Epogee LLC, an Indianapolis firm that has developed a fat-replacement product to reduce the calories in sweets and other comfort foods, has secured $8.3 million in venture capital funding from an Indianapolis venture firm, the companies announced Thursday.
The investment comes from Indianapolis-based HG Ventures, the venture capital arm of The Heritage Group, which launched last year and is aiming to invest up to $50 million annually in private companies developing new technologies.
Epogee will use the investment to “expand current manufacturing and accelerate technical capabilities to support customers,” according to a release.
“From a business development standpoint, we’re ready for prime time,” David Rowe, founder and chief technology officer of the company, told IBJ. “Their investment and their engagement is a huge piece in helping us.”
Epogee is a fat substitute that is made from using the firm’s patented technologies to transform the elements that make up fat: glycerine and fatty acids, according to Rowe, a former Dow AgroSciences executive.
“This is all stuff that people love to eat; it’s stuff you reward yourself with,” Rowe said. “The phrase indulgence comes to mind. If we can replace most of the fat, we can cut the calories in a serving anywhere from 20 to 45 percent.”
It has received a status of “generally recognized as safe” from the U.S. Food and Drug Administration for use in confectionary products, frying, baked goods and mixes, frozen desserts, nut products, grain products, and others. Epogee is Kosher, gluten-free, allergen-free, vegan and made from natural vegetable oils, according to the firm.
It is currently being used in a product called Sweet Nothings, a line of reduced-fat chocolates made by Evansville-based Health Smart Foods and sold in health-food stores.
Rowe said the investment will allow Epogee to scale up and “create awareness, create interest and build momentum toward the marketplace.”
The company wants to provide its fat substitute to two main types of customers: those in the consumer-packaged goods industry—think of a company like Mondolez—and in the food service industry, by providing to restaurants.
This is the first venture capital investment for Epogee, which previously has been funded from investments from family and friends, Rowe said. It used to be known as Choco Finesse LLC, but the company rebranded itself last year. The new firm was created last July.
The company has three full-time employees and just hired a new CEO, John Musselman.
Musselman said in the release, "We are excited to partner with HG Ventures in our next go-to-market phase.”
"While it is clear HG Ventures' capital is fully behind us, we know they can bring a lot more to the table to help us expand our operations and product offerings,” Musselman said.
Rowe said it became connected with HG Ventures because one of its ingredient suppliers, Indianapolis-based Monument Chemical, is owned by The Heritage Group.
Kip Frey, managing partner of HG Ventures and executive Vice President of The Heritage Group, said, “Epogee has developed an incredible product that has the potential to dramatically change the food industry.”
“The investment in Epogee builds on our relationships in food innovation and exemplifies HG Ventures’ commitment to investing in emerging companies commercializing advanced material technologies,” he said in the release.
HG Ventures’ first announced recipient of venture capital funding was revealed last month: Oakland-based Renewal Mill, which makes food ingredients using waste from other food manufacturers.