mycela South Korean startup making fungal-based biomaterials that can replace leather and meat said it has raised $10 million (13 billion WON) in a pre-Series A funding round.
Mycel co-founder and CEO Sungjin Sah told londonbusinessblog.com that the company uses mycelium, a root-like structure of mushrooms, to make leather substitutes that can be used in car seats and luxury cosmetic products, and fashion products such as shoes, clothing and bags. Mycel is in talks with global cosmetic brands to co-develop the mycelium-based leather products and cosmetic ingredients, Sah said, adding that it aims to bring its mushroom leather to market by 2023.
The Seoul-headquartered startup will use this new funding to open a manufacturing plant in South Korea to scale up production of its fungus-based biomaterials and double its workforce to 42 employees, Sah said in an interview with londonbusinessblog.com. The spin-off company from Hyundai Motor’s own startup program was founded in 2020 by former Hyundai Motor employees Sah, Sungwon Kim (COO) and Yunggon Park (CSO).
Mycel isn’t the only company using mycelium to make leather. There are at least eight companies around the world that use mycelium to make leather, per the report of the Material Innovation Initiative 2021. These innovators of mycelium-based materials have attracted investors to step up mushroom and plant leather. A San Francisco-based startup called MycoWorks raised $125 million in a Series C round early this year, while Bolt Threads Also Raised $253 Million at a valuation of $1.15 billion in September 2021. Ecovative Design also closed $60 million in March 2021.
Investors in Mycel’s latest round of financing include Korea Development Bank, Industrial Bank of Korea, Zero 1 Fund from Hyundai Motor, also known as ZER0 1NE 2 Fund, Stone Bridge, We Ventures and Spring Camp. The pre-money valuation is about $40 million (50 billion WON), according to Sah.
The global wholesale market of next-generation fabrics to replace leather, silk, down, wool, fur and exotic hides with plant-based, microbe-derived, mycelium, recycled and other sustainable materials is expected to about $2.2 billion in 2026.
A range of fashion brands are looking for next-generation materials to work with, according to the 2021 MII report. In July, global luxury brand Stella McCartney, which has partnered with Bolt Threads since 2017, launched a limited edition of 100 mushroom-based leather bags. Additionally, Hermes collaborated with MycoWorks making a handbag from mushroom-derived leather.
Mycel also competes in the alternative protein space with fungus-based food developers such as Mycorena and Quorn.
In addition to the mushroom leather, Mycel is developing a fungus-based biomaterial that could be used as an alternative protein to disrupt the meat industry — this biomaterial, which differs from Mycel’s mycelium in the leather, is a fungus but not technically mushrooms, Sah clarifies. In 2020, the startup tried to flip to its flagship alternative protein biomaterial product, which experienced a boom in South Korea in early 2020. But the company is now developing biomaterials for both mushroom-based leather substitutes and alternative proteins, Sah explains.
The company plans to enter Singapore with its fungus-based biomaterial that will be used in alternative proteins as early as next year, Sah noted.