A Glasgow-based biotech firm with “huge global potential” has secured £2 million in funding to scale up its production of natural food colourants.
Scot Bio, which produces natural colourants derived from algae, closed an over-subscribed funding round with investment syndicate Kelvin Capital, angel investment group Investing Women, mergers and acquisitions consultancy Oghma Partners and private investors in the UK and US.
The biotech firm, formerly known as Scottish Bioenergy, described the funding as “one of the largest private investment rounds in Scotland this year” and a vote of confidence in its “ambitious prospects”.
Scot Bio produces natural blues and greens using phycocyanin, an algae-derived pigment. Algae rich in phycocyanin is traditionally grown in pond systems, which are seasonal and subject to environmental contamination, but through collaborations with Newcastle University and The University of Edinburgh, Scot Bio has developed modular, scalable systems which are capable of meeting the demand from global food manufacturers.
This funding will allow the company to increase production and expand its team to respond to the growing international market for products free of artificial additives, which is expected to experience rapid growth in the next few years.
It has been estimated that global demand for phycocyanin could reach nearly £400m by 2020.
Following an initial £500,000 investment from Kelvin Capital and Investing Women in 2017, Scot Bio successfully scaled up to 16,000 litres of production and developed multiple product samples and for fast-moving good companies worldwide.
It also brought its first commercial product to market by partnering with Edinburgh-based drinks producer Firkin Gin to create Firkin Blue.
David Van Alstyne, chief executive at Scot Bio, said: “This is exciting news for Scot Bio and a demonstration of the high quality of our product and the exceptional team behind it.
“Our ambition is to be the world leader in the production of phycocyanin and other functional food ingredients and with our experienced board, technical and management staff and the support from our friends in academia I am confident we will do it.”
Chairman Tom Craig added: “This is a very exciting business to be involved in. It has patented IP [intellectual property] and a huge worldwide market opportunity.
“I am delighted to be working with David and his team.”
Jackie Waring, founder and chief executive of Investing Women, said: “We have a strong association with the great team at Scot Bio.
“We are therefore delighted to continue our support in this latest round of funding which will help the company further develop its unique product and realise its huge global potential.”