Using soybean germination technology to make plant-based meat, DAIZ received US$47.4 million in Series C financing

Japanese plant-based company DAIZ recently secured a substantial ¥71 billion (approximately $474 million) in Series C funding, marking the largest amount ever raised by a Japanese food tech firm, according to Green Queen.

This funding is earmarked for the construction of a new 40,000-square-foot facility. With the completion of this round, DAIZ’s total funding will reach ¥1.36 billion (about $87.6 million). Key investors in this round include Mitsubishi UFJ Capital, Roquette, Miyoshi Oil & Fat, and Kagoshima Bank.

DAIZ’s plant-based meat stands out due to its core technology called the “Ochiai Germination Method.” This innovative technique precisely controls the growth conditions (such as oxygen, carbon dioxide, temperature, and water) during soybean germination, resulting in increased breakdown products.

Compared to conventional germination conditions, DAIZ’s patented technology enhances the production of umami source glutamic acid tenfold, energy source arginine twofold, isoflavone 4.3 times, and GABA (gamma-aminobutyric acid) 3.5 times.

These breakdown products serve as flavor enhancers, allowing DAIZ’s plant-based meat products to improve taste and texture without artificial additives.

The newly acquired funds will be allocated to constructing a new factory in Kumamoto, Japan, set to commence operations in February 2025. The initial production capacity is estimated at 8,000 tons per year, with full production reaching 20,000 tons annually, making it Japan’s largest plant-based meat facility.

DAIZ’s technology is closely linked to the prominent position of soybeans in Japanese cuisine, where they are widely used to make tofu, edamame, natto, miso, and grilled fish.

In 2020, DAIZ secured ¥650 million in Series A funding and ¥1.85 billion in Series B funding last year. The company aims to expand its domestic and international collaborations, having already partnered with Japan’s 7-Eleven for two ready-to-eat products. DAIZ plans to accelerate its collaboration strategy with companies in Europe, North America, and Asia.

The potential of Japan’s plant-based market

The potential of the plant-based market in Japan has witnessed substantial growth, doubling in size from 2019 to 2022. The year 2020 was hailed as the “year of alternative proteins” in Japan.

Companies such as Umami United, Next Meats, and 2Foods have emerged as key players in the Japanese plant-based food market. Major corporations, including Marukome’s Soy Lab, Otsuka Foods’ Zero Meat, Itoham Foods, and NH Foods, have also entered the vegan food sector.

A recent survey indicated that only 17.5% of respondents have tried soy protein-based meat alternatives, with 3.1% experimenting with plant-based meats made from other ingredients. Interestingly, nearly one-fifth of participants intentionally reduced animal-based food consumption at least once a week, identifying with a flexible vegetarian lifestyle.

Japanese government support for vegan food

Government support is identified as a significant opportunity for companies like DAIZ. Japan has established government departments to promote alternative protein technologies, with a 2021 white paper categorizing meat substitutes as a solution for achieving the net-zero target by 2050. Economic institutions, including the Japan External Trade Organization, are collaborating with alternative protein companies to further expand the market.

Last year, the Japanese government announced efforts to create a plant-based food labeling law, aimed at eliminating barriers to the vegan food industry. DAIZ’s CFO, Tatsuya Koitabashi, acknowledged the challenging funding environment for startups but credited the company’s success to government support, securing long-term corporate loans through the Ministry of Economy, Trade and Industry and the Ministry of Agriculture, Forestry, and Fisheries at a low cost.

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