[Updated 6:16 p.m. See below.] Plant-based foods and beverages are getting more grocery store shelf space as consumers increasingly shop for meat and milk alternatives. But these products typically carry premium prices because making proteins in a lab is still far more expensive than conventional agriculture.
Motif Ingredients says it can use biotechnology and fermentation to develop proteins that are more affordable and scaleable than those in other meat and milk substitutes. The Boston startup is launching Tuesday with $90 million in financing that it will use to continue its research with the goal of bringing its first protein ingredients to the market within two years.
Motif is spinning out of Ginkgo Bioworks, a synthetic biology company that engineers microbes for uses in various industries. In the food sector, Ginkgo makes microbes that secrete compounds for flavors or fragrances. The Boston company’s customers include a number of food and beverage companies.
Proteins were part of Ginkgo’s research, says Jason Kakoyiannis, a business development executive at the company. As Ginkgo spent more time in the food sector, the company noticed its customers were looking for ways to produce new protein ingredients. That realization sparked the idea to turn the Ginkgo protein research into a separate business, Kakoyiannis says.
“This is an evolution of the same [Ginkgo] technology, basically coding microbes to produce compounds of interest,” he says. “The difference with Motif is the ingredients are proteins that we get mainly from animals.”
A convergence of trends supports the emergence of meat alternative companies, according to CB Insights. Global population growth, and a rising middle class in China—the world’s largest meat-consuming country—are boosting demand for protein. The research firm adds that concern about the environmental effects of agriculture, as well consumer preferences for healthier food choices, support a shift toward meat alternatives.
Cost remains a big obstacle to products made from alternative proteins. Despite slashing water use, greenhouse gas emissions, and land use, one pound of lab-grown meat costs approximately 12 times more to produce than one pound of conventionally grown animal meat, according to CB Insights.
Lab-grown meat is still in research and development, but alternative protein products from other food startups are gaining traction in the market. Redwood City, CA-based Impossible Foods, which has developed a beef-like burger from wheat and potato proteins, claims that its Impossible Burger is now available in more than 5,000 restaurants nationwide. Beyond Meat makes its meat products from yellow pea proteins. Consumers can buy burgers and other meat products from the El Segundo, CA-based startup in grocery stores in the U.S. and in some restaurants in Canada.
Big food companies are also showing interest in alternative proteins. Last November, Archer Daniels Midland (NYSE: ADM) inked a partnership agreement with Perfect Day, a San Francisco startup researching ways to produce dairy proteins in the lab that can be made into milk and cheeses. Tyson Foods (NYSE: TSN) has invested in Beyond Meat and San Leandro, CA-based Memphis Meats, a company researching a way to grow animal cells in the lab to form chicken meat. In a blog post last year, former Tyson president and CEO Tom Hayes wrote that addressing the growing consumer demand for protein “will take a combination of innovative and traditional approaches.”
[Paragraph updated to clarify Fonterra’s relationship with Motif.] Kakoyiannis wouldn’t disclose food company partners, though he says some of the company’s investors come from the industry, such as New Zealand dairy nutrition company Fonterra. Talks with food companies have informed Motif about their challenges, such as nut-based milks that are thin and gritty or plant-based meats that have a “grassy” taste. Kakoyiannis says Motif aims to make ingredients that can address those shortcomings.
Motif is operating independently of Ginkgo with its own management and staff, though Ginkgo has an ownership stake, Kakoyiannis says. The two companies will keep a close relationship. Under a services agreement, Ginkgo will bioengineer the microbes, which Motif will then ferment at large scale to produce its food ingredients. The arrangement spares Motif from needing to invest in infrastructure and staffing that Ginkgo already has at its headquarters and labs in Boston’s Seaport neighborhood.
Kakoyiannis says he’s unsure if Motif’s ingredients will qualify as vegan or even vegetarian. But he says the company’s goal is to give more choices to flexitarian consumers who want plant-based foods. He adds that ingredients will be derived from existing edible products, just as Ginkgo’s products were. These sources are what the FDA classifies as “generally recognized as safe,” but Kakoyiannis says the company will work with the regulator to secure any additional approvals that are necessary.
Besides Fonterra, investors in Motif’s Series A round of financing include Breakthrough Energy Ventures, Louis Dreyfus Company, and Viking Global Investors. Viking was also an investor in Joyn Bio, a joint venture between Ginkgo and Bayer Crop Science that is researching ways to engineer microbes for agricultural applications. Like Joyn, Motif will operate from Ginkgo’s Boston facility.