Clear Labs of Menlo Park, California, announced Tuesday morning that it closed a $21-million B2 funding round led by Menlo Ventures. Other participants were Wing VC, Dentsu Ventures, Felicis Ventures and Khosla Ventures. A number of unnamed food producers were also part of the funding round, the company said. This latest round brings the total raised by the food safety tech company so far to $45 million.
Clear Labs plans to use the new funding to expand features and increase commercialization of its Clear Safety food safety testing platform, which uses targeted next-generation sequencing (NGS). The four-year-old company said it has signed up 90% of the U.S. poultry market, 85% of the pet food market and 50% of third-party service labs — and also significantly lowered testing costs and achieved 99.9% accuracy.
The platform is currently supporting high-volume salmonella testing, but the company said it will be branching out next year into testing for listeria, E. coli, campylobacter and other pathogens. "They’re all on the roadmap for sure. We have to have a complete offering," Mahni Ghorashi, Clear Labs co-founder and chief commercial officer, told Food Dive.
Food safety testing has become big business as manufacturers try to avoid the negative fallout of a potential recall. The average cost of a recall can be as much as $10 million if brand damage and lost sales are figured in, according to a 2011 study from the Food Marketing Institute and the Grocery Manufacturers Association.
Whole-genome sequencing has become the go-to pathogen subtyping tool for food safety labs, but targeted NGS reduces turnaround time and cost because only specific gene regions need to be looked at and not the entire genome, according to Ghorashi.
Ghorashi told Food Dive that NGS shortens the turnaround time to within 24 hours or less. He also said trials with food manufacturers providing side-by-side evaluations of Clear Safety and older testing platforms showed it "dramatically outperformed" the others as far as accuracy and differentiating between false negatives and false positive results.
"With false negatives, you think the sample is clean and you ship and actually end up with a recall," he said. "A false positive means you think there’s something there when it’s actually clean, so [a company may be] holding millions of dollars in inventory and waiting days or weeks before they can ship, which is a tremendous expense."
Ghorashi said federal agencies have shown interest in buying the company's testing technology, which he called a unique platform and "a powerful tool for government." He said NGS can screen broadly — looking for traits and characteristics across the genome at the same time — as well as deeply — serotyping to identify the kind of salmonella, E. coli or listeria that might be present and getting down to strain level without doing whole-genome fingerprinting.
Some of the factors driving today's food testing market include Food Safety Modernization Act regulations, consumer concerns about outbreaks and manufacturers' fear of bad press. Ghorashi said a more complex global supply chain is also driving the business.
"That has put the spotlight on individual companies’ food safety programs — investing in more cutting-age technology, sometimes increasing the scope of testing they’re doing," he said.
A larger number of widespread foodborne outbreaks have renewed the focus on food safety and could be fueling consumer concerns that the food system isn't as safe as it used to be. A case in point was the E. coli outbreak this past spring linked to romaine lettuce from Arizona that sickened 210 people from 36 states, hospitalized 96 and killed five.
However, it's not necessarily because the food supply is less safe. Ghorashi said he believes technological advances play a role in revealing outbreaks.
"I think [so many outbreaks in the news are] largely due to more visibility to the end consumer, the consumer demand for more transparency in terms of where their food came from and what it contains, and also more sophisticated technology that can catch things that might have been missed before," he said.
With testing solutions becoming faster and more advanced, Ghorashi said it's possible there could eventually be an end to foodborne outbreaks as more manufacturers adopt miniaturized, handheld devices and online tools to scan foods at any point in their supply chains and get answers in minutes.
"That will probably move us toward the complete extinction of recalls, but that's probably several years away. I would say five to seven years," he predicted.