In a significant boost for the burgeoning alternative protein sector, Infinite Roots, a startup based in Hamburg, has secured a substantial $58 million in a series B funding round. Despite a challenging climate for fundraising, the company, previously known as Mushlabs, has attracted investment from some of Europe’s most prominent names, including the holding company behind the candy titan Haribo, Dr. Hans Riegel Holding (HRH), and one of Europe’s largest retailers, the REWE Group.
The investment round, which was also supported by the European Innovation Council (EIC) Fund, Betagro Ventures, and a host of existing investors, represents the largest mycelium investment in Europe to date. This financial milestone brings Infinite Roots’ total raised funds to an impressive $73 million since its inception in 2018.
Infinite Roots is pioneering an asset-light approach to the production of mycelium, the root-like structure of mushrooms. Unlike other startups in the space that are investing heavily in building their own production facilities, Infinite Roots is strategically partnering with existing infrastructure to grow its mycelium at pilot and industrial scales. This approach allows the company to focus on generating revenue without the burden of significant capital expenditure, which is a particularly savvy move in the current market where such investments have dwindled.
The startup has formed a strategic partnership with Bitburger Brewery Group, not only to use the brewery’s spent grains as a sustainable feedstock but also to adapt its fermentation capacity to suit Infinite Roots’ requirements. This collaboration is expected to yield commercial quantities of mycelium within the next 12 to 18 months.
Infinite Roots’ choice to use only edible mushroom strains in its fermentation process is a strategic one. It simplifies the regulatory pathway and makes the consumer education process less complex. Unlike competitors that use mold strains, Infinite Roots is leveraging the natural flavors of edible mushrooms, which consumers are already familiar with from supermarket shelves. This choice also enables the company to produce meat alternatives that are minimally processed with a clean label, an increasingly important selling point for health-conscious consumers.
Regarding regulatory hurdles, Infinite Roots argues that by using mycelium from edible mushroom varieties, its products should not be classified as novel foods in the EU, potentially sidestepping stringent regulatory requirements. In the US, the company has self-affirmed GRAS status for its products and is working towards securing a ‘no questions’ letter from the FDA.
Infinite Roots’ go-to-market strategy is ambitious and international in scope. The company is exploring various business models and partnerships to introduce its mycelium-based products to the market. The focus is on ensuring that any product using its ingredient is either branded or developed in a way that highlights the unique qualities of the mycelium, rather than merely serving as a protein substitute.
The backing from REWE Group is not just financial; the retail giant is also providing strategic insights to help Infinite Roots position itself effectively in the market. Similarly, HRH’s experience in market entry and positioning is expected to be invaluable as Infinite Roots navigates the complexities of launching products across different countries.
The success of Infinite Roots in securing such a substantial investment reflects a growing confidence in the alternative protein market and the potential of mycelium as a sustainable and versatile food source. With its asset-light approach, strategic partnerships, and focus on leveraging natural flavors, Infinite Roots is well-positioned to make a significant impact on the food industry and offer consumers exciting new options in the realm of plant-based eating.