The best known mycoprotein is probably Quorn, a meat substitute that’s fast approaching its 40th birthday. But Finnish biotech startup Enifer is cooking up something even older: Its proprietary single-cell fungus-based protein, branded Pekilo, was originally developed in the 1960s and ’70s — by, of all things, the local paper industry.

The focus back then wasn’t on producing an alternative protein for human consumption, as the startup intends — although the original Pekilo product was sold for animal feed. Instead, per Enifer CEO and co-founder Simo Ellilä, the paper industry’s engineers were trying to come up with a solution to pollution caused by mills dumping production waste (“sidestreams”) into local waterways.

“It basically started from the fact that people in the lab realized that if you left this stuff over the weekend on the lab bench it would start to grow fungus — and so that was like the ‘ah-ha’ moment,” he explained.

After discovery on a lab bench, production of the mycoprotein was developed over some 15 years — with paper industry engineers applying a process of biorefining and using fermentation to grow and harvest the fungus at commercial scale. But the main goal was still waste water treatment. Which is why Pekilo fell out of use in the early 1990s when the paper industry switched to incinerating its waste.

The engineering company that developed it also went bankrupt and knowledge of Pekilo was lost, as Ellilä tells it — “very actively forgotten” — adding a Tolkien-esque ring to this alt protein’s long history. “Our founder team were biotech scientists, trained, educated in Finland, and we’d never heard of this thing,” he told TechCrunch. “So, really well forgotten.”

Someone remembered, though. And that was how Enifer’s biotech founders stumbled across Pekilo — sparking their decision, in 2020, to spin out a company from the VTT Technical Research Centre of Finland. The idea: revive this lost proprietary mycoprotein and extend production to yield food-grade (not just feed-grade) protein.

“It was actually thanks to a very senior R&D director, who’s already retired — who’d worked at Valio, the local dairy company — who kind of remembered this process and was thinking, ‘Oh, could we utilize this?’” recounted Ellilä. “Myself and one of my co-founders came across this public R&D project where this gentleman was involved. And we thought it was fascinating — seriously, paper engineers were making alternative proteins in the ’70s?!”

A lot of old school detective work followed to recover as much production information as possible. “We started digging up everything we could find. There was still a lot of paper sources if you knew where to look,” he said. “We’ve done a lot of incredible detective work — like we’ve literally gone to old phone books finding some of these people.”

The motivation driving the founders is clear: Alternative proteins are a much more substantial commercial end, in and of themselves, these days — on growing demand for sustainable alternatives to meat. Enifer is bullish there’s a long-term opportunity to revive Pekilo. In essence: The mycoprotein’s best days may yet lie ahead.

First factory fully funded

The startup has just closed out a Series B funding round to complete and operationalize its first factory — at a total cost of €33 million — located in Kirkkonummi, Finland, close to the sea (which provides a source of cooling water to keep fermenter tanks at the right temperature).

“The fungal metabolism is really active,” Ellilä noted. “It’s like the fungus is on a treadmill in there. So it’s really generating heat and you need to remove that heat.”

Enifer says the factory will be the world’s first commercial plant to produce a mycoprotein ingredient from food industry sidestream raw materials — or, put another way, this biorefining business is about turning waste into high quality protein. (Whereas the fungus that produces Quorn is typically fed with glucose.)

The Series B consists of €15M in equity funding led by the Finnish private equity fund Taaleri Bioindustry Fund I, with follow-on investments from existing shareholders Nordic Foodtech VC, Voima Ventures, and Valio (the aforementioned dairy giant).

The Finnish Climate Fund has also extended a €7M junior loan to support the project. Plus Enifer secured a €2M Climate and Environmental Loan from Finnvera. It also previously reported a €12M recycling/reuse investment grant from Business Finland, making its first factory fully funded.

Once up to full scale the fermenting and processing plant will produce 500kg of the alt protein per hour. It says it expects to be able to start ramping up operations in 2026 but Ellilä confirmed it will take about three years to get to full production capacity. If all goes well, more factories could follow.

One of the key differences with Pekilo for food-grade consumption is the sidestreams used. Wood pulp was fine for animal feed but new sidestreams are required to extend the product’s utility. Dairy industry waste — such as lactose — is one Enifer says works well as a feedstock for the fungus, so you can see why Valio is investing.

While the alt protein space can seem pretty crowded these days, with many forms of plant-based and mycoprotein already available, another thing that’s relatively novel about Pekilo is it’s processed into a dry powder (steam is used to dry the fungus after it’s harvested).

Ellilä says that makes it particularly interesting to the food industry — as a long-shelf life ingredient that can easily be dropped into existing recipes and processing methods.

The food-grade version of Pekilo also has a mild and neutral flavor — making it suitable for a wide range of uses, from savory foods to sweet. “The feed-grade product does have a very characteristic flavor but we need to do some extra processing to make it food-grade and there the flavor is completely lost,” he noted.

One sample product he mentions they offer to visitors is a chocolate cake with flour swapped out for Pekilo. Other potential uses include patties, cold cuts and even yogurts and cheeses. Enifer intends to remain a B2B player, though — its culinary experiments are purely to showcase the mycoprotein’s potential to customers in the food industry.

On pricing, Ellilä says they want the product to be cheaper than pea protein — suggesting, if successful, Pekilo could nibble away at some other alt protein’s marketshare (although he also notes there are nutritional differences that can mean using a combination of alt proteins is best).

“How I like to think about it is what we want to achieve is trying to contribute both to bringing down the cost of these products and improving the quality of the next generation of plant based,” he added.

Applying for novel food clearance

Before Enifer’s mycoprotein can be folded into food for human consumption, the startup will need to gain regulatory clearance for Pekilo as a novel food. So there’s a long application process ahead of it.

Ellilä says they are preparing an application to file with regulators in the European Union, and will likely target Singapore next, followed by the US.

He sounds confident they will — “eventually” — get the green light to sell Pekilo as a novel human food. “I do feel that we have an exceptionally strong case… because a mycoprotein is not entirely new,” he argued.

“It’s another species of fungus. But, still, it’s not, you know, something outrageous. It’s actually not that distantly related — as an organism — to Fusarium, which Quorn uses. And then there’s mounds of evidence of its safety in pigs and chicken and all kinds of organisms.”

“We have so many so much scientific material from back in the day. Which is not the case for many other applicants,” he also suggested, adding: “I’m sure we’ll get it eventually.”

Enifer is also developing Pekilo for use in pet foods which gives it a market it can access in the meanwhile. Plus it’s still considering animal feed use-cases, too — harking back to Pekilo’s origins — but the economics are harder to stack up so partners would be needed.

Ellilä says they’re talking with companies with large volumes of sidestreams they’d like to upcycle over potential partnerships. “We definitely haven’t given up on animal nutrition,” he said, adding: “We’re in talks with a lot of companies to say let’s build a joint venture… and then we wouldn’t have to chip in all the capital.”