Food tech startup Grain4Grain has raised $775,000 in pre-seed equity funding from the Kroger Co. Foundation and Village Capital, Broadway Bank, and existing Texas-based private investors who supported the startup in their angel round.
On Thursday, the Kroger Co. Zero Hunger | Zero Waste Foundation announced its second Innovation Fund cohort of startups to receive funding for innovative new consumer products made with surplus food or food byproducts and technologies that advance the upcycled food industry. In collaboration with Village Capital, the largest supporter of impact-driven, seed-stage startups globally, the Foundation selected the San Antonio-based Grain4Grain as one of 10 Fund participants from a pool of more than 145 applicants.
As craft beer brewing grows in popularity, so does the staggering amount of leftover spent barley grains — over 6 billion pounds annually. That opportunity for food innovation is what drove Yoni Medhin and Matt Metchly to launch their low-carb spent barley flour company in 2019. Grain4Grain’s low-carb flour mixes won third place in H-E-B’s 2019 Primo Picks Quest for Texas Best competition, landing in about 200 H-E-B stores plus all Central Market locations.
“Every six-pack of beer produces about one pound of spent grain,” Medhin said. “After all the carbohydrates are removed in the beer-making process, what is left is mostly protein and fiber in spent barley.”
Grain 4 Grain’s patent-pending innovative technology converts the spent grain into flour in only 15 minutes, in sharp contrast to conventional methods that take hours for the barley grains to dry. The startup won the top prize of $50,000 at last October’s Tech Fuel, San Antonio’s largest equity-free cash-prize pitch competition for early-stage tech startups.
The startup’s “rapid growth since its launch in 2019 tells me that Grain4Grain has hit upon a food sustainability solution the market didn’t know it needed,” said Tech Bloc CEO David Heard.
In collaboration with Village Capital, the Kroger Co. Foundation works with startups with creative ideas to end food waste in the U.S. The Kroger Co. Zero Hunger Foundation’s Innovation Fund is a business advancement program with milestone-focused funding. Should Grain4Grain meet development milestones by the end of 2021, they will receive an additional $100,000 for a total funding round of $875,000.
“At scale, each of these solutions has the potential to create systems-level change, improve inefficiencies and prevent food waste,” said Sunny Reelhorn Parr, executive director of The Kroger Co. Zero Hunger | Zero Waste Foundation, of the 10 startups selected for the 2021 cohort.
Medhin will use the funding for opening a 6,000 square foot manufacturing facility in San Antonio near Wonderland Mall close to Interstate 410.
“The new plant will give us the capacity to produce up to 300,000 pounds of product every month,” Medhin said. “We have partnerships with Freetail and Alamo breweries for their spent barley and recently added Real Ale Brewery in Blanco.”
Medhin is working with larger-scale partners and looking for new end-users of their low-carb flour in the food sustainability space. The startup is also hiring people with facility operations and manufacturing experience for the new plant.
Grain4Grain, which also sells its products on its website, is adding four new products to its low-carb flour and pancake mix — seasoned Keto-friendly breading mixes and new flavored pancake mixes. Medhin is working with several large-scale food manufacturers to create spent grain flour mixes for restaurants. His goal is for all six products to be available for retail this summer.
“We’re looking for a pivotal partner who believes in the sustainability of our product that will help their customers,” Medhin said. “We’re also working on using our flour as a meat replacement for more sustainable vegan options.
“As a business, we looked at our strengths in manufacturing and the efficiencies in our technology to decide to sell our flour in bulk on the wholesale side.”
Focusing on wholesale opened up new options for Grain4Grain as Medhin discovered the market wants more sustainable food options.
“As the food industry produces more sustainable options, we want to the one-stop-shop for sustainable bread, ” Medhin said. “We’re striving to be the sustainable bun for vegan burgers like Beyond Burger.”