The “Series B” funding was led by London-based venture capital firm Felix Capital and apart from Fonterra included existing investors in YFood, Five Seasons Ventures and New Ground Ventures, YFood said in a release.
YFood declined to say how much each company had invested.
The company, set up in 2017, makes vegetarian bars, drinks and powders as snacks and meals aimed at supplying balanced food for people on the go, which are sold in over 13,000 shops in most European countries.
YFood said it will use the funds to expand further in Europe. It recently launched an online shop in the UK.
It will also draw on Fonterra‘s expertise in ingredients, intellectual property and patents to invest more in research and product development.
“This strategic partnership enables us to utilise Fonterra‘s knowledge to continuously improve our existing products in terms of taste, nutritional value and added benefits like we have done in the past,” said YFood co-founder Noël Bollmann in a statement to Reuters.
The investment comes as Fonterra, the world’s top dairy exporter, offloads overseas milk production centres as part of a “back-to-basics” strategy aimed at cutting debt after its ill-fated overseas expansion saw profits smashed.
It has also been looking for alternative types of nutrients for its products as appetite for meat substitutes rises around the world.
Last year, the company bought a minority stake in U.S.-based Motif Ingredients, a start-up using fermentation technology to create ingredients that mimic milk and egg proteins.
It also comes as the global dairy market struggles with falling demand for milk and other products as the foodservice sector shuts down due to the coronavirus pandemic.
Felix Capital’s portfolio includes the likes of food delivery company Deliveroo, Farfetch, Peloton and HungryPanda.