A love of food, and of course cheese, has led co-founder Roman Plewka and his team at German fermentation startup Formo to secure a massive $61 million Series B funding round to continue scaling their climate-friendly, animal-free cheese production.
The Berlin-based startup's first product is based on koji protein, a type of fungal microorganism that has been used for millennia in Asian dishes such as miso and soy sauce. While koji is an ancient ingredient, Formo claims to be the first fermentation startup that can use it to industrially produce dairy-free cheese.
The problem is, the words “vegan cheese” can clear a room faster than a block of Stinking Bishop. Many non-dairy based cheese products are very poor imitations of the real thing, typically based on plant proteins but loaded with additives to resemble cheese. Unfortunately, this often means a sticky, unhealthy and funny tasting food.
While higher-quality vegan cheeses exist, they are often made with nut-milk bases, which can increase retail prices. Formo's use of koji protein is a novel venture in a tough category, and one the company hopes will prove popular with consumers.
Koji is a fungus, meaning it's a microorganism and not a plant, so these proteins grow by fermenting in tanks — a bit like brewing beer. Plewka says koji is also a nutritious food, and Forma's non-dairy cheeses have “comparable” protein content to traditional cheeses.
“We founded the company in 2019 and since then have developed three technology platforms and generated a lot of intellectual property value, including patents and trade secrets,” he told TechCrunch. “During that time, we were the only company in the market that was able to launch, or still is able to launch, a profitable product at full scale with the second largest retailer in the industry, which drove much of the investor interest we received in our Series B.”
Dual Strategy
Using koji as a starter protein allows Formo to avoid novel food approval by European regulators (which can take years), allowing the company to get its food to market and start generating revenue immediately.
Though Formo calls itself a precision fermentation startup, Plewka emphasizes this “dual strategy,” explaining that the company started with something called “microfermentation,” which doesn't require altering the genetic makeup of the microorganisms involved and therefore doesn't require regulatory approval as a novel food.
Formo's first cheese range essentially involves fermenting and harvesting koji proteins. Then, they use that liquid to make cheese. Because there's nothing new in the ingredients, koji-based cheeses don't need regulatory approval. But for future products, they'll start genetically editing microbes to produce dairy proteins without cows, adding a wider range of animal-free cheeses to their portfolio.
Formo's first fake cheeses have recommended retail prices a bit higher than their dairy counterparts — its first products are a cream-cheese-like spreadable curd called Frisch Chain (€2.89) and a Brie-like soft cheese called Kamenblitz (€3.99) — but Pluca believes that as the startup continues to fine-tune its technology and scale up production, it can match prices and eventually even surpass them.
The startup has spent five years of R&D developing a production platform to enable it to produce a range of cheese varieties (a feta-style and blue cheese are next on the list). The first two were launched last week and are sold in over 2,000 REWE, BILLA and METRO stores in Germany and Austria in four SKUs (a plain version, plus herb and tomato versions for spreadable products).
While scaling up to cut costs is part of Formo's strategy, Plewka argues the quality of its product, with significantly improved sustainability and animal welfare benefits compared to conventionally produced cheese, justifies the premium price.
Animal farming is land- and resource-intensive, and the dairy industry is reported to be responsible for around 3.4% of global carbon dioxide emissions. Intensive farming methods also have a poor track record for animal welfare, and hormones and antibiotics can find their way into the human food chain. Vegan cheese avoids all of these issues – if it can just climb the big mountain of winning over consumers.
Formo says the micro-fermentation-based process used to make Frischhein produces 65 percent fewer emissions, uses 83 percent less land and requires 96 percent less water than dairy-based cream cheese.
Beyond a limited ingredient list of koji protein, vegetable protein, water, and a little salt, there are no scary additives, allowing Formo to avoid accusations of mass-producing ultra-processed foods (a category that includes some decidedly low-quality vegan cheese products).
Delicious, happy cheese?
“We just want to bring joy and enjoyment to our consumers without drawbacks or negative external effects, without costing the environment, animals or society at large,” says Plewka. “That's exactly what our mission is. It was clear that this couldn't be achieved with plant-based proteins, because they don't work for cheesemaking. So we turned to precision fermentation to create functional, bioidentical proteins for making real cheese.”
Plewka joined Formo with a background in food investing and a self-described “love for food.” He explains that the more he looked at the food market, the more it became plagued by inefficiencies and other serious issues, from animal welfare and environmental degradation to supply chain fragility and lack of resilience. The startup is his attempt to solve all of this.
Currently, Formo can produce 100 tonnes of its non-dairy, fermented koji protein and plant-protein based cheeses per month. Plewka said the new funding will enable the company to expand production to 1,000 tonnes per month by early 2025.
The non-dairy milk base it produces is passed on to traditional cheese makers to be transformed into finished products, which Formo says it does, using traditional processing know-how to create a more sustainable type of artisanal, yet vegan, food.
Formo says it plans to use the Series B funding to expand into other European markets and beyond.
The global cheese market is worth more than $240 billion, so even carving out a tiny slice of that giant cheese could be a very lucrative business, so it's no wonder investors are salivating (cheesy).
After years of research and development, Formo is optimistic about what's to come, suggesting that it will achieve net profit sooner rather than later, even though it's only been a week since the first product was released. “The early response has been phenomenal,” says Pruka.
As mentioned above, the company plans to get into precision fermentation, a more complex production process that involves editing the genes of microorganisms such as yeast to produce, for example, dairy proteins without involving cows.
Precision fermentation startups (such as Bon Vivant in France) are also working on developing animal-free cheeses, so there is growing interest in commercializing this kind of approach to transform the dairy industry. But as new foods, such products require regulatory approval and are likely still years away from local launches. (That's why Finland's Solar Foods has looked to Asia for the first launch of a new microbial-based protein blended into vegan ice cream.)
Plewka said Formo wants to produce and use non-animal casein protein to add an easy-melt hard cheese to its product line (which he said is hard to achieve with koji-based hard cheeses), but starting with a fungus-fermented product will allow it to enter the market, become profitable and start building a consumer brand in the meantime.
“The big differentiator for casein is [milk proteins]”Really, the biggest thing about cheese is that it's stretchy,” he points out, “so when you heat it, it melts and it becomes gooey and stretchy like mozzarella, so that's the limited functionality of our product right now.”
Formo's B round comes from a combination of existing investors, including Elevat3 Capital, EQT Ventures, Foodlabs, Grazia Capital, Happiness Capital, Lowercarbon Capital and M Ventures, as well as new investors including retailer REWE Group, Europe's second largest retailer (which is already carrying its first products), Indiposa Investments, Sazaby League, Seven Ventures, The Nature Conservancy and Woodline Partners.