Solar Foods: Finland Govt Pumps $10.6M in Startup to Build Giant Gas Protein Factory

Finnish gas fermentation firm Solar Foods has received €10M ($10.6M) in funding from Business Finland to help build Factory 02, which would produce 12,000 tons of Solein protein annually.

To accelerate the development of its industrial-scale facility for gas protein, Solar Foods has secured €10M ($10.6M) from Business Finland, an arm of the Finnish economic affairs ministry.

In addition to ramping up its plans for ‘Factory 02’, the funds will support R&D projects for its Solein protein, advance regulatory applications in various markets, and speed up its path to market.

It’s part of the company’s €600M financing programme under the EU Commission’s hydrogen-based Important Project of Common European Interest (IPCEI). This covered Business Finland’s initial €33.6M ($35.6M) investment to support the construction of its demo plant, Factory 01, in late 2022.

Located near Helsinki, that facility opened in April and can produce 160 tons of its fermentation-derived protein per year (set to rise to 230 tons by 2026). This first tranche of funding was also intended to support the start of the pre-engineering phase for Factory 02, which began last month.

Based on the updated cost estimate of the project, Business Finland decided to increase that first grant by €10M, and extended the deadline by a year (until the end of 2026). The maximum state aid available for the project amounts to €110M ($117.5M), with grants eligible until 2035.

The government agency has set aside €76M ($81M) to help with the construction of Factory 02, if built on European soil. This facility is expected to be able to produce 12,800 tons of protein at a cost of €4.30-5.20 ($4.60-5.50) per kg, and generate net sales of €80-200M ($85.5M-214M).

“We are extremely pleased to receive this additional funding for research, product development and the pre-engineering phase of Factory 02,” said Solar Foods co-founder Pasi Vainikka, who will step down as CEO in April and “continue in an important role” until the end of the year. “When realised, Factory 02 [will be] a unique project in terms of science, technology and climate impact.”

Solar Foods lays out its US plan for Solein

Solar Foods was spun out from the VTT Technical Research Centre of Finland and LUT University in 2017 to commercialise Solein, a protein produced by feeding microbes on carbon dioxide, hydrogen and oxygen instead of sugar. Doing so eschews the need for the agricultural land to grow sugarcane, alongside any irrigation, fertilisers and pesticides.

The ingredient is not dependent on water or weather either, allowing it to be produced in climates like the desert, the Arctic and even outer space (it’s working with the European Space Agency to find a way to produce food on Mars).

The microbes are grown in a liquid form, and later dried into an orange-yellow powder that is flavourless and has 78% protein, 6% fat, and 10% dietary fibre. Its macronutrient profile is said to be akin to dried soy or algae, and it contains iron and B vitamins.

Solar Foods calls Solein the “most sustainable protein” on Earth. The main raw materials for production are carbon dioxide and renewable energy, resulting in emissions equal to just 1% of those generated by conventional meat, and 20% of plant proteins.

The ingredient received novel food approval in Singapore in 2022, debuting as part of a vegan chocolate gelato at Italian eatery Fico. In addition, it was the base of a Taste the Future chocolate snack bar released by Fazer (a majority shareholder of Solar Foods) in the city-state, and a line of mooncakes and ice cream sandwiches rolled out by Japanese food giant Ajinomoto.

Moreover, the company achieved self-determined Generally Recognized as Safe (GRAS) status in the US last year, and registered Factory 01 with the Food and Drug Administration to import Solein protein stateside. Here, its commercialisation strategy centres on the health and performance nutrition market.

“In this segment, we are focusing on ready-to-mix powders, ready-to-drink beverages and protein bars. We are also moving from offering powder prototypes to a conceptual sales model where we will introduce finished products containing Solein,” Vainikka told investors in Solar Foods’s 2024 earnings call.

This week, it announced Solein Protein Bites – Nut Mix Edition as a concept product to showcase Solein’s capabilities. It is being exhibited at Natural Products Expo West in Anaheim, California (March 5-7).

Seeking further investment ahead of 2026 EU approval

To date, Solar Foods has raised over €43M ($47M) in equity funding, as well as €30M ($32M) in debt financing. But the company, which has been listed on the Nasdaq First North Growth Market since September, said it would require further equity and loan funding to cover the costs of Factory 02, estimated to be between €150-420M (around $160-450M).

This is because the IPCEI grants can only cover a maximum of 81% of the investment. Solar Foods is applying for further investment through the scheme too.

The company’s operating income grew by 57% in 2024, reaching €8.1M. Its net loss stood at €11M, ending the year with €13.4M in cash and cash equivalents. The firm is focused on growth and doesn’t expect to distribute a dividend in the short to medium term.

“The company plans to transition to a concept-based sales model, introduce higher-priced products, and expand the design capacity of Factory 01,” said Vainikka, adding that its phased investment plan for Factory 02 is geared towards achieving positive EBITDA – revenue excluding all non-operational expenses – during the 2025-30 period.

He will be replaced by Rami Jokela as CEO next month. “The company’s groundbreaking technology has the potential to make a significant impact globally, and therefore I look forward to working with the team accelerating Solar Foods’s growth and bringing its innovative solutions to the world,” Jokela said in January.

Solar Foods has applied for novel food approval with the European Food Safety Authority, and addressed inquiries regarding the scientific opinion on Solein’s safety. It expects to get the greenlight in 2026. Last month, it gave the region a taste of Solein through a partnership with Italy’s KelpEat, which showcased a high-protein snack with the ingredient at the Pitti Taste food fair in Florence.

“Our mission is ambitious: bring Solein to market globally, revolutionise sustainable food production and continue to deliver value to our shareholders, stakeholders and the planet, and we are now ready to enter the next phase on this journey,” said Vainikka. “The dedication of our team and our successful listing on the Nasdaq First North Growth Market Finland have created a solid foundation for this global growth journey.”