Sweet deal: Sugar-reduction startup raises $22 million to get product to market

Israel’s DouxMatok says it is able to cut quantity of sugar in foods by 40% without affecting taste, by precision-targeting our sweet taste buds

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

Chocolate produced with Israeli startup DouxMatok's ’precision’ sugar (Naomi Baniel)
Chocolate produced with Israeli startup DouxMatok's ’precision’ sugar (Naomi Baniel)

DouxMatok, a Petah Tikva, Israel-based food-tech company that says it is able to cut sugar levels in foods without affecting their taste, said on Wednesday it had raised $22 million in a series B funding round.

The money raised will enable the firm to move to large-scale production and sales, as it commercializes its technology in Europe and North America. The firm also plans to expand its technology to include other products and flavors, such as salt or vanilla, CEO and co-founder Eran Baniel said in a phone interview.

The funding round was led by Singapore-based fund BlueRed Partners and includes strategic investors: Germany’s Südzucker AG, the largest European sugar company; Royal DSM, a global leader in science-based nutrition, health and sustainable living; and Singha Ventures, a corporate venture fund of Singha Corporation, one of Thailand’s largest food and beverage conglomerates.

The first product developed by DouxMatok is a sugar-based solution that maximizes the efficiency of the delivery of sugar to the mouth’s sweet taste buds. Thus, foods can contain 40% less sugar than when made with the original recipes, but still provide the same sweet taste, texture and feeling, the company said in a statement.

Jello produced with Israeli startup DouxMatok’s ’precision’ sugar (Naomi Baniel)

Taking its cue from the ways in which medication is delivered to the right part of the body, DouxMatok engineers sugar grains so that most of the flavor reaches the taste buds, where the sweetness is felt, in contrast to normal sugar, where 80% of the sugar goes directly into the stomach.

The DouxMatok technology coats sugar molecules onto a tasteless mineral or a fiber or protein that are made for the purpose, which the company says ensures more of the sugar lands on the taste buds.

According to DouxMatok, consumers cannot tell the difference between the modified sugar and the real thing, saying this has been “tested independently and validated by third party panels as well as major food companies.”

“The new product is low in sugar but high in fiber and proteins,” said Baniel. “Rather than have accidental sugars hit accidental receptors, we make clusters of sugar molecules around a carrier (the fibers or the proteins), and when a carrier like that hits a receptor it gets to sink in the receptor and push down sugar into the receptor for quite some time.”

This generates two effects, he said: increased perception of sweetness, and a lingering sweetness, so you don’t end up wanting more of the food just because it is low in sugar. “It is very satisfying, wonderfully tasting. We are saying the first consideration for people is taste.”

As consumers become increasingly aware of the deleterious effect of sugar and other ingredients on health and obesity, companies globally are trying to find ways to satisfy sweet-tooth needs with healthier alternatives.

A granola bar produced with Israeli startup DouxMatok’s ’precision’ sugar (Naomi Baniel)

Israel has developed into a competitive and attractive global hub for agricultural and food technologies, ranking among the top five countries for number of investment deals, according to Start-Up Nation Central, a nonprofit that tracks the Israeli tech industry.

A 100-year-old startup entrepreneur

DouxMatok’s technology is backed by 20 granted patents, and has been developed for over six years by a multidisciplinary team of scientists who deal in material sciences, organic and green chemistry, sensory sciences, drug delivery, and food science. Last year the startup teamed up with Germany’s Südzucker to commercialize its product.

Eran Baniel the CEO and co-founder of Israeli foodtech startup DouxMatok (Courtesy)

Additional participants in the latest funding round included existing shareholders: Pitango Venture Capital, Jerusalem Venture Partners (JVP), Food Lab Capital, as well as new financial investors, including btov Partners, OurCrowd and La Maison.

The new funds will “speed up commercialization,” said Baniel. He co-founded the firm in 2014 together with his father Prof. Avraham Baniel, at the time 95 and today 100 years old. The father is an inventor who has 70 years’ experience in chemical research, and who was the managing director of Israel’s National Chemicals R&D center for almost 30 years.

Prof. Baniel, the father, realized the need for “a little sugar to go a long way” back in 1944, in Palestine under the British Mandate, when all essential ingredients, especially sugar, were rationed. His neighbor, an elementary school teacher, said that children in school had a hard time concentrating because they craved sugar. That got Baniel, then a young chemist, thinking.

In 2009, working out of his kitchen, he found a way to create a targeted flavor delivery system for sugar, and demonstrated his proof of concept to food manufacturers who confirmed the tech was good and emphasized the importance of solving two of the most acute health problems in the food and beverage industry, sugar and salt, without creating an aftertaste.

In 2014, aged 95, Prof. Baniel set up DouxMatok with his son Eran.

Prof. Avraham Baniel, an inventor who at the age of 95, in 2014, set up the Israeli startup DouxMatok with his son, Eran (Courtesy)

Dismissing criticism of sugar being deemed as harmful as tobacco to health, Baniel the son said in the interview with The Times of Israel that the equation is “demagogic.”

“Nature thrives on sugar,” he said, with the carbohydrate a basic source of energy. “There is no comparison between the two. We need sugar for energy, for happiness. If you deprive people with sugar, you probably have to provide them with antidepressants.”

DouxMatok is soon expected to complete the industrial manufacturing of its sugars in Europe, jointly with Südzucker, followed by commercialization in North America, the statement said.

In parallel, DouxMatok has started a number of collaborations with other food companies to “reformulate popular products” with their solution, the firm said. Initial commercial quantities of the DouxMatok sugar are expected to be available in the last quarter of 2019. The product will target sugar and food manufacturers globally and not end consumers, Baniel said.

“The task of providing a sugar reduction solution is not only important for the consumer, but also for food corporations that rely on sugar to create the world’s top-selling products,” said Yishai Klein, managing partner of BlueRed Partners. The fund will be “supporting DouxMatok’s team in scaling their breakthrough technological platform globally, the only one that enables reducing sugar with sugar.”

The startup was awarded the Prime Minister of Israel Innovation Prize for 2018.

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