A Glasgow-based firm that has created natural food colourant in the laboratory has won one of the biggest rounds of funding in Scotland this year, raising more than £2m to ramp up production and hire more staff.
Scot Bio said it was oversubscribed for its second funding round with investment syndicate Kelvin Capital, Investing Women, Oghma Partners and private investors in the UK and US.
The firm plans to open four factories as it expands the use of its patented system that involves stimulating growth of natural algae pigment with a complex lighting sequence and frequency.
Based in BioCity Glasgow, the biotech incubator, Scot Bio says it has developed a way to provide food and drinks firms with traceable, natural blue and green colourants.
Analysis: Natural colouring expected out of blue
The natural blues and greens are produced using phycocyanin, the internationally-approved algae derived pigment.
Pond systems traditionally used to grow phycocyanin-rich algae have supply and quality-control issues, the firm said.
Scot Bio, through academic collaborations with Newcastle University and the University of Edinburgh, has developed systems that are "scalable and capable of meeting the demand from global food manufacturers".
The new funding will allow the company to up its production and expand the existing team to respond to an expanding international market for natural colourants, which is expected to experience further rapid growth.
David Van Alstyne, chief executive at Scot Bio, above, said: "We are taking a bio-reactor based system which is basically big stainless steel vessels that we drop LED lights into that are under a very weird frequency.
"That causes a massive increase in this chemical production and it makes it easier to extract."
He added: "There is a massive undersupply in the world and by growing it in these controlled environments, we don’t just have a higher quality-controlled product but it also allows us to scale internationally.
"It is our ambition to build four factories in the next three to five years, two in the US, one on the Continent and one in Asia."
Analysis: Natural colouring expected out of blue
"The way we produce it also gives more flexibility of colours, we can make a deep blue, or any shade of blue or green.
"This is what the fast moving consumer goods companies are requiring."
Mr Van Alstyne 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."
The firm has seven staff with at least 10 more expected, while it is also sponsoring four PhD students.
Following Kelvin Capital and Investing Women’s first round investment in 2017, the company successfully scaled up to 16,000 litres of production and developed multiple product samples and formulation solutions to major consumer companies worldwide.
The firm also brought the first commercial product to market in collaboration with Leith based Firkin Gin to create Firkin Blue.
Analysis: Natural colouring expected out of blue
The latest backing is one of the largest private investment rounds in Scotland this year, and hailed as a vote of confidence in the ambitious prospects of the company.
John McNicol, director of Kelvin Capital, said investors "look forward to its continued rapid progress".
Jackie Waring, founder and chief executive of Investing Women, said "We have a strong association with the great team at Scot Bio, as an investor in the business and through their successful involvement in our AccelerateHER Awards programme."
Oghma Partners provided corporate finance advice to the Scot Bio management team with regards to the announced capital restructuring.
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