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Friday, January 27, 2023

Bengaluru-Based Company Making Dairy Without Animals Raises $1.2M in Seed Funding

Founded in Bengaluru in early 2021, Phyx44 is using precision fermentation of microbes to create the full stack — whey and casein proteins and fatty acids — to recreate dairy. The company has now raised $1.2M in funding from Better Bite Ventures, Ahimsa VC, PeerCapital, Spectrum Impact, Rohit Gulati (MD & Partner at Boston Consulting Group), Sandhya Sriram (CEO, Shiok Meats) and others. With the new funding, it will accelerate R&D, expand the team and work on co-development of product formulation with key partners. The biotech-enabled food science company has also received backing from Big Idea Ventures and Humane Society International, among others.

The components used by the company to recreate dairy are identical to the ones found in traditional dairy, but they are animal-free, lactose-free and planet-friendly.

The biggest pain point for consumers who want to avoid or reduce dairy intake — whether for animal cruelty, environmental reasons, or due to lactose intolerance — is the lack of convincing alternatives. “As a vegan for over 9 years, I’ve always struggled to find good alternatives to curd (yogurt), ice cream and paneer,” said Bharath Bakaraju, founder of Phyx44, who is keen to apply his scientific background (MS in Industrial BioChemistry from IIT Kharagpur) and management experience (MBA from IIM Lucknow, Ex-Google, Ex-Amazon) to leverage new technologies. “Dairy has a huge environmental cost. Plus, animal welfare is an area of concern. That is why I was excited when I learnt what we could do with precision fermentation,” he added.

Phyx44 is betting on microbial fermentation as the best way to replicate dairy. This technology “teaches” microbes to do what a cow or buffalo would do inside its cells. The team at Phyx44 has already made whey and casein proteins at lab scale and are in the process of scaling them up.

The company’s first product is expected to launch in 2024 in India and Singapore.

phyx44 team

Fermentation is a key pillar of smart protein, globally known as alternative protein. Sharing insights on the promise of this technology, Nicole Rocque, Senior Innovation Specialist at the Good Food Institute India said, “This sunrise sector has a key role to play in meeting the Government of India’s ambitious target of growing our bioeconomy to USD 300 billion by 2030. India is quickly becoming the preferred destination for both innovation and manufacturing of smart protein, and will play a key role in the development of bio-enabled solutions globally. Startups like Phyx44 have the potential to accelerate new product innovation and lay down the path toward cost reduction, establishing a model for growth of this technology in the developing world.”

Unleashing the power of these microbes brings incredible efficiency in the long term — and will be instrumental in reducing animal suffering, land and water use, and greenhouse gas emissions from dairy production globally. “The intersection of India being an agrarian economy, the largest producer and consumer of dairy, and a huge pharma producer provides a massive opportunity for Phyx44 to serve global demand for dairy ingredients and products, sustainably. The team’s technical prowess is reflected in how swiftly they have scaled to a 100L capacity,” said Jinesh Shah, Chief Investment Officer at Ahima VC, who participated in the Seed round.

Milk contains whey and casein proteins which give it many of its key characteristics. It is not a surprise, therefore, that replicating them is the holy grail for precision fermentation based companies.

In addition to proteins, fats play a crucial role in enhancing the sensory properties of dairy. While protein gets a lot of attention within the discussion around dairy alternatives, there are very few who are working on fats. Phyx44 is working on the “full stack” — whey, casein and fats. “What we do not see getting enough attention is fats. We’re one of the very few companies working on key fat components alongside key dairy proteins because we believe this will go a long way in our ability to create a superior product,” Bharath added. Building a full stack enables Phyx44’s products to be used in a host of applications, including ice-cream, cheese, baked goods, and more, advancing the alternative dairy sector across dimensions of taste, functionality, and accessibility.

While based in India, Phyx44 has aspirations of being a global player. The low cost of R&D and manufacturing in India (manifold cheaper than US or Europe) has its benefits — as is evident from India’s strong supply base for vaccines, insulin etc. for countries around the world.

“We believe that Phyx44 will leverage the base in India and provide affordable, sustainable dairy proteins and fats to partners and consumers globally. With its biotech infrastructure and talent pool, India can be the smart protein factory of the world”, said Michal Klar, Founding Partner at Better Bite Ventures who led Phyx44’s investment, in a statement.

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