8 Startups Using Fungi for Innovative Applications

December 26. 2019. 8 mins read

Your bog-standard white grocery store button mushroom makes up 38% of the world’s production of cultivated mushrooms. It’s one of the thousands of species of fungi, some of which haven’t even been classified. (Says Wikipedia, a fungus is any member of the group of eukaryotic organisms that includes microorganisms such as yeasts and molds, as well as the more familiar mushrooms.) Most people don’t know a whole lot about mushrooms because the 250 or so known poisonous mushrooms are a turn off to those who might go out into the woods to forage an expensive food product that grows freely.

Unlike plants, mushrooms don’t require sunlight to grow, and dozens of species actually grow exclusively in the dark. What we call a “mushroom” is actually a fruiting body of a predominantly underground organism. “The majority of the organism is underground in the form of mycelium – the vegetative part of a fungus that consists of a mass of branching single-cell strands called hyphae,” according to the National Forest Foundation.

The majority of fungi in the forest take the form of underground mycelium, a vast network of single-cell strands
The majority of fungi in the forest take the form of underground mycelium, a vast network of single-cell strands – Credit: National Forest Foundation

Mushrooms are nutritious, and they’re good for you. The Chinese are the world’s biggest grower of mushrooms and have been using their medicinal properties for centuries in traditional Chinese medicine. These days, more and more people are advocating the humble mushroom as a solution to many of the world’s problems.

The Fascinating World of Fungi

A British fellow named Simon Sinek once said that “working hard for something we care about is stress while working hard for something we love is passion.” One person who is passionate about finding new sources of protein is Olivia Fox Cabane, someone whose accomplishments include things like obtaining “three master’s degrees in Business Law” or being “the youngest person ever to have been appointed Foreign Trade Advisor to the French Government.” These days, she’s left all that stuff behind to pursue the thing she’s most passionate about – climate sustainability work. In response to one of our pieces on alternative proteins, she asked if we’d consider doing a piece on the fungi industry – or as she put it – “a kingdom of species with infinite possibilities for clean meat scaffolding.” So, that’s what we’re going to look at today.

When deciding what startups to include in any given article, we like to refer to someone else’s list so that we can punt any sort of “you missed our sacred cow” emails that we get from startups that don’t make it into the article. Fortunately, Mrs. Cabane has put one of those together for the fungi industry as follows:

The fungi industry landscape
Credit: Newprotein.org

For today’s piece, we’re going to look at a sampling of applications for fungi across all industry types in the above market map. We’ll start by looking at several companies we’ve talked about before in previous articles.

From Packaging to Meat

Click for company websiteThe first startup we came across using fungi was New Yawk based Ecovative which was featured in a piece we wrote on Recyclable Building Materials You Can Grow Yourself. Since our 2017 article, they’ve managed to raise an additional $10 million in venture funding which closed just a few months ago bringing their total funding to $30.1 million. In September of this year, they announced the formation of an entirely new company dedicated to the future of animal-free meat: Atlast Food Company. They use mycelium, the root structure of mushrooms, and their process allows them to fine-tune the structure to account for porosity, texture, strength, resilience, fiber orientation and more. The end result is a line of three products thus far.

Atlast is their alternative protein product, MycoFlex is a foam product that can be used in footwear or as a leather replacement, and MycoComposite is a high performing packaging solution. Customers include names like Dell, Ikea, BioMASON, Gunlocke, and Sealed Air. They also worked with our next startup to create faux leather.

A Bag of Mushrooms

Way back in 2016Click for company website, we wrote about a firm called Bolt Threads that was creating high-performance materials by mimicking how a spider weaves thread, a process that’s often referred to as “biomimicry.” Since then, the startup has taken in a whopping $213 million in funding to develop their product lines, one of which is a leather product that’s made from mycelium called Mylo which can be produced in days versus years. The startup is able to control the mycelium’s growth conditions to produce a substrate that can be cured and tanned into a soft, supple material that looks and feels like leather.

The driver bag seen above is the first commercially available bag made with Mylo in collaboration with Chester Wallace. If you want a piece of that, pledge $400 or more on their Kickstarter and they’ll send you one – this month they say. Super cool and all that, but those price points need to come way down if this will ever achieve more than just over-priced designer handbags for ESG types.

An Organic Sugar Substitute

Perhaps the most promising application of fungi we had come across prior to learning about Mrs. Cabane’s market map was MycoTechnology, a “food technology company that utilizes fungi-based food-processing platforms to transform the flavor and value of agricultural products.” Incredibly, an estimated 74% of all packaged foods contain some amount of added sugar. MycoTechnology has raised $82.6 million so far from big names like Bunge, Tyson Foods, and Kellogg, and to develop an organic sugar substitute and a food additive for flavor masking. You can read all about this exciting company in our previous article about An Organic Sugar Substitute That Tastes Good.

