The global foodtech sector has yet to fully bounce back from the venture capital downturn of 2022. While total investment climbed from $9.6 billion in 2023 to $10.3 billion in 2024, this increase was largely driven by a handful of high-value late-stage rounds. Meanwhile, early-stage deals hit record lows in the final quarter of 2024.
Europe’s alternative protein sector has had its own share of setbacks—Sweden’s Mycorena, for example, was unable to secure a Series B and filed for bankruptcy last July, to be acquired by Naplasol. However, investment in mycelium-based startups is growing, as alternative proteins continue to attract attention from both public and private funding sources.
Waste Streams as a Competitive Edge
Venture capital investment in alternative protein startups rose 24% in 2024, reaching €158 million compared to €127 million the year before. While traditional VCs remain cautious, public and semi-public entities like EIT Food and the European Innovation Council (EIC) are filling the gap, with Germany’s FoodLabs ranking among the most active investors.
The largest deal in this space last year was Hamburg-based mycelium startup Infinite Roots’ $58 million Series B, backed by the EIC. Many of these startups are leveraging waste streams from food and agricultural industries, using by-products as feedstocks for fermentation. This approach not only aligns with circular economy principles but also offers a path to lowering production costs, making these alternative proteins more competitive.
From Rapeseed By-Products to High-Value Protein
This waste-to-protein approach is something Swedish mycelium startup Millow is actively exploring. The company is about to launch a collaboration with a global rapeseed oil producer, aiming to repurpose its by-products into protein-rich food for both human and animal consumption.
Large food manufacturers are increasingly interested in this model as part of their carbon reduction strategies. Finnish startup Enifer is a prime example—its backer, dairy giant Valio, has moved beyond investment and is now co-developing supply chains with the company, integrating mycoproteins into its broader business model.
Solid-State Fermentation: A Water-Saving Alternative
Manufactured mycoprotein is being developed as a protein source through various fermentation techniques. Most startups use liquid fermentation, growing fungal cells in tanks and controlling their environment to direct growth towards edible structures before they form mushrooms.
Millow, however, has taken a different path, leveraging solid-state fermentation. Unlike liquid fermentation, which requires large volumes of water, Millow’s method uses minimal moisture to grow mycelium directly onto plant-based substrates like oats.
The company has focused on two key ingredients—a plant-based material and mycelium. By carefully managing the conditions inside its bioreactors, it can efficiently control mycelium growth. Liquid fermentation often results in protein structures that require extensive binding agents and additives to form food products. In contrast, Millow’s dry fermentation approach produces a complete protein mix from the start, which can be shaped into meat alternatives like meatballs, taco mince, or kebab-style strips.
Scaling Up Without Retail Risk
Large food retailers are under increasing pressure to reduce emissions, but startups often struggle to meet the high-volume demands of supermarket chains. To mitigate this risk, Millow is focusing first on food service providers—targeting office cafeterias, hospitals, and schools before scaling up to retail.
The company is currently setting up its first factory near Gothenburg, aiming to produce over 300 tonnes of protein by the end of 2025. So far, Millow has relied on grant funding, including a €2.6 million EIC grant awarded last summer.
When the company moves into retail, it will face strict requirements to ensure consistent delivery in terms of volume, timing, and quality. The ability to meet these demands will determine how quickly it can expand into mainstream supermarket distribution.
Compared to traditional meat production, Millow’s process is highly cost-effective. The company can purchase a kilo of oats for about €0.25 and convert it into 2.2kg of protein. By contrast, cattle require around 25kg of feed per kilogram of meat.
Navigating Patents and Regulatory Hurdles
Many foodtech startups struggle with long approval times for novel ingredients, as regulatory bodies like the European Food Safety Authority (EFSA) can take up to 18 months to grant clearance. Millow has sidestepped this delay by using an already-approved mycelium strain.
The company has developed hundreds of fungal strains that contribute to flavour, texture, and colour, but has chosen to move forward with one that does not require novel food approval.
Patent activity in the mycelium sector is also ramping up. GFI Europe reports that nearly 1,200 patents related to plant-based foods, cultivated meat, and fermentation were filed in 2023–2024—double the number from 2021.
The growing investment in mycelium startups signals a wider shift in the protein industry. With pressure to cut emissions, lower costs, and find sustainable alternatives to animal protein, mycelium fermentation is emerging as a serious contender in the global food system.