An Edinburgh-based biotech startup which turns whisky distillation by-products into pet and fish food has received investment of £1 million.

MiAlgae produces microalgae, which is high in omega 3 and other nutrients, from distillation by-products and plans to sell it to pet food manufacturers and fish farm operators. It estimates that one tonne of its algae can feed up to 30 tonnes of wild fish.

New investor Hillhouse Group has joined existing backers Equity Gap, Scottish Investment Bank and Old College Capital in the new funding round. MiAlgae plans to use the money double in size, commission a demonstrator plant in East Lothian and hire five new staff in the next 12 months.

Andrew Vernon of Hillhouse Group said: “MiAlgae has essentially taken a by-product from one industry and turned it into a solution for another industry. Through the application of biotechnology, MiAlgae is finding solutions to feed the world’s population, and with the global aquaculture industry set to double in size in the next ten years, this is a very promising business indeed.”

MiAlgae was founded by Douglas Martin in 2016 while he was studying Biotechnology at the University of Edinburgh. The business is supported by Edinburgh Innovations, the University’s commercialisation service, which also manages Old College Capital, the University’s venture fund. It is based at the Heriot-Watt University Research Park.

Martin said: “I am really pleased that with this investment we can turn our attention to growing the business. We plan to target the pet food and aquaculture industries with our sustainable, ocean-friendly, algae-derived omega 3.

“I am proud that we operate as part of the circular economy where, by using a low value co-product from the whisky industry, we are creating a valuable supply of nutrients for the animal and fish food industries, thereby using the planet’s resources more efficiently. There is no doubt we will see a rapidly growing market for our product.”

MiAlgae says the global aquaculture market is worth more than £50 billion a year and expected to increase by 100% by 2030. Its original three investors shared a £500,000 funding round in June 2018.

Fraser Lusty, investment director at Equity Gap, said: “Since our last investment in MiAlgae 18 months ago, the business has achieved a great deal, designing and building its pilot plant, making its first sales to a premium dog food company, and beginning production with its first large scale tank.

“The business now turns its focus to commercialisation and scaling up. The global pet food market is worth $100 billion and growing at around 5%. MiAlgae plans to supply customers in both the pet food market and the aquacultural industry in the next 12 months. This is an exciting business, and one to watch over the next couple of years.”

Scottish Investment Bank director Kerry Sharp said: “MiAlgae perfectly epitomises Scotland’s willingness to take the lead on climate-related issues. By turning the by-products of manufacturing and industrial processes into a valuable resource, they and other pioneering companies like them are completely redefining the concept of waste. We’re delighted to continue supporting MiAlgae and look forward to helping them realise their commercial and environmental ambitions.”