Atomo Brews Up $7.8M Fundraise to Expand Café Collaborations with 50:50 Beanless Coffee Blend

Seattle startup Atomo Coffee has raised $7.8M in Series B funding to ramp up sales of its 50:50 beanless coffee blend via international partnerships.

A leader in the bean-free coffee space, Atomo has secured $7.8M from investors in its latest fundraising round; so far the startup has raked in nearly $59M in investment.

The company will use the capital to expand the reach of its 50:50 product, a half-and-half blend of conventional coffee and its beanless innovation, with an eye on international horizons.

“Many coffee companies are exploring how to incorporate beanless coffee into their product offerings to ensure they can create consistently great tasting coffee at an affordable price for consumers,” Atomo CEO Andy Kleitsch told GeekWire, which first reported the news.

Blended approach can support coffee farmers

Kleitsch founded Atomo with Jarret Stopforth in 2019, starting with beanless cold brews, before moving on to powdered formats for filter coffee and espresso.

Its current mix includes a combination of upcycled date pits, ramon, fenugreek and sunflower seeds, millets, lemon, guava, carrots, strawberry and potato fibre, black aronia berries, green bananas, and fructose (with caffeine from green tea).

The company takes date pits from Coachella Valley farmers destined to be thrown or burnt and cleans, washes, dries and granulates them to use in its roastery. These are then infused in a marinade made from the other ingredients, and then heated in a cross-Maillard reaction to produce the coffee compounds.

Atomo’s coffee is available at all 58 locations of the speciality coffee chain Bluestone Lane, as well as 13 other locations in the US.

Last year, it expanded internationally through partnerships with Japan’s Post Coffee and zero-waste café Ash. It will now launch at London’s Hagen Espresso Bar, and has a collaboration with a premium ice cream brand planned for this spring.

A common criticism of beanless coffee is the impact on farmers – the industry has 125 million people whose livelihoods depend on the crop. Atomo addresses this issue on its website, noting that a transition to a scale large enough to displace farmers (which it states isn’t its goal) is very unlikely.

“Coffee consumption worldwide is growing at a rapid pace forcing coffee farmers to increase production,” the company says. “To increase production along with changing climate conditions is forcing them to expand their growing areas which leads to deforestation and increased water consumption.”

The 50:50 blend that Atomo launched last year is a testament to this approach. It combines beanless coffee with conventional beans for use in drip coffee, and blind taste tests found that people preferred this over Starbucks filter coffee by a 2:1 ratio.

Atomo also sells a Flagstaff Remix made exclusively for Bluestone Lane, as well as an espresso-focused Coachella Latte blend.

Capital raise could help fund large-scale facility

The food tech startup is among several others working on coffee alternatives. A water-guzzling crop, growing coffee produces more emissions than pork, shrimp, rice and cheese. It’s also one of the most climate-vulnerable commodities – the area suitable for growing arabica could be cut in half by 2050, which puts it among the 60% of endangered coffee species.

Extreme weather events, combined with increasing demand, are leading to crop failures and shortages, pushing up arabica prices by 80% last year, with wholesale prices reaching a nearly 50-year high. As a commodity, coffee was the second-largest gainer (behind chocolate) across the value chain last year.

Startups like Minus, Voyage Foods, Atomo, Prefer, and Northern Wonder also make beanless coffee, and Pluri and Stem are working on cell-based versions. Amaterra, meanwhile, is leveraging molecular biology and crop genetics to develop perennial coffee varieties. And even giants like Starbucks and Nestlé have developed coffee varieties that can better withstand climate change.

Kleitsch told GeekWire that its blended coffee enables cafés and roasters “to launch their most sustainable products, maintain excellent coffee taste and reduce their overall ingredient costs”.

Analysis from sustainability research firm HowGood has shown that Atomo’s Coachella Latte generates 83% fewer carbon emissions and uses 70% less farmland compared to conventional coffee.

In its effort to scale up production and expand its presence, the company opened a 33,000 sq ft roastery in April, which can produce four million lbs of beanless coffee every year – enough to supply around 2,000 coffee shops.

Atomo hoped the roastery would create enough buzz that it could support a capital raise for the construction of a larger facility, with the capacity of producing 40 million lbs of product annually. This $7.8M injection is likely a realisation of that goal.