Perfect Day, the Berkeley, California-based startup that creates cow-free milk proteins out of yeast, has raised $24.7 million in Series A funding, according to Food Navigator. The round was led by Temasek, which has also invested in plant-based burger maker Impossible Foods.
The ag tech company has patented its process of producing non-dairy milk ingredients using genetic engineering and is in talks with big food companies to market its product as a whey and casein replacement.
"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," Perfect Day co-founder Perumal Gandhi told Food Navigator.
Animal-free dairy proteins would seem to offer similar functional benefits to animal-free, cell-cultured "meat" products, which are attracting attention and investment from some large food makers. Memphis Meats, a San Francisco-based cultured "meat" startup, has received funding from both Tyson Ventures, the VC arm of Tyson Foods, and from Cargill.
On the cost side, Memphis Meats is striving to reduce the current high price of its cell-cultured "meat" — which it estimated may fall from about $2,400 per pound last year to perhaps $3 or $4 per pound by 2021. Similarly, Perfect Day will have to compete with today's dairy proteins if it hopes to be successful. Dairy industry analyst Matt Gould told the co-founders in 2016 that would mean bringing the price down to about $2.50 per pound.
In addition to pricing, product labeling is proving to be another obstacle. Perfect Day's co-founders have been in discussions with the U.S. Food and Drug Administration about how to state that the company's ingredients are technically dairy yet animal-free.
Perfect Day's patented process involves taking food-grade yeast and adding DNA sequences from dairy cows — which can now be 3D printed — to produce the types of proteins found in dairy-based milk. The proteins are placed in large fermentation tanks with corn sugar and additional nutrients to help them grow. The proteins are then harvested mechanically and the ingredients can be added to any foods or beverages where dairy proteins are now used, Perfect Day co-founder Ryan Pandya told Food Navigator.
Gelton, a producer of gelatin manufactured without using animals, is another emerging player in this space. The company's process results in a vegan alternative to traditional gelatin made with animal products, which the company calls a $3-billion industry. However, Gelton told Food Navigator it will take some time and scale to become competitive with the current gelatin bulk market price of about $8 per kilogram, or about $3.63 per pound.
Unless Perfect Day and other alternative animal-free products start hitting the market in a big way, it's difficult to project how U.S. consumers will respond to genetically engineered milk proteins and gelatin. They may appreciate having other options and be glad to know that no animals were harmed or killed in the manufacturing process, or they may respond to the "ick" factor when confronted with foods or beverages too far out of their comfort zone.