Driven by a love of food and cheese, Roman Plewka and his team at German fermentation startup Formo have raised a whopping $61 million Series B round to scale production of climate-friendly, animal-free cheese.
The Berlin-based startup’s first product is based on koji protein, a type of fungal microbe that has been used in Asian dishes like miso and soy sauce for thousands of years. But while koji is an ancient ingredient, Formo claims to be the first fermentation startup to use it to make non-dairy cheese in industrial quantities.
The problem is that the phrase “vegan cheese” can clear a room faster than a slice of Stinking Bishop. Early versions of non-dairy cheese products were very poor imitations of real cheese. They usually used plant-based proteins as a base, but added additives to create something that approximated cheese. Unfortunately, this often meant unhealthy, weird-tasting foods with a sticky mouthfeel.
There are better quality vegan cheeses out there, but they are often made with a nut milk base, which can drive up the retail price. Formo’s use of koji protein is a new twist in a challenging category that it hopes will resonate with consumers.
Koji is a fungus, so it is not a plant but a microorganism. Therefore, the protein can be grown through fermentation in a vat, similar to brewing beer. Also, according to Fluka, Forma’s non-dairy cheese is a nutritious food choice that claims to have the “same” protein content as conventional cheese.
“We founded the company in 2019 and since then have developed three technology platforms and created a lot of IP value, patents and trade secrets,” he told TechCrunch. “In that time, we have been able to launch the only profitable product on the market at full industrial scale, and are currently launching it, and have attracted a lot of investor interest, including a Series B round with the second-largest retailer.”
Dual strategy
By using koji as a starter protein, Formo was able to skip the years-long process of getting a new food product approved by European regulators, meaning it could get its food product to market and start generating revenue right away.
While Formo calls itself a precision fermentation startup, Plewka emphasizes this “dual strategy,” explaining that it started with what he calls “microfermentation,” which doesn’t require regulatory approval as a novel food because it doesn’t involve altering the genetic structure of the microbes involved.
In the first wave of cheese, Formo basically ferments and harvests the Koji protein. It then uses the resulting liquid to produce cheese. Since there is nothing new in terms of ingredients, Koji-based cheese does not require regulatory approval. However, for future products, it plans to start gene-editing the microbes to produce milk proteins without cows and add a wider range of animal-free cheeses to its portfolio.
The suggested retail price for Formo’s first faux cheeses is a slight premium over dairy products. The first products are a cream cheese-style spread called Frishchain (€2.89) and a Brie-style soft cheese called Camembritz (€3.99). But Plewka believes the startup can achieve price parity and, ultimately, go further as it fine-tunes its technology and scales up production.
The startup has been working on R&D for five years and has developed a production platform that can produce a variety of cheeses (feta-style and blue are next in the pipeline). The first two went on sale last week, with four SKUs (plain, herb and tomato versions of the spread) available in over 2,000 REWE, BILLA and METRO stores in Germany and Austria.
While scale-up to cut costs is part of Formo’s strategy, Plewka argues that the product quality justifies the premium due to significantly improved sustainability and animal welfare benefits compared to traditionally produced cheese.
Livestock farming is extremely land- and resource-intensive, with the dairy industry reportedly accounting for around 3.4% of global carbon emissions. Intensive farming methods have a poor record on animal welfare and can introduce hormones and antibiotics into the human food chain. Vegan cheese can avoid all these problems, if only it could climb the big hill that attracts consumers.
According to Formo, the micro-fermentation-based process used to produce Freeshine produces 65 percent fewer emissions, uses 83 percent less land, and uses 96 percent less water than dairy-based cream cheese.
Aside from a limited list of ingredients—koji protein, plant-based protein, water, and a little salt—there are no scary-looking additives, so Formo can avoid accusations of producing overly processed foods (an area where low-quality vegan cheese products obviously fall into this category).
A delicious and joy-filled cheese?
“We just want to provide a delicious product that gives consumers complete enjoyment and pleasure without any downsides or negative externalities, without any cost to the environment, animals or society as a whole,” says Plewka. “That’s our mission. It was clear that you couldn’t achieve this with plant-based proteins, because they just don’t work well in cheesemaking. So we created a functional, bioidentical protein for producing real cheese through precision fermentation.”
Fluka came to Formo with a background in food investment and a self-proclaimed love of food. He explains that the more he looked into the food market, the more he became concerned about serious problems such as inefficiency, animal welfare, environmental destruction, supply chain vulnerability, and lack of resilience. This startup is his attempt to solve all of these.
Formo currently produces 100 tons of non-dairy-based fermented koji protein and plant-based cheese per month. According to Plewka, the new funding will allow the company to expand production to 1,000 tons per month by early 2025.
The non-dairy milk base produced by Formo can be passed on to traditional cheese makers to be processed into finished products. Formo is also doing this, using old processing know-how to produce a more sustainable type of traditional vegan food.
Formo said it plans to use the Series B funding to expand its business into other European markets and beyond.
The global cheese market is worth over $240 billion. Even a small slice of that market could be a huge business, so it’s easy to see why investors are salivating (like cheese).
After a long initial R&D, Formo seems optimistic about the road ahead, suggesting that it will soon reach net profit, even though it has only been a week since its first product was released. “The initial response has been tremendous,” says Plewka.
As mentioned earlier, the company plans to move into precision fermentation, a more complex production process that involves editing the genes of microorganisms like yeast to produce things like milk proteins without any cow involvement.
Several other precision fermentation startups (e.g. Bon Vivant in France) are also developing non-animal cheeses, so there is growing interest in commercializing this type of approach to revolutionize the dairy industry. But because these are novel foods, they require regulatory approval, so regional launches are likely years away. (That’s why Finland’s Solar Foods is looking to Asia for its first launch of a new microbial-based protein, which is being blended into vegan ice cream.)
Fluka says Formo would like to produce and use non-animal casein protein to introduce a meltable hard cheese into its product line (a melting property he says would be difficult to achieve with a koji-based hard cheese). But by starting with a mold-based fermented product, it can enter the market, generate revenue, and build a consumer-focused brand in the meantime.
“The big differentiator of casein (a milk protein) is that it actually provides elasticity,” he says. “So when you heat the cheese, it melts and gives you that gooey, stretchy quality that you typically get with mozzarella cheese. So that’s where the functionality of our products today is limited.”
Formo’s B round is a mix of existing investors including Elevat3 Capital, EQT Ventures, Foodlabs, Grazia Capital, Happiness Capital, Lowercarbon Capital and M Ventures, and new investors including REWE Group, the second largest retailer in Europe with its first product already in stock, Indiposa Investments, Sazaby League, Seven Ventures, The Nature Conservancy and Woodline Partners.
