Israel’s Imagindairy nabs Danone as strategic investor for cow-free dairy products

Israeli foodtech startup uses precision fermentation tech to make versions of whey and casein proteins that can be used to produce dairy duplicates

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

Israeli startup Imagindairy uses precision fermentation technology to teach microorganisms such as yeast or fungi to produce animal-free milk proteins. (Tal Shahar/Imagindairy)
Israeli startup Imagindairy uses precision fermentation technology to teach microorganisms such as yeast or fungi to produce animal-free milk proteins. (Tal Shahar/Imagindairy)

French dairy giant Danone has made a strategic investment into Israeli startup Imagindairy Ltd.. which could pave the way to joint collaboration on developing animal-free dairy products for consumers using precision fermentation technology.

The Paris-based food giant joined Imagindairy in April as a strategic investor through its corporate venture arm Danone Manifesto Ventures (DMV). The financial terms of the investment were not disclosed.

It marks Danone’s second investment into an Israeli food tech startup in less than a month. In early April, the French company, which produces Activia yogurt, Aptamil infant formula and Evian water, announced a $2 million investment into Israeli startup Wilk, a developer of cell-based technology to produce cultured human breast and animal milk.

“It’s a very nice investment that will help us to move forward,” Imagindairy’s co-founder and CEO Dr. Eyal Afergan told The Times of Israel. “It’s a multi-layered partnership, with the investment on one end and talks to build collaboration with the R&D teams to develop animal-free products, and eventually once we have the right product and we have everything in place like cost, price and taste, then this could lead us to a commercial agreement.”

Founded in 2020 by Afergan, Dr. Arie Abo and Prof. Tamir Tuller, Imagindairy has developed precision fermentation technology that teaches micro-organisms such as yeast or fungi to produce milk proteins that the startup says are identical to those in cow’s milk. The technology, based on 15 years of research led by Tuller, a professor at Tel Aviv University, recreates animal-free versions of whey and casein proteins that can be used to produce any dairy duplicates.

The whey proteins are the building blocks for developing a full range of non-dairy products that mimic dairy versions with the same quantity of protein and fat as cow’s milk but without any cholesterol or lactose.

Imagindairy co-founder and CEO Dr. Eyal Afergan. (Tal Shahar/Imagindairy)

Precision fermentation is a technology that has been used in the food industry for more than 40 years, for example in the production of food enzymes. Imagindairy uses it to produce animal-free milk proteins in a cost-effective manner, Afergan said.

“Our proprietary technology is a very comprehensive technology that allow us to improve the productivity of our organisms: It is the difference between having a cow that gives you one liter of milk a day or 40 liters of milk a day,” he said. It “basically takes the fungi, the yeast, and bioengineering — using AI machine learning kind of technology — to help us improve production of the protein much more efficiently and with much higher quality.”

Afergan said Danone’s strategic investment comes as the startup is transitioning into an industrial company and is targeting the launch of its first product in the US by the end of this year together with an unnamed dairy producer.

“We just provide the protein itself and they develop the product,” Afergan said. “The first step is to reach commercial production and getting regulation approval in the US and then in other geographies.”

The Yokne’am-based startup is made up of a multidisciplinary team of 30 experts in microbiology, computational systems, and biotechnology with the support of Israel-based The Kitchen FoodTech hub. To date, Imagindairy has raised $28 million in seed round funding from investors including Target Global, Strauss Group, Emerald Technology Ventures, Green Circle Foodtech Ventures, Collaborative Fund, and New Climate Ventures.

There are a number of companies operating in the dairy alternative space for milk proteins using precision fermentation technology, such as Israeli startup Remilk, which says it has developed milk proteins that are chemically identical to those in cow-produced milk and dairy products.

Last week, the Health Ministry granted Remilk the first regulatory approval of its kind to market and sell dairy products made with the startup’s non-animal proteins, which are free of lactose, cholesterol, antibiotics and growth hormones. Another one is Pigmentum, which has developed gene-modified plant-based technology to create milk proteins from lettuce that can be used to make cheese.

“The regulatory approval is good news for the industry, as once the first company gets approval, then it’s easier for the second and third companies to get their approval and then we can develop the market more efficiently,” said Afergan. “We have a joint development agreement with the Strauss Group, and we are planning to launch products together in Israel.”

In 2022, the government declared food tech among the top five new national priorities for significant investment over the next five years. Earlier this year, the Israel Innovation Authority announced a call for proposals to build R&D facilities that use precision fermentation technology for the development of alternative proteins in an effort to uphold the country’s edge in the field. Total budget for all approved proposals will be up to NIS 50 million.

“I hope this will be the first step towards the option of building production facilities in Israel,” said Afergan.

Last year, Israel ranked second after the US in attracting alternative protein investments, with local startups in the field raising some $454 million in capital, according to a report by the Good Food Institute (GFI) Israel, a nonprofit organization that seeks to promote research and innovation in food tech.

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