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VMG Partners & TerraVia launch algae-fueled investment vehicle TerraBrands

By Elaine Watson+

05-Apr-2016
Last updated on 05-Apr-2016 at 16:44 GMT2016-04-05T16:44:45Z

VMG Partners &TerraVia launch algae-fueled TerraBrands

It is only a matter of time before microalgae becomes a mainstream food ingredient, predict the founders of TerraBrands, a new partnership between private equity firm VMG Partners and microalgae specialist TerraVia (formerly known as Solazyme).

The launch of TerraBrands demonstrated that VMG - which has made a name for itself by identifying emerging food trends - believed algae would play a pivotal role in healthy food formulation in the future, said PopChips founder Keith Belling, who has been working as a strategic advisor to TerraVia for two years.

San Francisco-based TerraBrands, headed up by TerraVia boss Jonathan Wolfson, Belling, and VMG Partners MD Michael Mauzé, will invest in or acquire lower middle-market companies in food, petfood and nutrition that leverage TerraVia’s platform of algae-based ingredients (lipid and protein powders, oils, structuring fats), Belling told FoodNavigator-USA.

 “What’s exciting about this is that TerraBrands can capitalize on select branded opportunities in food, petfood and nutrition without distracting from the core focus of TerraVia, which is a next-generation ingredients company."

TerraBrands is about bringing our expertise sets together to build category-killing companies

TerraBrands CEO Jonathan Wolfson added: “VMG understands emerging food trends better than anyone and they believe, as do we, that the time for algae-based ingredients to become mainstream is now.

“TerraBrands is about bringing our expertise sets together to build category-killing companies. The focus of TerraVia – which is an ingredients company, not an investment company - won’t change, but that doesn’t mean we won’t do some selective consumer brand incubation work like what we’re doing with Thrive algae oil , which is doing exceptionally well, although it’s still early days.”

TerraBrands combines VMG’s investment capital and skill in identifying hot consumer brands (it has invested in scores of high-profile players from KIND and Vega to Health Warrior), with TerraVia’s algae-based ingredients platform.

Algae will be front and center in food marketing

While early adopters have been fairly low key about their use of algae ingredients – acknowledging their presence but not necessarily shouting about it from the rooftops - this would likely change in future as marketers begin to weave the ‘Earth’s first superfood’/’mother of all plants’ story more prominently into their brand platforms, predicted Belling.

“I think it’s going to feature much more prominently in marketing in the future.”   

Asked about the scope of TerraBrand’s investment plans, he said: “We’re looking at compelling business opportunities and brands that will benefit from TerraVia’s ingredient platform, but at this stage we don’t have a set number of deals or fixed amount of capital in mind, it’s about finding the right opportunities to pursue.”

Thrive culinary algae oil is being test marketed in southern California

TerraVia (formerly known as Solazyme) firm recently raised $28m in a financing round backed by high profile investors and entrepreneurs including Glenhill Capital, VMG Partners, PowerPlant Ventures, Charles Chang, ARTIS Ventures, Simon Equities, Jack Davis and Keith Belling.

The company – which originally hoped to make a splash in the alternative energy market but gradually learned that food and super-premium face cream were better bets - has developed microalgae-based ingredients used in everything from surfactants and detergents to industrial lubricants, tires, soap and carpets.

However, food, nutrition and personal care offer some of the most exciting opportunities, according to CEO Jonathan Wolfson, who said he will be “pursuing strategic alternatives over the next 12-18 months to unlock the value created [in the industrial products division, which is to be spun off].

The platform we’re developing has the ability to redefine the future of food

TerraVia CEO Jonathan Wolfson: “We have more than 200 active projects for our applications in food and nutrition.”

Speaking to FoodNavigator-USA last month, Wolfson acknowledged that it had taken a long time for the algae-based food ingredients business to gain traction, which was in part a reflection of the lengthy product development cycles of many food companies.

But it also reflected the fact that the company was doing something genuinely new, he said. “The platform we’re developing has the ability to redefine the future of food. Algae is the mother of all plants, the world’s original superfood. But it’s completely new to the food industry and true innovation takes time.”

However, things had picked up significantly in recent months, he said. "Product, safety, regulatory, large scale manufacturing at the right cost structure, and getting the first important validation customers... that's all happened over the past six to nine months.

"It's taken a long time, but all the pieces are coming together, and it's very exciting."

The TerraVia  portfolio includes:

  • Specialty food ingredients: AlgaVia whole algae ingredients (lipid rich powder and protein, manufactured in Peoria, IL) and AlgaWise oils (made in Brazil as part of JV with Bunge), with customers including Hormel, Utz, Enjoy Life Foods, So Delicious (WhiteWave Foods), Soylent and Follow Your Heart (click HERE ). Structuring fats (algae butter) coming soon (click HERE ).
  • Consumer foods: Thrive culinary algae oil (click HERE ).
  • Animal nutrition ingredients: Coming soon…
  • Specialty personal care ingredients: Includes AlgaPur Oils; major customers include Unilever. 

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