Fermtech raises £2.5 million seed round to scale cocoa alternative made from side streams

Fermtech has raised £2.5 million (US$3.2 million) in seed funding to scale production of Koji Cocoa, its cocoa ingredient made from fermented cocoa side streams, as food manufacturers faced mounting pressure from volatile cocoa prices, sustainability concerns, and the need to reformulate products without compromising taste.

• Fermtech raised £2.5 million (US$3.2 million) in seed funding to expand production of Koji Cocoa in the UK and internationally.
• The round was led by Elbow Beach, with participation from Carbon13 and Empirical Ventures, to support commercial scale-up and partner work.
• The company said Koji Cocoa could replace up to 100% of traditional cocoa while cutting costs by 25-33% and reducing carbon emissions by up to 98%.

The raise marked an early commercial milestone for the UK company, which has developed its ingredient around a simple but increasingly relevant proposition: extracting more value from what is already grown rather than relying entirely on conventional cocoa supply. As cocoa markets have become more unpredictable, manufacturers have had to contend not only with sharp price swings, but also with growing scrutiny of sourcing practices and emissions linked to raw material supply chains.

That combination has created a tougher operating environment across confectionery, bakery, and adjacent categories. For manufacturers, the challenge has not been limited to ingredient procurement. It has also extended into margin protection, product development, and the search for substitutes or partial replacements that can reduce exposure to cocoa without weakening sensory performance.

Fermtech said Koji Cocoa was designed to answer that pressure point by using cocoa side streams that would otherwise go to waste. Through fermentation, the company has developed what it described as a true-tasting cocoa ingredient that could be used to replace up to 100% of traditional cocoa in some applications.

The pitch is not just about resilience of supply. It is also about cost and nutritional value. According to the company, Koji Cocoa delivered cost savings of 25-33% compared with traditional cocoa, alongside double the fiber content. Fermtech also said the ingredient offered up to 98% lower carbon emissions, giving manufacturers another lever as they sought to reduce the climate impact of reformulated products.

“Despite all the discussion on food inflation, the global food system is actually extraordinarily efficient. For any new technology to succeed, it has to compete on cost,” said Andy Clayton, Founder & CEO of Fermtech. “At Fermtech, we’ve built the business around that constraint from day one, using low-cost side streams as inputs, and fermentation processes that are already proven at scale.”

Those claims placed the company squarely in a part of the ingredients market that has attracted growing interest: solutions that combine waste valorization, fermentation, and reformulation support in response to real procurement pressures. In cocoa, that pressure has become especially acute. A category once largely discussed in terms of taste, indulgence, and origin stories has increasingly become tied to concerns over affordability, supply reliability, and sustainability performance.

The new capital is expected to help Fermtech move from early commercial traction into a broader scale-up phase. Clayton said the funding would allow the company to scale production and deepen its work with commercial partners, particularly in the UK.

“This funding will allow us to scale production and deepen our work with commercial partners, particularly here in the UK,” he said.

Manufacturers engaging with Fermtech were said to be focused on three core challenges: managing cocoa cost volatility, reducing cocoa usage through reformulation, and switching to ingredients with a lower carbon footprint. Each of those priorities has become more urgent as brands and suppliers try to balance consumer expectations on taste and price with rising internal pressure around climate targets and supply-chain risk.

The participation of Elbow Beach, Carbon13, and Empirical Ventures also underscored the kind of investor appetite emerging around ingredient technologies that promise practical gains rather than distant disruption. In this case, Fermtech was not presenting Koji Cocoa as a futuristic replacement divorced from existing agricultural systems. Instead, the company was building its case around side-stream utilization and the idea of creating more cocoa-like value from current production flows.

That distinction may matter in a market where buyers are often less interested in novelty for its own sake than in whether an ingredient can slot into existing formulations, reduce costs, and support environmental goals at the same time. A replacement ingredient that asks manufacturers to sacrifice flavor is unlikely to travel far. One that claims true cocoa taste, meaningful cost reductions, and lower emissions may find a much warmer reception, particularly if cocoa volatility remains entrenched.

For Fermtech, the next phase will be about proving scale and repeatability. Seed funding can support manufacturing expansion and customer development, but long-term success will depend on whether the company can demonstrate consistent performance across multiple applications and geographies.