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From science to CPG: New ventures create opportunities for startups


This is the last installment in a five-part series about the challenges food tech companies face in scaling up. Previous stories can be found here.

When Ravi Jhala joined Perfect Day, there were six employees. 

A dairy industry veteran who worked with big CPGs including Chobani and Wells Enterprises, Jhala purposefully joined a small startup. 

As Perfect Day’s global head of commercial, Jhala said he now sometimes pinches himself to prove that Perfect Day is getting to be as much of a provider as some of the companies he’d been with previously.

“What we are strongly aware of is what got us here may not get us there, to the next step,” Jhala said. “…But at the same time, the DNA and the playbook that Perfect Day has created of collaborating with people, partnering with teams to make one plus one equal to three, that still continues to be part of our approach on how we are building our business.”

Perfect Day announced in September it was getting into a new line of the precision fermentation business altogether by launching a subsidiary, nth Bio, to help other startups use its process to create biomaterials ranging from animal-derived proteins to rare sugars. 

“Perfect Day is out here to help companies in the precision fermentation space to truly close the gap from strain to scale,” Jhala said. “…And we want companies to know that there is a path forward, that you do not have to piecemeal your needs. Basically, you can go from soup to nuts essentially with this kind of a service that we are going to offer.”

Perfect Day isn’t the only company using its technological knowhow and facilities to help smaller startups. Mark Warner, who had been a consultant for companies in the cultivated meat and fermentation spaces as they started scaling up, noticed a real lack in existing facilities they could use. According to a presentation Warner gave in 2020, a pilot facility — which can provide proof of concept, but only a small amount of product — could cost $1 million to $5 million to build.

His new venture, Liberation Labs, would establish fermentation facilities for food companies to scale up. The lack of this kind of facility is one of the biggest problems Warner has seen among companies he worked with. Facilities like those planned for Liberation Labs, Warner said, could help startups do more to improve and expand their technology without having to raise millions of dollars and use months of time to build their own.

And last week, Capacitor, a new online directory of pilot-scale facilities that companies can use to scale up, went live. Capacitor is a product of Synonym Biotechnologies, a business venture formed in January to build commercial-scale facilities for biomanufacturing companies to use. 

Two people pose for a portrait in front of a variety of milk products in a kitchen lab.

Perfect Day co-founders Ryan Pandya and Perumal Gandhi with a host of prototypes in 2019.

Permission granted by Perfect Day

 

Assistance to the nth degree

When Perfect Day got started in 2014, it was a brand new entity doing something altogether new. The company harnesses the power of precision fermentation to create dairy proteins without the animal. At the time, co-founder Ryan Pandya was working at a company making medical antibodies through precision fermentation. A bad plant-based cream cheese experience encouraged him to apply that technology to dairy.

Fast forward eight years, and Perfect Day is the biggest player in the precision fermentation food space. Its branded protein ingredients are used in products ranging from ice cream to cream cheese to protein powder to milk. Perfect Day also has partnerships with three of the world’s largest CPG companies. It’s working with General Mills on the animal-free Bold Cultr cream cheese, providing the dairy in Mars’ milk chocolate CO2Coa bar, and partnered with Nestle to make a milk drink.

Part of this success was being the first to the space with good science and a plan, but another big part is beneficial business decisions, including a scaling and commercialization agreement with Archer Daniels Midland in 2018. 

Perfect Day is still building its scale, but it is increasing its capacity quickly. According to a statement from the company in September, Perfect Day made more dairy proteins in the first six months of 2022 than all of 2021.

“What we have realized in this journey when we started out as a startup in the precision fermentation space is that the ecosystem that is required in order to successfully bring a commercial product to the market, we had to create it on our own, right? Because it did not exist,” Jhala said. ”And so that has now become the core base of what the company does.” 

In September, the company’s new business arm nth Bio named its first partner, Onego Bio, which makes egg white protein through precision fermentation. Jhala said they will work closely with Onego to help them to develop bioprocesses, scale up their production and help the proteins produced at the end receive approval from regulators.

Nth Bio will operate from Perfect Day’s 58,000 square-foot state-of-the-art Salt Lake City facility, which Jhala said should be completely operational by next August. The space will address a gap in precision fermentation scale-up. The facility has space and equipment for pilot-scale production for both Perfect Day and nth Bio partner companies.

In the early days of Perfect Day, Jhala said Pandya and co-founder Perumal Gandhi were just trying to figure out how to make a kinder and animal-free version of real dairy. What nobody realized for a while, Jhala said, was the company they founded would be figuring out how to make biotech-enabled food a reality for the mass market.

Perfect Day is expanding into nth Bio largely to share that knowledge. Jhala said Perfect Day doesn’t want to be the only ingredient maker using precision fermentation for long. 

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