Phyx44, the first full-stack precision fermentation startup in India, raises $1.2M Seed to make animal-free dairy

Founded in Bangalore in early 2021, Phyx44 is using precision fermentation of microbes to create the full stack of whey and casein proteins and fatty acids to recreate dairy. These components are identical to the ones found in traditional dairy, but they are animal-free, lactose-free, and planet-friendly.

The biggest pain point for consumers who want to avoid or reduce dairy intake whether for animal cruelty, environmental reasons, or due to lactose intolerance is the lack of convincing alternatives. “As a vegan for over nine years, I’ve always struggled to find good alternatives to curd (yogurt), ice cream, and paneer”, said Bharath Bakaraju, founder, Phyx44, who is keen to apply his scientific background (MS in Industrial BioChemistry from IIT Kharagpur) and management experience (MBA from IIM Lucknow, Ex-Google, Ex-Amazon) to leverage new technologies, “Dairy has a huge environmental cost. Plus, animal welfare is an area of concern. That is why I was excited when I learned what we could do with precision fermentation”, he added.

Phyx44 is betting on microbial fermentation as the best way to replicate dairy. This technology “teaches” microbes to do what a cow or buffalo would do inside its cells. The team at Phyx44 has already made whey and casein proteins at lab scale and are in the process of scaling them up. Fermentation is a key pillar of smart protein, globally known as alternative protein. Sharing insights on the promise of this technology, Nicole Rocque, senior innovation specialist at the Good Food Institute India said, “This sunrise sector has a key role to play in meeting the Government of India’s ambitious target of growing our bioeconomy to USD 300 billion by 2030. India is quickly becoming the preferred destination for both innovation and manufacturing of smart protein, and will play a key role in the development of bio-enabled solutions globally. Startups like Phyx44 have the potential to accelerate new product innovation and lay down the path toward cost reduction, establishing a model for growth of this technology in the developing world.”

Unleashing the power of these microbes brings incredible efficiency in the long term — and will be instrumental in reducing animal suffering, land and water use, and greenhouse gas emissions from dairy production globally. “The intersection of India being an agrarian economy, the largest producer and consumer of dairy, and a huge pharma producer provides a massive opportunity for Phyx44 to serve global demand for dairy ingredients and products, sustainably. The team’s technical prowess is reflected in how swiftly they have scaled to a 100L capacity”, said Jinesh Shah, chief investment officer at Ahimsa VC, who participated in the Seed round.

Milk contains whey and casein proteins which give it many of its key characteristics. It is not a surprise, therefore, that replicating them is the holy grail for precision fermentation based companies. “Our ultimate goal is to create all key components and reconstruct dairy, from the ground up”, said Bharath.

In addition to proteins, fats play a crucial role in enhancing the sensory properties of dairy. While protein gets a lot of attention within the discussion around dairy alternatives, there are very few who are working on fats. Phyx44 is working on the full stack of whey, casein, and fats. “What we do not see getting enough attention in fats. We’re one of the very few companies working on key fat components alongside key dairy proteins because we believe this will go a long way in our ability to create a superior product,” Bakaraju added.

Building a full stack enables Phyx44’s products to be used in a host of applications, including Ice cream, cheese, baked goods, and more, advancing the alternative dairy sector across dimensions of taste, functionality, and accessibility.

While based in India, Phyx44 has aspirations of being a global player. The low cost of R&D and manufacturing in India (many folds cheaper than the US or Europe) has its benefits — as is evident from India’s strong supply base for vaccines, insulin, etc. for countries around the world. “We believe that Phyx44 will leverage the base in India and provide affordable, sustainable dairy proteins and fats to partners and consumers globally. With its biotech infrastructure and talent pool, India can be the smart protein factory of the world”, said Michal Klar, founding partner at Better Bite Ventures who led Phyx44’s investment, in a statement.

With $1.2M in funding from Better Bite Ventures, Ahimsa (managing director- PeerCapital, Spectrum Impact) Rohit Gulati (managing director &partner at Boston Consulting Group), Sandhya Sriram (chief executive officer, Shiok Meats), and others, Phyx44 will accelerate R&D, expand the team and work on the co-development of the product formulation with key partners.

The biotech-enabled food science company has also received backing from Big Idea Ventures and Humane Society International, among others. The company’s first product is expected to launch in 2024 in Singapore and India.