of microbes that digest the waste of different gas mixtures. For some products, synthetic biology techniques can be used to improve the stability and efficiency of the microbes. But for natural products, Novonutrients uses evolution to enhance it, Tse said. “Our most important strain development is the fact that we can customize the strains through natural, non-GMO means for the specific gas mixtures available at a particular partner site,” Tse said.
Rather than building and operating commercial-scale plants, Novonutrients plans to make most of its revenue by selling the microbes along with a license to build, operate and maintain the facilities. “We'll also be doing product marketing and business development,” Tse said.
Getting there will take some work, but Tsi is confident the pilot plant will generate the data needed to convince investors that it's worth investing in commercial-scale fermenters. The goal is to work your way into a “capital-light” market, Tsi said.
While it was an unexpected turn of events, Tse said he had spent a lot of time in discussions with pet food companies over the past year.
“This is partly a response to a broader decline in public trust and interest in alternative proteins,” he said. “Meanwhile, the pet food industry was quicker to recognize the benefits of alternative proteins.” It's not a bad thing that people are spending a lot of money on their pets: total spending increased 78% from 2013 to 2021, according to the U.S. Bureau of Labor Statistics.
“There's a segment of the market that's willing to pay quite a bit for ingredients, not just hypoallergenic,” Tse said. Because Novonutrients' protein will be new to many pets' diets, it shouldn't be a problem for pets with food allergies, Tse said.