Perfect Day raises $24.7m in Series A round to commercialize animal-free dairy ingredients
The round - supported by Horizons Ventures, Continental Grain, Iconiq Capital (USA), Lion Ventures, Verus International, and others – is “among the largest food tech series A rounds ever,” said co-founder Ryan Pandya, who is on a mission to introduce dairy ingredients that vegans and dairy lovers alike can enjoy in products “in every aisle of the grocery store.”
The round was announced as the Berkeley-based firm also celebrated receiving its first patent for the use of animal-free dairy proteins in food applications, co-founder Perumal Gandhi told FoodNavigator-USA: “Now we can say we have patented technology, which is really exciting.
“I think once we’ve shown this at a commercial scale at super affordable prices, others will come in, but our hope is that at that point, we will have such a big head start, we can just license our technology instead of people spending five or six years to try and develop this themselves.”
We spent six months answering questions non-stop... but you come out the other end a better company
He added: “Temasek [which has also invested in vegan leather firm Modern Meadow and plant-based burger maker Impossible Foods] put in $10m, and they don’t generally do series A rounds, so we were pretty lucky we managed to get them so early. They usually come in for B, C and D rounds when things are further along, but they decided to take the leap and lead the round because this will take us to commercialization.
“Everyone knows that the due diligence they do is extremely thorough. We spent six months answering questions non-stop about everything from financial projections, to pressure-testing different scenarios in terms of royalty rates or partnerships, and what things would look like in the market at difference scales. But once you come out the other end, you are a better company because of it.
“They also have relationships with some of the largest food companies and brands in the world, which coupled with the investment from Continental Grain, will allow us to accelerate commercialization with a wide variety of partners across food and beverage.
“They are also willing to take a long-term view, so they are not looking to get return in three to five years… That’s critical especially in food where scaling up takes time and you can’t deliver results in three years.”
We’re scaling up in partnership with another company
Like fellow Bay area start-up Geltor, Perfect Day is one of a new breed of companies in the ‘cellular agriculture’ business – using genetically engineered yeasts that have been ‘programmed’ to produce proteins or other ingredients found in plants or animals - on an industrial scale, without raising animals, and with less impact on the environment.
While the company had originally intended to develop its own consumer vegan dairy products first (Perfect Day milk), it has since pivoted to an ingredients-based strategy following a surge of interest from “some of the most well-known food and dairy companies in the world,” said Pandya.
“We’re scaling up production in partnership with another company that brings a lot to bear in terms of experience in everything related to fermentation. What we are doing is compatible with industry standards both in terms of fermentation and the various paths to market, as we’re making dairy ingredients that are every bit as functional and nutritious as the proteins we all know and love.”
He added: “We’re generating a whole new supply of cost-effective animal-free dairy protein into the food industry.
“Some of the applications Perumal and I are most interested in are fresh dairy applications, cheese, milk yogurt and ice cream, but these proteins can go into all kinds of food and beverage products.”
The great thing about dairy proteins is that they are already known to the food industry
Perfect Day dairy proteins are cleaner, greener and kinder than those produced via industrialized animal farming, claimed Pandya, but they also represent a new supply of vegan proteins that deliver the unique functionality and nutrition of dairy so that formulators do not have to compromise.
He added: “We’ve had interest from manufacturers that want to create vegan products but feel that plant proteins lack the taste, nutrition and functionality of dairy, and from manufacturers who are currently using dairy but who wish it was more on-trend in terms of consumers moving away from animal products and looking for more sustainable foods. We’ve had inbound interest from everyone from small organic brands to large CPG companies.
"The other great thing about dairy proteins is that they are already known to the food industry, so we’re not creating a totally new product.
“We’re both vegans and we come at this from a vegan perspective [many vegans have found dairy the hardest thing to give up] and we wanted more nutritious, cleaner label vegan products that are not held together with a bunch of starches and gums and stablizers, and from all the vegans that we talked with, this totally meets their expectations. It’s vegan because there are no animals involved in the process whatsoever.”
The production process
So how are the proteins produced?
In a nutshell, Perfect Day takes food grade yeast, and adds DNA sequences (which can be 3D printed using synthetic biology techniques) which effectively instruct that yeast to produce the proteins found in milk. It then throws them into big fermentation tanks with corn sugar and other nutrients to feed on and sits back while they get to work.
When the microbes have done their work at the bio-refinery, Perfect Day’s dairy proteins - which have the same organoleptic properties as their animal-based counterparts - are harvested via a mechanical process and can be used in everything from ice cream to fluid milk, protein powders and shakes, yogurt, pizza and any other product containing dairy proteins, said Pandya.
“We are able to create all the major dairy proteins and the great thing is that we are developing them on an individual basis, so we can create blends with interesting and novel functionality.”
GM technology can ultimately help us provide a safer and more sustainable food supply
Perfect Day’s dairy proteins are technically non-GMO products in that they do not contain any GMOs (none of the GE yeast used to manufacture the proteins is present in the final product), and would not need labeling according to the federal GMO labeling bill that President Obama signed in 2016.
Despite the PR problems experienced by some pioneers in the synthetic biology arena, Pandya is confident that by being transparent about the process and its environmental and ethical benefits, and engaging with NGOs along the way, Perfect Day will be able to avoid ‘Frankenmilk’ headlines, however.
“GM technology can ultimately help us provide a safer and more sustainable food supply, especially when it comes to proteins, but we are committed to transparency about what our products are, and how they are made.”
Labeling: Consumers demand and deserve transparency
Product labeling for animal-free dairy is new regulatory territory, acknowledged Pandya - who is having conversations with the FDA on this as we speak - but it’s actually not as complicated as you might think, given that Perfect Day is making ‘dairy’ proteins (albeit using a different process) that are well understood and widely consumed.
“There’s very little controversy about what you would call the proteins that we’re making, they are whey proteins and casein proteins. The challenge is more about what you’d call a formulated product such as milk, but we want to make it clear to consumers that the proteins don’t come from cows – that’s the whole point of this, after all – so we’re going to be very transparent.”
As for the term ‘milk,’ a term that has a standard of identity, discussions are ongoing, but the FDA’s primary concern is that labeling is not misleading, he said.
“Consumers demand and deserve transparency so we want to make sure that it’s clear that it’s dairy protein, but that it is animal free, and therefore suitable for vegans.”