Fundraising

Food tech firm launches Series A, attracts Nestle’s interest – exclusive

MycoTechnology is raising $5m to $10m to develop its technology platform aimed at enhancing food flavours naturally and improving nutritional value. Major food companies are also considering making bids to acquire the company outright.

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MycoTechnology, a food technology company aiming to create healthier food and drink without sacrificing on taste, is in the early stages of raising $5 million to $10 million in Series A funding.

Major food and beverage companies are also showing some interest in acquiring the full equity capital of the company. And a source close to the matter indicated that Nestle is among those conducting due diligence.

“It is amazing how many big food companies are telling us that we are the future of food processing. It doesn’t get much better than that,” said chief executive Alan Hahn.
The Denver-based technology platform aims to have a lead investor on board and terms settled by the end of January, according to Hahn, who is a technology start-up veteran. Both venture capital firms and major food and beverage companies are considering the round, he added.

MycoTechnology has so far developed two methods of removing molecules that contribute to bitter tastes by using mushrooms and fungi – MycoSmooth, for coffee and chocolate, and MycoZyme, for green tea and natural sweetener stevia.

This makes it unnecessary to use masking agents such as sugar or other unhealthy additives. Mushrooms and fungi also improve the nutritional profile of food by producing beta-glucans which are known to help control body weight and have other health benefits.

The company has 15 patents in total which it will build out on its platform to cover over 400 agricultural products, according to Hahn.

There are few, if any other food tech companies pursuing a similar strategy, according to Hahn.

“Our platform is highly scalable and the technology is disruptive to the sector at large which has focused only on different masking agents until now,” he said. “The release of beta-glucans and the removal of the need to add a lot of sugar, and therefore calories, to mask unpleasant tastes makes our technology able to hit all the consumer trends for people seeking healthy alternatives today.”

Due to the company’s potential to disrupt the food technology sector, major food and beverage companies are also considering making a bid to acquire the company as a whole. But it might be too early to sell, argued Hahn.

“One of our directors told us that we would get a lot of offers to buy the business before we would feel ready to be acquired and that is what has happened.” said Hahn. “But we are not really ready to sell – we are having too much fun as this is such as transformative sector. Although of course there is always a price.”

MycoTechnology was established in April 2013 and has so far raised $1.4 million in angel capital from Hahn’s contacts in Silicon Valley, New York and some of the company’s board of directors. Hahn has had several successes in the venture technology sector including Scale Computing.