Declining Funding in Fermentation Startups: A Mixed Outlook for Alt Protein Development

According to a new report from The Good Food Institute (GFI), funding for fermentation startups in the alternative protein sector saw a significant decline from $651 million in 2024 to $357 million in 2025. Despite this downturn, the nonprofit organization believes that the future remains promising for startups that successfully navigate the challenges of scaling production.

Challenges Faced by Key Players

Several prominent companies, including Meati, Motif Foodworks, and Arkeon, faced significant setbacks, raising questions about timelines and financing for future projects. The GFI acknowledges that this landscape has tested initial assumptions about scale-up pathways and posed increased risks for investors.

Progress in Biomanufacturing

Nevertheless, advancements have been made in establishing new production capabilities and validating more cost-effective feedstocks. Governments and corporations worldwide are increasingly connecting biomanufacturing to concerns about food security. Notable initiatives include:

• Middle East Ventures: The Abu Dhabi Investment Office is collaborating with The EVERY Company and Vivici to develop a multi-tenant industrial-scale facility in Qatar. Additionally, Unibio is constructing what is set to be the world’s largest single-cell protein plant in partnership with the Saudi Industrial Development Group.

Types of Fermentation Technologies

The GFI outlines various fermentation technologies contributing to alternative proteins:

• Precision Fermentation (e.g., The EVERY Company): This process engineers microbes to produce specific ingredients, like dairy or egg proteins, extracted from the fermentation broth.
• Biomass Fermentation (e.g., Superbrewed Food): Here, microbial cells such as fungi or bacteria are grown and harvested as whole biomass.
• Solid State Fermentation (e.g., MyForest Foods): This method cultivates microbes on solid materials, often utilizing agricultural byproducts.

Biomanufacturing and Food Security

In just a decade, the application of precision fermentation has expanded from primarily producing additives and enzymes to generating products ranging from recombinant lactoferrin to replacements for egg whites and whey proteins. Recent collaborations between corporations and startups have successfully opened new facilities globally, showcasing innovative techniques and launching several mycelium-based products in the U.S. and Europe.

Significant Funding Rounds in 2025

Despite overall declines, several notable funding rounds in 2025 included:

• Liberation Bioindustries: Secured $60 million in Series A funding and $31.5 million in a convertible note for building facilities in the U.S. and Saudi Arabia.
• The EVERY Company: Closed a $55 million Series D round, with its egg proteins now available at Walmart.
• MATR: Raised $47 million in equity and debt for a 4,000-ton solid-state fermentation plant in Jutland set to launch in 2027.
• Formo: Obtained $36 million in venture debt for growing koji via biomass fermentation and casein via precision fermentation.
• The Protein Brewery: Completed a $35 million Series B round, targeting various food categories with a mycoprotein powder.
• Vivici: Raised $34 million in Series A funding to produce lactoferrin and beta-lactoglobulin (BLG) for nutrition markets.
• Better Meat Co: Secured $31 million in Series A funding for scaling up commercial production of its mycoprotein.
• Enduro Genetics: Completed a $12 million Series A round for developing genetic switches to enhance cell proliferation in bioreactors.

Innovative Technologies Shaping Biomanufacturing

As the industry explores new possibilities, some analysts suggest that the capital-intensive sector may currently only be economically viable for high-value ingredients. However, advancements in “picks and shovels” technologies—like those from Fermeate and Enduro Genetics—hold promise for enhancing productivity and reducing costs.

Addressing Scaling Challenges

As startups face difficulties in scaling production, new biomanufacturing hubs are emerging. In India, several facilities financed through the bioenabler scheme focus on biomass and precision fermentation for alternative proteins. In the U.S., BioMADE is establishing a network of fermentation facilities to support pilot and demonstration scales.

Internationally, partnerships between startups and established industries, such as Superbrewed Food and major food corporations, are vital for navigating the sector’s challenges.

Navigating IP Conflicts

As the industry matures, it faces numerous intellectual property challenges, particularly as companies pursue similar ingredients but with different microbial hosts and processes. Protracted legal disputes can disrupt advancements and slow down progress across the sector, as affirmed by the GFI.

👉 For more insights, read GFI’s comprehensive reports on the current state of the industry in regards to plant-based, fermentation, and cultivated meat sectors.

Further Reading:

• 🎥 Insights from 21st Bio on strains and overcoming challenges.
• 🎥 Future Food-Tech: Exploring transformative ideas and the road to scalability.
• 🎥 Highlights on the role of Guatemala in the biomanufacturing landscape.