Gilly Uses Fungal Fermentation to Cut Animal Feed Costs by Up to 10%
- Marc Violo
- Jun 22
- 3 min read
California startup Gilly, backed by SOSV's IndieBio programme, completed its first livestock pilot in January 2026 at Trinkler Dairy in Modesto, feeding 130 cows upgraded tomato pomace for two weeks.
The company breeds fast-growing fungi strains to ferment low-value crop byproducts in just three days, raising crude protein content from around 15% to 23% while breaking down anti-nutrients such as tannins, lectins, phytates, and saponins.
With feed representing the largest input cost in livestock farming, Gilly's model targets 5–10% feed cost savings for farmers while projecting profitability from its first facility on less than $100,000 in capital expenditure.
Animal feed is one of the world's largest agricultural markets, valued at roughly $600 billion globally, according to SOSV. Despite its scale, the industry has a persistent inefficiency at its core: vast quantities of crop byproducts, such as soybean hulls, corn distillers' grain, almond hulls, and tomato pomace, are used as low-value bulking agents rather than meaningful nutritional ingredients. These feedstocks typically trade at $40 to $100 per tonne, offering farmers little in the way of protein density.
A $600 Billion Market Ripe for Disruption
Gilly, a startup incubated at IndieBio in San Francisco, is trying to change that. Founded by Bo Xu (CEO) and Vincent Wu (CTO), both holding PhDs, the company uses fungi to ferment these cheap byproducts into higher-value feed ingredients, upgrading their protein content and digestibility in the process.
What the Fermentation Process Does
The core of Gilly's technology is solid-state fermentation, a process in which fungi grow directly on solid substrates rather than in liquid tanks. Gilly breeds proprietary, non-GMO fungal strains, using a species already present in food, selected for rapid substrate transformation and tolerance to the variable pH and temperature conditions typical of on-farm environments.
In three days, the process raises crude protein content from approximately 15% to 23%, according to co-founder Vincent Wu. Crucially, the fungi also degrade anti-nutrients, compounds such as tannins, lectins, phytates, and saponins that inhibit digestion and reduce how efficiently animals convert feed into body mass. Reducing these compounds improves the feed conversion ratio, meaning animals extract more nutrition from the same quantity of feed.
Gilly's ingredient is not a complete feed but a blended component. By substituting upgraded byproduct for more expensive protein sources, farmers reduce their overall feed bill without sacrificing nutritional targets.
From Pilot to Profitability
Gilly's first commercial trial ran from around 21 January 2026 at Trinkler Dairy in Modesto, California. A pen of 130 cows consumed upgraded tomato pomace, a byproduct of the tomato-canning industry, continuously over two weeks. According to Xu, the trial validated palatability, an essential commercial threshold since a nutritionally improved feed that animals refuse has no market value.
The company's initial business model centres on co-locating with farms. California dairies, for instance, already hold the infrastructure, equipment, and sometimes the feedstocks themselves needed to run Gilly's process. At that scale, a single module processing 20,000 tonnes of feedstock per year is projected to generate $1.3 million in revenue. Total capital expenditure for the first facility is estimated at under $100,000, a figure that, if accurate, would make early-stage profitability unusually accessible for a food-tech startup.
At larger scale, Gilly intends to co-locate with centralised feedstock suppliers to reduce logistics costs and access bulk material more cheaply. The economics on offer to farmers are straightforward: the company estimates savings of 50 cents per cow per day, while earning an equivalent amount in revenue.
Limitations and What Comes Next
The Trinkler Dairy trial was small, covering 130 cows over two weeks, and no independent data on nutritional or performance outcomes has yet been published. Palatability was the stated objective; productivity metrics such as milk yield or weight gain are not reported in the available sources. Gilly is also at an early stage, with its first facility still to be built at commercial scale. The fungal fermentation of agricultural side streams is an increasingly active area, with other startups exploring similar waste-to-protein approaches across different end markets. How Gilly differentiates at scale, and whether its cost projections hold under real-world conditions, remains to be demonstrated.
