Israeli food-tech firm Phytolon has raised $23.6 million in Series B funding to accelerate commercial production of its fermentation-derived natural food colorants, as global regulatory pressure mounts against synthetic dyes. The investment signals growing demand among food manufacturers for stable, FDA-approved alternatives to petroleum-based colorants like Red Dye No. 3 and Red 40.
Funding and strategic backing
The Series B round was led by an undisclosed strategic investor, with participation from existing backers Millennium Foodtech, NextGen Nutrition, Colorcon Ventures, and Yossi Ackerman. The final tranche closed in April 2026. The funding will support broader commercial rollout of Phytolon's precision-fermentation pigments, which use baker's yeast to produce targeted color compounds.
Product portfolio and FDA approval
Phytolon's lead product is a beetroot-derived red colorant that received FDA approval in February 2026. It is heat- and pH-stable and available in liquid and powder forms, suitable for bakery, dairy, confectionery, frozen, and savory applications. The company's platform also produces yellow and purple pigments, which can be blended to create orange, pink, and red shades.
Regulatory and market drivers
The FDA banned Red Dye No. 3 in 2025, with the restriction effective January 2027. The additive is already restricted or banned in the EU, Japan, Australia, and New Zealand. Updated FDA labeling guidance now allows "no artificial colors" claims on products using natural colorings, even if added color is present. Major CPG firms including Nestlé, Mars, Kellogg's, and General Mills are reformulating to remove synthetic dyes.
What buyers should watch
Innova Market Insights data shows 28% of major food company product launches in 2025 still contained artificial dyes, indicating substantial reformulation needs. Phytolon joins a growing field of fermentation-based pigment developers—including Chromologics, Octarine Bio, and Sparxell—that are attracting investment. Importers and formulators should monitor Phytolon's commercial distribution timeline and evaluate its colorants for stability and cost competitiveness in their specific applications.
China sourcing context
While Phytolon is an Israeli company, its fermentation-derived pigments could offer an alternative to synthetic dyes commonly sourced from China. As global regulatory divergence widens—with China still permitting many synthetic dyes banned elsewhere—buyers seeking harmonized supply chains may consider natural colorant options from non-Chinese producers for export-oriented products.
Source: Read the original report | Published: May 29, 2026