Mycorena Pauses Large-Scale Mycoprotein Facility: “Investors are Hesitant to Back Projects with Heavy Capital Requirements” – vegconomist
Pioneering mycelium-based solutions company Mycorena announces it is discontinuing its large-scale factory project in Sweden for Promyc, its flagship mycoprotein ingredient.
Planned in 2022 and designed with Tetra Pak, the large-scale production factory aimed to supply the then “booming” plant-based market with volumes of mycoprotein: 5,000 tons by the end of 2023, with a total production volume of up to 100,000 tons in multiple stages.
“The market sentiments changed drastically”
Despite significant growth and raising over €35 million in funding, including a €24 million Series A round, Mycorena says it has faced changing market conditions such as reduced investor interest in capital-intensive projects within the food tech industry and a slowdown in the plant-based meat market. The company says it attempted to raise Series B funding with SEB and Pareto Securities in 2022-2023 but failed due to low investor interest.
Dr. Ramkumar Nair, founder and CEO of Mycorena, explained, “We experienced steady growth until 2022. However, it seems we were set on track on a wrong timing [sic] when it comes to the scaling project and the market sentiments changed drastically. Investors are hesitant to back projects with heavy capital requirements and the declining sales in plant-based foods have also impacted our cost models.”
Strategic B2B2C shift
Mycorena will now focus on a long-term circular upcycling production model working with industry side-streams to build and co-location production model for the upcoming mycoprotein production.
Ebba Fröling, co-founder and COO, commented, “After almost 24 months of efforts, we’ve concluded that the industry isn’t ready yet for big bets on mycoprotein or fermentation-related products. Therefore, we’re taking a step back to focus on our core operations and reinforce the interest in mycoprotein products before scaling up further,” added Fröling.
The new business plan will maximize production capacity at the Gothenburg demo plant, support existing partnerships, and explore new opportunities with private labels and foodservice partners, pivoting from a B2B ingredient sales model to a more B2B2C approach.
“Food companies won’t commit without a proven large-scale production”
According to the announcement, the demo facility in Gothenburg has the potential to produce enough mycoprotein ingredients to supply up to 500 tons of end-consumer products. The initial roll-out is planned for 2025, focusing primarily on the Nordic market where, according to the company, consumers prefer locally made alternative products, including mycoprotein.
Fröling said, “We’ve faced a constant catch-22 situation where investors demand binding purchase contracts to invest in capex, while food companies won’t commit without a proven large-scale production.”
Confident in fungi’s potential
Mycorena, active in the market since 2017, has launched not only the production of Promyc, but also developed innovative including a fungi-based fat and a mycoprotein-based butter. Additionally, it has launched consumer products in six EU countries through partnerships and collaborations.
“We still have strong confidence in the potential of fungi and mycoprotein’s impact on the food system”
This year, Mycorena received funding from the European Space Agency’s (ESA) Discovery Programme, recognizing mycoprotein’s potential for use on long-distance space missions due to its nutritional benefits and closed-circuit production system.
Nair concluded, “We still have strong confidence in the potential of fungi and mycoprotein’s impact on the food system. However, given the current investor climate and geopolitical situations, we must pause our scale-up journey.”
Mycorena is seeking investment from existing shareholders and new investors to support the pivoted growth plan.
