Mushrooms Galore: Mycelium Startup Infinite Roots Bags Record $58M Series B Funding

German biotech startup Infinite Roots has secured $58M in Series B funding, which it claims is the largest investment in mycelium in Europe.

Hamburg-based Infinite Roots has closed a $58M Series B financing round, described as Europe’s largest investment in mycelium tech. Formerly known as Mushlabs, the startup uses biomass fermentation to grow micronutrient-rich, umami-packed mushroom mycelium, which can be used in applications like meat and dairy analogues.

The funding round was led by Dr. Hans Riegel Holding (one of the two holding companies of Haribo), with support from the European Innovation Council (EIC) Fund, German retailer Rewe Group, and Thailand’s Betagro Ventures. Meanwhile, returning investors include Clay Capital, FoodLabs, Redalpine, Simon Capital and Happiness Capital. It brings the company’s total raised to $73M.

The company will use the funds to scale its fermentation platform, turn to commercial activity and advance its launch plans.

Infinite Roots’ regulatory and production plans

Founded in 2018, Infinite Roots leverages submerged fermentation to grow mycelium, but since it only uses edible mushroom strains, it’s not considered a novel food, which eases the regulatory pathway considerably. Essentially, these are the roots of mushrooms consumers can buy at the supermarket, as founder and CEO Mazen Rizk told AFN.

“We’re not using mould, and I think that’s easier for consumers to understand,” he said. Education is key, if you consider a 10,000-person survey suggesting that nearly 80% of Americans didn’t identify a mycelium growing on a substrate as a mushroom.

The company already has a self-affirmed Generally Recognized as Safe (GRAS) status – which is determined through consultation from an independent scientific council, without the need for FDA review – and plans to notify the FDA of the same to receive a ‘no questions’ letter in the US. It’s in talks with the European Food Safety Authority too.

Infinite Roots plans to use the new capital to scale its fermentation platform and production capacity, expand commercial growth, and invest in launch activities globally. Rizk told AFN that the business doesn’t plan on building its own facilities, instead relying on contract manufacturers that can grow mycelium on pilot and industrial scales. “We don’t own production facilities because of the heavy capex that comes with it,” he said. “We have also been developing the technology to use [cheaper, more sustainable] sidestreams from the agrifood industry as feedstocks such as brewers’ spent grains.”

The startup’s patented technology can enable the creation of multiple mycelium-based food products, and showcases the fungi’s potential to diversify the world’s protein consumption. “Rethinking food production and consumption has never been more pressing, and requires our collective efforts,” Rizk said in a statement.

“We are in a unique position to define a new era of mushroom mycelium-based products. With Infinite Roots’ technology and products, we aspire to lead the monumental shift to a more sustainable and healthy food system.”

Mushroom root’s potential is coming to fruition

Mycelium is hot in the alternative protein universe currently, with many startups innovating with fungi to develop sustainable and highly functional proteins. One estimate values the market at $2.85B, and there has been a host of activity in the space lately: from innovations and breakthroughs to product launches and even more funding rounds.

And this is because of mycelium’s nutritional and environmental prowess, and ability to scale in a cost-competitive manner. In December, a study in the Journal of Agricultural and Food Chemistry – all of whose authors are involved in fellow mycelium startup Meati – delved into the ingredient’s potential.

Mycelium is said to be low in fat and high in fibre, with 20-30% of protein content in dry matter, which usually provides all of the essential amino acids. Additionally, it can deliver essential micronutrients – especially those usually found in animal foods – like iron, zinc and vitamin B12. The study cited research revealing the impact of mycelial extracts on the immune system, cancer, cirrhosis and glycemic response. A three-week early intervention trial has that 190g of mycelium per day can lower LDL cholesterol by 21% on average versus animal protein.

If more companies valorise agricultural sidestreams – the way Infinite Roots does – they can reduce a lot of food waste. Estimates reveal that a third of all food produced globally goes to waste, which accounts for 6% of global emissions. Moreover, mycelium sequesters carbon (with some strains able to store 70% more carbon in soil), some of which can be broken down into carbohydrates that act as nutrients for the soil.

For consumers, though, taste is key when it comes to alternative proteins. Mycelium excels here, with foods made from the ingredient usually exhibiting bland or only slightly mushroom-like flavour profiles, which can be enhanced by spices and seasonings to replicate the flavour of the meat. Developing ‘in-process’ flavours through biochemistry and flavour chemistry is an option too, since different species of mushrooms can produce various profiles, such as the aroma of beef bullion, curry or maple syrup, or the flavour and texture of chicken.

Infinite Roots takes a different approach, embracing the inherent flavour of mushroom roots. The startup heavily relies “on the tastes that the mushroom strains bring, rather than having to mask tastes, so we can create meat alternatives that are minimally processed with a very clean label,” Rizk told AFN.

His company – which plans to come to market this year – is in a burgeoning space backed by significant investment. Meati, one of the sector’s leaders, has raised $275M so far, while Nature’s Fynd has secured an even higher $510M. Fellow US brand MycoTechnology has brought in $208M. Over in the UK, Enough Food’s total funding amounts to $122M. But the biggest name in this industry internationally is Quorn, the brand synonymous with mycoprotein, which – despite a loss-making year – is comfortably the market leader in the UK.

“It is high time for consumers to be able to reconcile their appetite for good food and their willingness to act for the planet and for their health,” said Svetoslava Georgieva, chair of the EIC Fund board. The EIC’s Work Programme 2024, which falls under the EU’s flagship Horizon Europe scheme, recently also allocated €50M for precision fermentation startups. This strengthened its commitment to protein diversification, despite some of its member states objecting against another alt-protein pillar, cultivated meat.