NoPalm Ingredients Sizzles with €5M Seed Funding to Scale Palm Oil Alternative

Dutch startup NoPalm Ingredients has raised €5M ($5.4M) in a seed funding round to accelerate production of its sustainable palm oil alternative.

The investment round was led by Rubio Impact Ventures, and co-led by Oost NL, Fairtree Elevant Ventures, and Willow Capital Investments. There was participation from the Netherlands Enterprise Agency (RVO) and other private investors as well.

It takes the total raised by NoPalm Ingredients – which makes a fermented yeast-derived alternative to palm oil – to €6M ($6.5M), following a pre-seed round in 2022. The capital will help the startup scale its technology up to industrial levels of 50 cubic metres and beyond, and prepare for its demo factory.

“NoPalm Ingredients is a leading pioneer from the Foodvalley ecosystem that is shaping the Dutch and European alternative oils and fats landscape, to create a more sustainable food system,” said Maureen Haverkamp, investment analyst at Oost NL.

“Their business model is innovative and appealing to both suppliers and customers and has a clear positive impact on the environment. We’re proud to invest in the innovative team of NoPalm Ingredients.”

Using potato peels to make eco-friendly oil

NoPalm Ingredients, which was founded in 2021 by Lars Langhout and Jeroen Hugenholtz, employs a proprietary fermentation process using non-GMO yeasts and low-capex technology, which can convert local agricultural waste – like potato peels and whey permeate – into yeast oils.

The oils are said to be a “drop-in” replacement for palm oil, a fat that is present in 60% of all supermarket products, across every category. The yeast-based oils don’t require manufacturers to reformulate recipes, and cost the same as palm oil, thanks to the use of sidestream ingredients and its asset-light, highly scalable technology.

The company has developed an in-house pilot line producing several kgs of oil per batch, and completed pilot projects with CPG giants like Colgate-Palmolive, Unilever, and Zeelandia. It’s now gearing up for industrial-scale trials, which would help it deliver hundreds of kgs of oil for customer testing.

“This funding is pivotal for us to demonstrate large-scale production and reach our next milestone of producing 1.5 million kgs of sustainable oil annually, solidifying our role as a trusted partner in the food and personal care industries,” said Langhout. “We are on track for industrialisation and commercialisation in 2025.”

“NoPalm Ingredients has demonstrated the ability to make a cost-effective drop-in replacement for palm oil and other lipids that we believe will revolutionise the industry, address the massive environmental challenge of palm oil production and harvesting as well as solve myriad supply chain pain points for customers,” said David Evans, managing director at Fairtree Elevant Ventures.

“Further, NoPalm Ingredients’ innovation allows them to upcycle industrial food waste streams which recovers carbon and creates value from waste, creating tremendous benefit,” he added, noting that the company has “demonstrated both the technical capabilities as well as the commercial partnerships to rapidly scale their technology and make an incredible impact across a wide swathe of industry”.

Why we need substitutes for palm oil

Palm oil accounts for 40% of all global oil production, and is desired for its neutral flavour, smell and colour, ability to withstand high temperatures, and function as a natural preservative. “Palm oil is cheap, incredibly versatile and widely used in almost every fast-moving consumer good, from your toothpaste to my newborn’s infant formula,” said Langhout.

The problem, however, is that this oil is a major driver of tropical deforestation, which is responsible for nearly 20% of global emissions. Indonesia and Malaysia alone are home to 90% of oil palm trees – the former’s forests have been subject to wildfires emanating directly from palm plantations in 2019.

Palm oil production has increased tenfold since 1980, and expanding demand means more forests will be burnt down, a form of mass deforestation that emits greenhouse gases, while removing trees that would help absorb these very emissions. “Global demand for palm oil grows by 4% annually, and there’s no strategy to meet the additional 22 million tons needed by 2030 without clearing rainforests 1.5 times the size of Ireland,” explained Langhout.

Additionally, it is a threat to wildlife, and as an industry, it’s associated with numerous human rights abuses. Indigenous communities have lost their lands and villages, and workers have been exploited with poor working conditions and pay.

Innovations like NoPalm Ingredients’ yeast oil – which generates 90% fewer emissions and requires 99% less land than conventional palm oil – are therefore crucial. “With new regulations banning deforestation-related products, European companies can only source sustainably certified palm oil, which excludes 83% of current supplies,” said Langhout.

“This will drive price increases that will affect every family in Europe. Often, the answer isn’t to prohibit a product but to step back and create a superior alternative that naturally compels a switch.”

NoPalm Ingredients is among a number of companies dedicated to tackling the problematic $70B palm oil industry. These include British firms PALM-ALT and Clean Food Group, New York-based C16 Biosciences, Estonia’s Äio, Dutch startup Time-Travelling Milkman, and Bay Area company Kiverdi, among others.