How This Startup Raised a $1.7 Million Seed Round on Chicken-Less Eggs

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This story appears in the April 2016 issue of Entrepreneur. Subscribe »

Eggless egg whites sound like another vegan treat, but San Francisco-based startup Clara Foods is shooting for omnivores. It inserts genes for egg whites into yeast, which then ferments in tanks, like beer, and creates a product that is genetically egg but never involved a chicken. Clara cofounder and CEO Arturo Elizondo thinks that will appeal particularly to those who want to eat eggs but avoid the messy egg industry: Last year’s avian flu outbreak, for example, cost the economy $3.3 billion and resulted in the disposal of more than 45 million U.S. hens. Yeast, meanwhile, is drama-free.

Chicken-less egg whites -- you must have developed quite the elevator speech.

We thought one pitch would work for everybody. Just not using a chicken was so revolutionary -- we thought that would be enough. But different investors were interested in different things. Some were true foodies. They asked, “You can create fluffier meringues?” Others were focused on sustainability: They really wanted to do something for the world and the environment.

Idealistic venture capitalists? We don’t get that a lot. What about the bottom line?

Investors want viable businesses that will upend existing models. When you look at how much water and feed it takes to turn animals into the end products, chickens have a very inefficient energy-conversion rate. It takes 636 gallons of water to produce a dozen eggs. The only things worse are lamb and beef. And it’s not going to get any more efficient. We’re already cramming animals on top of each other to maximize profits. It’s hard to imagine water and soy will be any cheaper in the future, when we need to feed millions more people.

What does a chicken-less egg white factory look like?

Like a brewery -- a high-tech brewery. We’ve joked about having glass walls, so we can have people tour or have science classes come, and we’ll say, “This is what a 21st-century food production system looks like.” If you ask any major egg producer if they would have glass walls, very few would be into it. Paul McCartney said that if factory farms had glass walls, everyone would be a vegetarian. It’s illegal now, in some states, to actually go inside a factory farm and try to record what’s going on there.

How long do you expect it will take consumers to warm up to an idea like this?

I think a lot of our food will be coming from breweries like ours. Yeasts are factories in themselves, so why use really inefficient ones like livestock? We’ve already replaced pigs for insulin production. Another example is cheese, which is made using rennet, an enzyme that curdles the milk. That enzyme once had to be extracted from a calf’s fourth stomach -- so you had to kill the animal, take out the stomach, open it up and get the rennet out. But now, more than 90 percent of cheese in the U.S. uses the exact same process we’re using. And now we’re replacing chickens for eggs. 

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