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Mushroom startup draws Tyson's eye

by Nathan Owens | February 2, 2019 at 4:30 a.m.

A Colorado startup that develops mushroom-based ingredients for the food industry recently completed a $30 million round of funding that includes an investment by Tyson Foods Inc.

MycoTechnology Inc., of Aurora, Col., uses mushrooms to make ingredients meant to help food and beverage companies cut back on sugar content in their products.

The fungi-fueled startup has undergone three multimillion-dollar investment rounds of funding since 2015. The latest round, which closed Wednesday, drew participation from animal protein and animal feed veterans Tyson Ventures, Bunge Ventures, Continental Grain Co. and Eighteen94 Capital (Kellogg's venture capital arm), among others.

"We're interested in learning more about MycoTechnology's approach of using a protein alternative as an ingredient to various foods and hope our investment will help grow its business," a Tyson spokesman said in an email Friday. The company did not disclose investment details, and said "there are no immediate plans to develop products together, although that may be a consideration in the future."

Jayson Lusk, a professor and head of the Department of Agricultural Economics at Purdue University, said part of the investment strategy for food companies is anticipating consumer demand five, 10 or 15 years down the road. It also gives them an "inside look" at potential future competition, he said.

"They're buying some insurance in case these alternative proteins seriously compete [with animal proteins]," Lusk said. "[MycoTechnology] is another player from a slightly different angle, and at this point, it's hard to see which ones are going to be successful."

Food companies, in general, have invested in alternative-meat startups to be positioned for anticipated changes in consumer tastes. Tyson has more than a 5 percent ownership stake in Beyond Meat, which crafts burgers and hot dogs from pea and soy protein, and an undisclosed stake in Memphis Meats, which grows meat from animal cells. Cargill Inc. also has investments in both companies.

MycoTechnology said in a news release it plans to use the funds collected this week for workforce expansion and research and development projects. According to Crunchbase, which tracks venture capital investments, the mushroom startup has scooped more than $80 million from investment groups so far.

The company has two key products. One is promoted as a bitter blocker used to replace sugar. The other is a protein source -- comparable in nutritional content to animal protein but with lower levels of fat, cholesterol and carbohydrates -- derived from shiitake mycelium.

MycoTechnology claims its fungus extract offsets bitterness in some foods. In company documents, the startup said sugar is in nearly all processed foods as a sweetener and to mask some flavors. MycoTechnology said its flagship product, ClearTaste, blocks bitter flavor receptors and gives foods a "cleaner taste."

PureTaste, another product from the startup, is meant to be a protein ingredient for plant-based products that look, feel and taste like chicken, beef or pork.

Ken Shea, a food and beverage analyst with Bloomberg Intelligence, saw Tyson's latest move as a modest investment that may offer some upside for shareholders.

"Tyson, like many of its domestic packaged food peers, remain actively in pursuit of investments that help it participate in early-stage, high-potential trends that could affect their business," Shea said in an email.

Business on 02/02/2019

Print Headline: Mushroom startup draws Tyson's eye


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