Solar Foods to Go Public With Listing on Finland’s Nasdaq First North Growth Market

Finnish gas protein startup Solar Foods is planning to go public with a technical listing on the Nasdaq First North Growth Market in Helsinki.

Solar Foods, which makes Solein protein by feeding microbes on gases, has announced its intention to list the business on the Nasdaq First North Growth Market in September.

The First North marketplace is a division of Nasdaq Nordic and an alternative stock exchange for smaller companies in Europe. It is currently home to over 550 companies.

Helsinki-based Solar Foods will be applying for a technical (or direct) listing – unlike an IPO, this doesn’t involve the issuance of any new shares, but instead allows businesses to sell their existing stocks without raising new capital.

The Solein protein producer outlined two reasons for going public. The first is to implement a global growth strategy, which involves scaling up production, introducing new products, and making strategic acquisitions to speed up tech development.

Additionally, Solar Foods aims to enhance its profile and credibility among stakeholders, customers, financiers, as well as current and future personnel.

Tech licencing could open up new revenue stream

Solar Foods produces Solein through the fermentation of microbes, using carbon dioxide, hydrogen and oxygen as feedstocks (instead of sugar). The resulting protein can be used in an assortment of products, from meat, dairy and egg analogues to beverages and noodles.

Having already been approved for sale in Singapore, it debuted as part of a vegan chocolate gelato at Italian eatery Fico, and was the base of a Taste the Future chocolate snack bar released by Fazer – a majority shareholder of Solar Foods – earlier this year. And just this month, Japanese food conglomerate Ajinomoto unveiled mooncakes and ice cream sandwiches where Solein replaced the dairy.

The deep-yellow, flavourless powder boasts 65-70% protein, 5-8% fat, and up to 15% dietary fibre, while also containing iron and vitamin B. But apart from nutrition, Solein’s USP lies in the sustainability credentials – the main raw materials for production are carbon dioxide and renewable energy, resulting in emissions equal to just 1% of those generated by conventional meat, and 20% of plant proteins.

This has also allowed it to become the first private company in Finland to gain a Nasdaq Green Equity Designation, which recognises businesses that generate more than half of their turnover from green activities, and less than 5% from fossil fuels.

In its announcement, Solar Foods explained that its business model is “to produce new food raw materials for the global market using both existing and new microbial strains under development”.

“This requires investments in R&D, sales and marketing, as well as in the production capacity of Solein,” it said. “As the company has already scaled its production technology to demonstration scale, it also has the potential to licence both hydrogen fermentation technology and production organisms for the food industry.”

In doing so, its net sales would be based on a licence fee based on clients’ production, and the startup said this model wouldn’t tie up capital and would help improve its profitability.

Solar Foods working on new products as it plans for Factory 02

To date, Solar Foods has attracted over €43M in equity funding, including an €8M Series B round last November, as well as €30M in debt financing. It also received €34M in grants from Business Finland to build its commercial-scale Factory 01, which opened in April with the capacity to produce as much protein per day as a dairy farm with 300 cows.

Business Finland has set aside a further €76M to support the construction of its next plant, Factory 02, if it’s built on European soil. This facility is expected to have a profitable production scale.

Solar Foods has highlighted several “megatrends” that underscore its growth. Climate change, biodiversity loss, shrinking farmland, a swelling population, increasing consumer consciousness around sustainability, and geopolitics (three countries make up 80% of global soy production) are all major challenges for food companies.

“Solein has the lowest carbon footprint compared to all other known protein sources if fossil-free energy is used in production,” Solar Foods said. “The production of Solein does not require arable land, and it can be produced anywhere where renewable energy is available, such as in the desert or in space. In large-scale production, the company estimates that Solein’s cost will be competitive with any other protein.”

The startup is now focusing on international expansion, with regulatory approval expected in the US this year, allowing it to begin sales in the second half of 2024. This is set to provide “significant benefits” in authorisation processes in the other markets it has filed dossiers in, such as the EU and the UK. Solar Foods anticipates the UK greenlight in 2026, and is also considering filing applications for new products developed alongside Solein.

The two manufacturing plants form the basis of Solar Foods’ growth over the next two years. Factory 01 can produce 160 tonnes of Solein annually, and this would be sold to customers for test marketing campaigns and new product pilots – these are prerequisites for earning sales contracts for Factory 02.

The latter’s capacity is set to be 50 to 100 times higher than Factory 01 and generate net sales of €80-200M. It could see a total investment of €150-420M, and based on current estimates, each kg of Solein will cost €4.3-5.2 to produce (excluding certain financing costs). That price is set to fall even further with tech advancements.

At the end of 2023, Solar Foods had a net debt of €12M (25% down from the previous year), with an operating loss of nearly €7M and net sales of €5,000 – the latter will likely increase significantly with the new partnerships this year, including the Fazer and Ajinomoto products.