Venture capital firm Agronomics has announced a £700m investment in Clean Food Group (CFG), a UK-based food technology company.

The investment is part of a £2.3m pre-series A funding round, with the group subscribing for 4.2 million ordinary shares.

Agronomics is a venture capital firm with a focus on cellular agriculture, and the firm has established a portfolio of over 20 companies at the pre-seed to series C stage in what it has described as a “rapidly advancing sector”.

The group had previously invested £900,500 in CFG in June 2022, and following its latest investment will now hold 30.31% of the equity capital on a fully diluted basis.

Subject to audit, Agronomics will carry this position in its accounts at a book value of £6.97m, including an unrealised gain on cost of £5.37m, an IRR of 385% and a MOIC of 3.92x. The holding in CFG will represent approximately 4.33% of the last published net asset value of the company, including estimated post-balance sheet date adjustments.

Executive director of Agronomics and co-chairman of CFG, Jim Mellon, also participated in the funding round with a £50,000 investment on the same terms. AIM traded SEED Innovations Limited, of which Jim Mellon has a 6.95% holding, also invested in the round on identical terms.

He commented: “Agronomics’ portfolio speaks to the breadth of disruption emerging from biomanufacturing on conventional agriculture and beyond.

“This fundraise marks an important milestone for CFG in the mission to drive transformative changes across the food industry by providing an alternative to palm oil in food and cosmetic production. This funding takes CFG a step closer to commercialisation as we continue to unlock the potential for a future where our food choices will be more sustainable.”

CFG produces palm oil using a non-GMO microorganism which is already used on an industrial scale in the wine industry – meaning that the regulatory pathway in the UK and EU could be less stringent.

The group indicated that capital raised from the pre-series round will enable it to accelerate the scale-up of its technology platform, ahead of the planned completion of its series A funding next year to further develop its technology for production at a commercial scale – with the funds supporting the construction of a new manufacturing facility in the UK.

CFG is an early-stage company with no revenues with operating costs of approximately £100,000 per month, and total assets of £1.6m, at 31 December 2022, including cash or near cash of £1.3m with no material liabilities.

“We are delighted with the rapid progress the business has made in the past year,” added CFG co-founder and CEO, Alex Neves.

“The successful conclusion of this current funding round validates the important strides our business is taking in solving critical sustainability and supply chain challenges facing our food and cosmetic manufacturer customers. We are now in a great position to validate our technology at a commercial scale, advance our regulatory pathways and develop our growing list of commercial partners in advance of our series A next year.”

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