Israeli vegan protein startup inks manufacturing deal in India

Nextferm to produce neutral-tasting yeast-based protein that has similar nutritional value to animal-derived protein, at lower cost; shares jump 34%

Sharon Wrobel is a tech reporter for The Times of Israel.

ProteVin, a vegan, yeast-based non-GMO fermented protein powder. (Courtesy)
ProteVin, a vegan, yeast-based non-GMO fermented protein powder. (Courtesy)

Israeli foodtech startup Nextferm, a developer of alternative yeast-based nutrients, has inked an agreement for the commercial manufacturing of its fermented vegan protein in India.

The Yokneam Illit-based company announced on Wednesday that it has entered into an agreement with Kothari Fermentation and Biochem, a subcontractor in India to produce its flagship product ProteVin. Kothari is a manufacturer of baker’s yeast and and other yeast-based products.

The announcement sent Nextferm’s shares traded on the Tel Aviv Stock Exchange up 34% at the close on Wednesday.

Founded in 2013 by CEO Boaz Noy and Moran Gendelman, Nextferm has focused on the development of yeast-based proteins and nutrients using fermentation technology.

ProteVin, its vegan, non-GMO fermented protein powder, claims to have a similar nutritional value to animal protein and comes with a neutral taste and flavor, meaning it has no aftertastes that are typical of plant-based protein.

Yeast-based ProteVin can be used for various products in the alternative protein market, including milk and dairy substitutes, meat substitutes, and additional categories such as infant nutrition, adult nutrition, sports nutrition and fruit drinks.

Nextferm is tapping into the global alternative protein market, which is estimated to be valued at $76.3 billion in 2023 and is predicted to reach $423 billion by 2033, according to a report by Future Market Insights.

“ProteVin is the only alternative protein on the market today with a neutral taste and an animal-like nutritional value, and we believe it will become a leading solution in the global alternative protein industry,” said Noy.

Israeli startup Remilk uses a yeast-based fermentation process to produce animal-free milk proteins that, the company says, are indistinguishable in taste and function from cow milk proteins, but free of lactose, cholesterol, and growth hormones. (Remilk)Under the terms of the deal, the production facility in India will initially have the capacity to produce up to $4 million annually in revenues. Nextferm will invest a total of $2 million for the production setup, including the purchase of equipment. The production facility is expected to be ready by the fourth quarter of 2023.

The factory in India will replace Nextferm’s previous plans for the establishment of a manufacturing plant with a subcontractor in North Macedonia.

“In past few months, we have focused on finding an efficient and flexible production alternative to the production facility that was planned to be established in North Macedonia, which will be in line with the company’s capabilities and financial resources,” said Noy. “The production setup that will be established in India will allow us to meet the growing demand for ProteVin, with a lower investment than planned and with the ability to increase future capacity.”

Nextferm went public in 2021 raising NIS 30 million at a company valuation of NIS 115 million on the Tel Aviv Stock Exchange. In March this year, the startup raised $5.2 million from investors taking the total funds nabbed to date to $36 million.

Since last year’s rollout of the commercial production of ProteVin, Nextferm has received purchase orders and a supply agreements of more than $3 million — from the US, Germany, Singapore and South America — as of the end of March.

Starting 2023, the startup said five food and dietary supplement companies in the US and Europe have launched vegan products based on ProteVin, including Swanson, a veteran nutritional supplement brand, Spacemilk, a vegan health and sports nutrition brand, and Mushroom Design.

Fermentation, long used to produce beer, is also being employed to exploit the alchemist abilities of microorganisms such as bacteria and fungi. Precision fermentation uses microbes as “cell factories” for producing specific proteins, enzymes, flavoring agents, vitamins, pigments and fats. These can be used to produce everything from meat and seafood alternatives to milk, ice cream, butter, cheese and products such as gelatin.

In 2022, Israel ranked second after the US in alternative protein investments, with local startups in the field raising some $454 million in capital, according to data by the Good Food Institute (GFI) Israel, a nonprofit organization that seeks to promote research and innovation in food tech. About 60% of all investments in Israeli food tech companies went to alternative protein startups.

In fermented proteins, which use microorganisms such as bacteria and fungi, Israel is also second place to the US, taking 18% of global investment in this field with $147 million in investments in 2022, according to the data.

One of the most notable deals last year in the alternative protein market by an Israeli food tech startup was the $124 million raised by Remilk, a developer of animal-free milk and dairy. The company uses a yeast-based fermentation process to produce milk proteins that, the company says, are indistinguishable in taste and function from cow milk proteins, but free of lactose, cholesterol, and growth hormones.

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