Voice of the Modern Manufacturing Economy Since 2013

MycoTechnology

by Eric Peterson on May 31, 2016, 08:16 am MDT

www.mycotechcorp.com

Aurora, Colorado

Founded: March 2013

Privately owned

Employees: 23

CEO Alan Hahn aims to revolutionize the food industry with cutting-edge fungi science.

In 2013, Hahn met co-founder, Dr. Brooks Kelly, a leading fungi scientist from Penn State University. Kelly "had been working on a lot of different uses for fungi, including nutraceuticals and food sources like tempeh," Hahn says. "He was using mushrooms in a way I've never thought of before."

Kelly's techniques involved using fungal root systems to cultivate enzymes and other extracts in a liquid environment. "My plans weren't to start a company, but I was fascinated," says Hahn. "You can improve your health by eating the beta-glucans and other essential vitamins and minerals that come from fungi. It's really good for you."

It's also really good at masking bitter flavors. After Kelly and Hahn co-founded MycoTech with Jim Langan and Peter Lubar, the initial focus was removing the bitterness from coffee beans."We did small-scale production with our lab equipment," Hahn says. "Our first quarter in 2014 selling coffee, we did 20,000 pounds."

But MycoTech pivoted away from coffee to a broader market for anti-bittering agents. "We realized that is not what we wanted to do -- you're dealing with a lot of material," says Hahn. "Multiple companies came to us and said, 'You're the bitter experts.' Can you get the bitterness out of stevia? Can you get the bitterness out of chocolate?"

The company subsequently raised about $10 million to build a 4,000-square-foot manufacturing plant at its R&D facility in Aurora to manufacture ClearTaste, "the world's first organic bitter blocker," says Hahn. The ribbon-cutting event was in late March 2016.

"It's going over big time," says Hahn of ClearTaste's reception by food companies like GLG Tech Life, a leading stevia producer based in Vancouver, British Columbia. "It's being used for all sorts of different things, from gummies for vitamins and supplements, in yogurt and dairy applications, chocolate milk, and proteins like pea protein. It's in syrups to cut the bitterness so you can add less sugar."

An example: "Whole-wheat bread has about 7 percent sugar to mask the taste," says Hahn. "We're able to cut the sugar requirement in half."

And that's not all, he adds. "It works incredibly well across a broad spectrum, even with alcohol." Hahn says ClearTaste can cut the ethanol taste in spirits and keep bitter beer in check. Of the latter, he says, "You get a very clean finish. You don't want a lingering bitterness." He's currently looking for distilleries and breweries to experiment with ClearTaste.

The manufacturing process looks "like the beer industry or dairy industry," says Hahn. "We work in big tanks of liquid, and those tanks contain fungi." Using a proprietary process, MycoTech grows and harvests the raw materials for powdered ClearTaste in seven days -- "which is unheard of," says Hahn, noting that other bitter blockers typically require several weeks to manufacture.

The factory's capacity is "significant metric tons every year," says Hahn. But that's not going to be enough for very long. "We expect in the next 12 months to have reached capacity," he forecasts. "We are designing as we speak the next plant. We're going to build a facility that's 100,000 square feet." He says the new plant will be located in metro Denver and employ hundreds of people.

"The goal of all of this is to have an impact on obesity and type 2 diabetes," says Hahn. As the easy way to make food more palatable has been to just add more sugar to mask unwanted flavors, MycoTech offers a new path forward. "Use ClearTaste and modulate the bitterness, sourness, and astringency and eliminate the need for a masking agent."

But ClearTaste is only the first MycoTech product. Hahn describes "a breakthrough" in vegetable protein dubbed PureTaste. By weight, PureTaste is coming in at 60 percent protein, more than double that of chicken (27 percent) and four times that of pea protein (15 percent). "We are creating the highest density protein ever created with fungi," says Hahn. "We're really excited about this," he adds. "This is a fundamental change in how you produce protein. . . . We're pulling the cow out of the equation and replacing it with fungi."

He projects PureTaste will hit the market by mid-2017. "We're going to start having some conversations with companies," says Hahn.

And if it takes off, it could impact not just the health of people, but the health of the planet itself. "Animal gases represent 18 percent of all greenhouse gases -- more than cars," says Hahn. "We can't keep it up."

Challenges: Now that manufacturing is up and running, a big hurdle has been cleared, says Hahn. "The next big challenge is designing the new plant for the expansion of ClearTaste and the introduction of PureTaste protein."

Opportunities: Hockey-stick growth. For ClearTaste, Hahn notes that stevia has global annual sales of $400 million, dwarfed by chemical sweeteners ($6 billion) and sugar ($90 billion). A bitter aftertaste has held stevia back, and ClearTaste could help vault it to $12 billion by 2021.

Non-animal protein is an even bigger market, with annual sales estimated at about $20 billion worldwide, and processed meat is north of $500 billion. "It's so off the charts," says Hahn of MycoTech's potential for growth.

Needs: Capital. "We're going to do a round of funding for the new plant," Hahn says. He won't disclose the target number, but says, "It's pretty big."

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