Precision fermentation investment overview: are investors still interested?
- Investor interest in precision fermentation has matured, not disappeared entirely
- Investors now demand offtake agreements, contracts and credible cost curves
- Technology already mainstream in enzymes, vitamins and HMOs across food markets
- EU regulation remains barrier, with no approved dairy or egg products
- Infrastructure, scale and costs still constrain commercialisation despite improving science
Precision fermentation has a lot of potential. The production method can produce a wide range of ingredients, and it does. It is used by industry extensively, in dairy, plant-based meat and even space food.
How is it faring now that investors are showing greater scepticism towards food tech?
What is precision fermentation?
Precision fermentation is a type of fermentation that uses microorganisms in very precise ways.
Microorganisms are given ‘biological instructions’ to create ingredients, explains think tank The Good Food Institute (GFI).
They are added to a warm fermenter and fed sugars. These sugars are then converted into the desired ingredient by the microorganisms, who release them into the fermenter.
It has already been used for decades to produce ingredients such as rennet and citric acid, according to GFI.
But its use is expanding. It is now being used to create components of plant-based meat substitutes such as fats, and ingredients such as casein, whey and egg.
How has investor interest evolved?
As in the food tech ecosystem more generally, investors in precision fermentation are looking for more than they used to.
Investor interest has “matured” rather than disappeared, explains Ewa Granosik, clients, strategy and operations director at strategy consultancy Bright Green Partners.
Investors are still interested in the sector, but a “compelling science story” alone is not the draw it was five years ago.
“Today investors want offtake agreements, signed commercial contracts and a credible cost curve. The capital is still there, but it’s going to companies that have crossed from promise to proof.” An offtake agreement is an agreement between a buyer and a producer to buy goods that have not yet been produced.
How is it being used in the food industry?
Precision fermentation is in some sense already mainstream, Bright Green Partners’ Granosik points out.
“People forget precision fermentation is already in their fridge: the enzymes in most cheese, the vitamins in fortified foods and the HMOs in infant formula are all fermentation-derived and completely mainstream.”
What’s new is its use for producing whey, egg and casein. Dairy and egg proteins now have real commercial volume, explains Granosik. Casein, fats and lactoferrin are “the next wave”, but they’re still scaling.
Precision fermentation is not currently being used in “new and novel ways“, says Kim Anders Odhner, co-founder and managing partner of Unovis Asset Management. What’s novel is the strains being introduced and the products being developed.
The food sector is focused squarely on developing higher-value ingredients that justify production costs, such as lactoferrin, whey, enzymes, fats and lipids, he explains.
How are precision fermentation-derived products regulated?
Regulation remains a barrier for precision fermentation-derived products to get to market.
Much like in the case of cultivated meat, such products are subject to the EU’s famously stringent novel food regulation. Unlike with cultivated meat, however, there are already such products on the market, in the form of HMOs in infant formula.
Nevertheless, explains Bright Green Partners’ Granosik, as of mid-2026 not a single precision-fermented egg or dairy product has been approved for sale on the EU market, compared to at least seven cleared in the US since 2018.
Yet the sector does not face all of the same barriers as cultivated meat. There are no outright bans on precision fermentation like those seen in Italy and Florida in the US for cultivated meat. Furthermore, consumers and regulators tend to view it as less radical.
What bottlenecks remain in production?
Bottlenecks in precision fermentation often depend on the product being produced, suggests Unovis’s Odhner.
Such bottlenecks often stem from factors such as the availability of bioreactor capacity or the complexities around downstream production. Because of this, there is “often no single problem to solve”.
According to Granosik, the science-based bottlenecks of precision fermentation are mostly in the past. Strains, titres (the measure of the concentration of a substance) and continuous processing are improving fast, she explains. The leading companies are making significant volumes of product.
What’s left are the bottlenecks of infrastructure and economics.
There isn’t enough infrastructure that’s fit for purpose, says Granosik – much available contract fermentation is pharma-grade and 50 or more years old, and food-grade infrastructure is lacking.
Furthermore, downstream processing is still expensive, and the cost of goods isn’t yet at parity with commodity proteins.
“Scale helps, but process redesign is actually the bigger cost lever”, says Granosik.
Precision fermentation doesn’t face the same intensity of obstacles as cultivated meat, such as production bans and a sceptical public.
Nevertheless, with more exacting investor expectations, expensive production and time-consuming regulation, things are far from plain sailing.