Fungi as Alternative Proteins

Click for company websiteIn one of our previous article on 8 Alternative Protein Sources to Meat and Dairy, we noted at least two startups – 3fbio and Prime Roots – that are creating alternative proteins from mycelium. Both startups are using a fermentation process to produce “mycoproteins.” Another startup doing something similar is Sustainable Bioproducts which discovered a fungus in a Montana super-volcano that might help feed the planet. Founded in 2016, this Chicago startup has taken in $33 million in funding so far and counts yogurt conglomerate Danone and agriculture giant Archer Daniels Midlands (ADM) as investors. (ADM happens to be one of thirty constituents in our dividend growth investing portfolio.) They’ve discovered some extremophiles in Yellowstone park that thrive in extreme temperatures and provide a complete protein source with 20 amino acids (including the 9 essential amino acids).

An extremophile up close
An extremophile up close – Credit: National Park Service

Yummy. The company is expected to have a product to market as early as next year.

Drinking Mushrooms

Click for company websiteBet you didn’t know that Finland happens to be the country where the most coffee is consumed. It’s also where the founders of our next startup hail from. In 2012, a couple of Finns decided that the Koreans were onto something with mushroom tea. They founded Santa Monica, California startup Four Sigmatic which has now raised $5.4 million in funding to “make drinking mushrooms easy with their mushroom coffees, elixirs, and superfood blends.” An article by CNBC this past summer talked about how “Four Sigmatic’s mushroom coffee mix with Lion’s Mane and Chaga is the No. 1 best seller in the instant coffee category on Amazon, beating out Nescafe and Starbucks.”

Mushroom coffee mix on Amazon
Mushroom coffee mix on Amazon

While China may be the biggest consumer in the $5.8 billion “functional mushroom” market, other countries are catching on. It’s become a trend, and Four Sigmatic has developed more than 30 products which are now being sold in more than 65 countries around the globe.

Mushrooms Masquerading as Meat

Since the advent of the portobello burger, chefs across the globe have been using mushrooms as a viable alternative to meat for vegetarians. Founded in 2016, Denver, Colorado startup Emergy Foods has raised $4.8 million in funding to create “plant-based proteins that have the taste, texture and nutrition profile of animal-derived meat,” and they’re using mushrooms to make that happen. Their first product, Meati, is a meat-like product that consists of fungi that are fermented in large tanks using only water, sugar, and nutrients. After fermentation, they harvest the fungi in a process similar to cheese making. The end result is something that certainly looks like meat.

According to an article by The Spoon, they’ll first sell to high-end restaurants to build the brand and provide some time to scale production. As for availability, Emergy is “preparing for a beta launch at the end of 2019 and is expecting to launch in restaurants in early 2020.” If they could get to the same size as the famous Coors Brewery in Colorado, the company could produce 351,000 tons of Meati products a year – the meat equivalent of 4,200 cows. Still, they’ll have a tough time convincing us that mycelium will make a great Bistecca alla Fiorentina, which is a good segue into our next startup.

A House of Mushrooms

Click for company websiteFounded in 2015, Italian startup MOGU has taken in around $2.3 million in funding to develop materials and products that “feature remarkable technical properties and radically innovative aesthetics,” thanks to the use of fungal mycelium and upcycled textile residues – like the short and dusty fibers of cotton which cannot be used in upholstery or yarn production. (Maybe they should have a word with re:newcell.) So far, they’ve developed a collection of acoustic panels for interior designers to maximize sound absorption and floor tiles which consist of a mycelium composite core, coated with a proprietary formulation of 90% bio-based resins. When we’re talking something as bulky as building materials, it all comes down to producing at scale, at a price point that will extend beyond just super-niche applications. Mogu Floor products are currently available for pre-order, for delivery in 2020.

Mushrooms for Pets

Click for company websiteIf mycelium is good enough for humans, it’s good enough for our furry friends. Founded in 2017, Berkeley, California startup Wild Earth has taken in $12.2 million in funding so far to develop “a fungi-based protein formula that is 100% nutritionally complete.” It’s so good in fact, that a video on the company’s website is showing the CEO literally eating his own dog food. And it’s not just about creating a good protein for your pet. According to the company, a study released by UCLA calculated that the meat-based food eaten by Americans’ dogs and cats generates the equivalent of 64 million tons of carbon dioxide per year, which has about the same climate impact as a year’s worth of driving from 13.6 million cars. Instead of waving a sign around demanding everyone else change their habits, now you can lead by example and start feeding your pets – and yourself – with this great clean protein source that will only set you back $65 for an 18-lb bag.

Mushroom protein food for your pets
Wild Earth pet food

Remember, there is absolutely no price you can place on saving the environment and providing your pet with a better life.


Mushrooms grow indoors 24/7/365. Unlike green plants, they don’t need light to grow. Incredibly, they expand about 4% per hour, doubling in size every day. If you had to pick between raising grasshoppers as a potential protein source or mushrooms, it’s pretty obvious which sells itself better. Perhaps mycelium is the alternative protein source that’s the most economically viable – all things considered. More than that, perhaps mycelium can let us start growing everything from clothing to building materials. Combine fast-growing mycelium with a technology like gene editing and the sky’s the limit.


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