April 6, 2016

TerraVia (formerly Solazyme) is partnering with private equity firm, VMG Partners in the new investment venture, TerraBrands.

Combining VMG’s expertise in brand building and investment capital with TerraVia’s algae-based food and ingredient platform, TerraBrands was created to bring algae-based food and ingredients into the mainstream food sector. The investment vehicle will invest in or acquire established, lower middle-market companies within the food, pet, and nutrition sectors that are positioned to leverage TerraVia’s algae-based platform to achieve growth.

“Given the accelerating demand for plant-based nutrition, we are excited to be at the forefront of this next generation of foods and ingredients,” said Michael Mauze, Managing Director of VMG Partners in a recent press release.

Indeed, the market potential for algae-based foods and ingredients appears impressive. The vegetarian market is currently worth $2.8 billion per year and algae is beginning to position itself to leverage consumers’ demands for “free of” foods and foods that cater to specialty diets, reports Fortune. Algae-based oils are already used in 90% of infant formulas as a source of healthy fats, however, products are being developed to replace olive and soy oils, and algae-based lipid powders and flours have the potential to replace eggs while providing protein and nutrients and cutting saturated fats.

Kara Cissell-Roell, Managing Director of VMG Partners, adds “We see a compelling opportunity to marry products and brands with TerraVia’s innovative, nutrient-rich ingredients in response to a rapidly growing consumer demand for healthy, environmentally sustainable food products that don’t sacrifice on taste.”

TerraVia produces a type of algae called Chlorella, which is grown in sealed tanks, similar to how a brewery would brew beer. Producing their oils using microbes, this production system is highly sustainable and does not degrade farmland.

Marketed under the brand name AlgaVia, TerraVia produces algae-based lipid powders and flours that are already being incorporated into the production of Enjoy Life Brownie Mix, Pizza Crust mix, Rising Hearts Vegan Brioche, Califia Farms coffee creamers, and various cookies and chocolate products. Meanwhile the company’s Thrive algae-based cooking oil, which has less saturated fat and more monounsaturated fat that canola or olive oil, was launched on September 30.

For VMG, this algae-based investment partnership represents entry into a new segment for the firm, which has successfully invested in and built up consumer brands including KIND, Vega, Pretzel Crisps, Justin’s, Health Warrior, and Solid Gold Holistic Pet Food.

“We’re excited to work with VMG, one of the world’s most successful private equity firms in building cutting-edge food and nutrition brands, and which also recently invested in our transformation from Solazyme to TerraVia,”said Jonathan Wolfson, the founder and CEO of TerraVia.

TerraBrands has also announced that Keith Belling, the founder and former CEO of Popchips, will be joining the venture, where he will apply his expertise in brand building in the better-for-you snack space.

“By bringing together VMG, TerraVia and Keith, we will help drive a new movement, recognizing algae as a critical solution for plant-based eating and nutrition,” said Wolfson. “We believe TerraBrands™ will also enable TerraVia to capitalize on the opportunity to create substantial value for our shareholders by focusing on select branded consumer opportunities.”