Climax Foods, a plant-based cheesemaker, has secured bridge funding to sustain its operations through the end of the year after a challenging period marked by significant financial strain and workforce reductions. The company, founded in 2019 by astrophysicist Dr. Oliver Zahn, had furloughed approximately half of its employees in December 2023 for three months. During this period, employees retained their healthcare and other benefits but were eventually laid off.
By August 2024, Dr. Zahn informed staff of the need to reduce employee salary expenditures by 80% through the end of the month. This reduction was achieved through a combination of furloughs, unpaid time off, and voluntary salary cuts, leaving only a handful of full-time staff to manage the business, which once peaked at over 35 employees. A former employee described the situation as dire, noting that the company’s existence hinged on a term sheet they hoped would materialize swiftly.
Despite these challenges, Zahn recently announced that Climax Foods has raised bridge funds from existing investors, allowing the company to extend its runway into the next year. As the funding round closes and money begins to flow in, the company plans to bring back employees from furlough, with three already scheduled to return next Monday. In line with its transition from a research and development-focused entity to one engaged in multiple commercial rollouts, Climax Foods is also restructuring and hiring for new roles on the commercial side.
To date, Climax Foods has raised approximately $26 million from investors such as At One Ventures and Climate Capital, along with an undisclosed sum from Bel Group. However, the company lacks a formal board and has not yet conducted a priced funding round. Zahn revealed plans to establish a more formal board with the conclusion of the current funding round. When asked about his future role, Zahn indicated that the search for a strong commercial lead at the executive level would allow him to focus on science and vision.
Climax Foods’ products, which notably do not contain gums, emulsifiers, or flavor and color additives, have garnered positive attention. Recently, the company won a Good Food Award but was disqualified on the eve of the awards ceremony. Climax Foods has also started supplying its signature blue cheese to a select number of restaurants and retailers from its plant in Petaluma, California. Additionally, the company has a partnership with Bel Group to develop plant-based versions of its iconic cheese brands, including Mini Babybel.
However, like many foodtech startups, Climax Foods has faced difficulties raising funds in a market where investor enthusiasm has waned due to the underperformance of high-profile players like Eat Just and Beyond Meat. Former employees have claimed that Climax is losing money on every wheel of blue cheese it sells, arguing that economies of scale cannot make the unit economics viable—a claim Zahn strongly denies. He stated that with a leaner strategy and scaling to 5,000 pounds per month at the Petaluma facility, the company would achieve 40% gross margins.
The partnership with Bel Group remains on track, with consumer trials commencing this fall ahead of a planned launch next year. Climax Foods aims to create plant-based cheeses that are indistinguishable from their dairy counterparts.
Addressing claims about the scalability of Climax Foods’ plant-based casein ingredient, Zahn clarified that while the initial BabyBel launch would use other proteins, the plant-based casein is scalable. He cited successful scale-up trials and interest from large-scale partners due to strong economics.
Despite the challenges, Zahn remains optimistic, emphasizing the support from investors and the mission-aligned individuals backing Climax Foods. He believes the company will emerge stronger from this period of restructuring and financial uncertainty.