MeliBio, a California-based start-up developing honey without bees, has been acquired by Swiss innovation lab and venture studio FoodYoung Labs.

Based in Balerna, Switzerland, FoodYoung Labs has a facility dedicated to developing snacks, bars, chocolates, spreads, baked, and frozen products and has developed brands including ZAZ, Kakoo, Bonnap, FRŸZE, Mani, and CimaNorma. Founded by Abouzar Rahmani, it also provides marketing, commercialization support and business planning for new brands.

Under the deal, FoodYoung Labs is acquiring MeliBio’s Mellody plant-based honey brand and its ‘Generation 1’ plant-based technology and related IP. The deal does not include MeliBio’s ‘Generation 2’ precision fermentation tech to produce enzymes that bees use to convert nectar into honey, which would deliver products closer to honey made by bees.

‘Food-tech can only move forward with strong participation of a food company’

MeliBio cofounders Darko Mandich (CEO) and Dr. Aaron Schaller (CTO) will help with the transition but have not yet decided on next steps, Mandich told AgFunderNews.

“Aaron and I are helping the transition. That’s what’s important to us in the near term.”

Asked about the Gen 2 tech, “It’s TBD for mid-term, as few options exist,” added Mandich, a Serbian entrepreneur and honey-enthusiast who teamed up with Schaller (a molecular biologist) to create MeliBio in 2020.

He added: “We realized that in the current situation, food-tech can only move forward with strong participation of a food company. When conversations with FoodYoung started, we realized they have a fantastically equipped facility, strong supply chain, willingness to run multiple projects at the same time and the necessary infrastructure to accelerate us. We took the opportunity.”

Manufacturing of the Mellody products, which is currently taking place in southern California, will “now happen in Balerna, Switzerland under FoodYoung Labs with the idea to bring it back to the US again, under management of FoodYoung,” said Mandich.

Mellody plant-based honey contains 80% fructose and glucose and 18% water, but gets its distinct flavour and properties from a blend of plant extracts comprising the remaining 2% (red clover, jasmine, passionflower, chamomile, and seaberry, coupled with gluconic acid and natural flavours). Image credit: MeliBio

Fundraising challenges

Mandich, who said 2024 had been “personally the most difficult year of my career,” said investors were not always sure how to value MeliBio, which has secured listings for Mellody in “500 locations across the US, split between foodservice, retail, and several B2B partnerships with CPG brands.”

He explained: “For some CPG investors we were too sciencey, but then some more deep tech investors saw that we have a plant-based product in the market and liked to slap a CPG label on us.”

While MeliBio was running an extremely lean CPG operation and picking up distribution wins in the US after some challenging times in Europe, it would need additional funding to secure regulatory approvals and scale its fermentation business, he told us in February.

“We had a lot of learnings from the partnership with [Slovenian food maker] Narayan [to introduce the plant-based honey to some European markets under a variety of private label brands], but we realized over time that focusing on the US, where we can control the entire supply chain, just made much more sense for us.”

As for lessons learned, “There are many,” said Mandich, who has raised around $10 million to date to support MeliBio’s progress from investors including Big Idea Ventures and Astanor Ventures. “The biggest realization is that food-tech start-ups need more time, but the market is not generous with time. But I’m excited about next gen foodtech companies that can achieve so much more with less capital raised, and hopefully with the support of food companies earlier on.”

He added: “Investors are burnt and I understand that. However, venture is a long game of taking big risks that can bring outsized results. Food is a place where outsized returns exist, but post the ZIRP (Zero Interest Rate Policy) era, it’s a different game. Founders need to adapt, but investors should not back away.”

While MeliBio initially talked a lot about ethics and sustainability, the most compelling argument for bee-free honey reflects simple economics, says CEO Darko Mandich. Put simply, he says, demand for honey is rising and honey bee populations are declining due to viruses, parasites, bacterial and fungal pathogens, and climate change, creating an opportunity for alternatives. Pictured: MeliBio co-founders Dr. Aaron Schaller (L) and Darko Mandich (R). Image credit: MeliBio

Originally posted by: https://agfundernews.com