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The future of food: How startups are revolutionizing in the insect farming sector

Written by Aalia Shah Published on 

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Insects have long been considered as an alternative source of protein – Here’s how the sector is growing and the challenges they face currently.

As food demand grows, the world is constantly on the lookout for alternative sources of protein. Insects can provide protein to livestock at a lower environmental cost, in addition to recycling organic waste.

Wissam Adli, the Managing Partner at VC firm Honey Capital, commented, “There is a massive opportunity for the right player to disrupt the USD 400 billion global animal feed market as conventional protein sources like soy and fishmeal put pressure on our natural resources and have reached the boundaries of sustainable production.”

A simple infographic to show the massive opportunity in insect farming. Image courtesy of author.

Given the high level of animal consumption in today’s world, there’s just not enough ingredients to feed the animals with the growing demand forecasted. Many insect farms are also providing a carbon solution which will help in the race to reduce climate change. Hence insect farming can be seen as the most efficient way to produce protein without a carbon impact.

1. Ÿnsect- A leading startup in the insect farming sector

Ÿnsect provides products and services that operate in the agro-food and environmental biotech industries. It uses the potential of insect nutrients and behaviours to develop novel products and services in collaboration with their clients. Since 2011, Ÿnsect has been transforming farmed insects into premium animal nutrition. They are developing innovations to farm insects at large scale and automating processes to turn insects into the highest quality raw materials for animal feed. Its unique know-how makes Ÿnsect a preferred partner among agri-food professionals, laboratories, investors, public institutions, and insect industry farmers.

This French-based insect farming startup has raised $399.3. It has 21 different investors and is currently at Series C. Investors in the insect farming startup are mostly European and Asian venture capital firms, banks, and government institutions. However, this round included a couple of U.S.-based VC firms, including a new fund named Footprint Coalition that was created last year by the actor Robert Downey Jr. The firm says it is a “media and investment group using robotics and nanotechnology to clean up the planet.” Its other investment is a bamboo-paper company called Cloud Paper, which also counts Salesforce CEO Marc Benioff as a Seed investor.

A protein dryer, where insects are dried and turned into animal protein.
A protein dryer, where insects are dried and turned into animal protein. Image courtesy of author.

The company chooses to focus on farming the ‘mealworm’, feeding it wheat bran over a 70-day life cycle. Ÿnsect uses a vertical farm which minimises the amount of space needed. Their automated system moves the trays of mealworms around the factory at various stages of the process. In fact, the company has some 40 technology patents, and since it was founded in 2011, it has raised almost $400m, making it the most highly funded upstream agritech startup outside of the US. Instead of human consumption, the main market for Ÿnsect is the food for commercial fish farms market. At present, due to health concerns related to BSE (mad cow disease), EU legislation effectively limits the types of animals that can be fed with insect-based protein, but the company is confident that the market will open up soon, and they are looking forward to supplying high protein feed to poultry and pig farmers (they hope to have the green light in a year).

“Ÿnsect is becoming the world’s largest insect producer, whatever the species, thanks to our unique highly scalable and pioneering technology,” said Ÿnsect CEO and chairman Antoine Hubert

“Enabled by deep tech, the entire production process — from feeding to controlling the health and welfare of our insects, and from the sensors used for quality control to harvesting mature insects — is automated,” said Hubert. “We have 25 patents covering our technology, the products themselves and their different applications, giving Ÿnsect the world’s largest insect patent portfolio.”

2. NextProtein- another startup in the insect farming business.

NextProtein, also based in France, was launched to help tackle land and resource scarcity using insect protein as feedstock. They have raised a total of 11.6m EUR and recently closed a $11.2m Series A to scale up insect production in Tunisia. Leading the round were a group of investors drawn together by Blue Oceans Partners, including Telos Impact and RAISE Impact. Further support came from Mirova and Althelia Sustainable Ocean Fund, along with Japan’s Kepple Africa Ventures and Aucfan Incubate Inc (since its founding in 2015, NextProtein has also secured funds from investors including Kima Ventures and angels Khaled Helioui and Cyril Grislain.)

Like most start-ups, NextProtein began in a garage back in 2014. It was born from the personal and professional ambitions of its founders, who were searching for solutions to change agricultural food production. The founders – Syrine, an Emergency Operations Specialist at the Food and Agriculture Organisation of the UN, and Mohamed, a Grammy-nominated chemical engineer, identified that they could combine organic cycles of nature with the scalable efficiency of technology, to produce an alternative to wasteful and unsustainable agricultural systems.

3. FlyFarm

Hong Kong-based agritech startup FlyFarm, which raises black soldier flies for pet, poultry and fish feed. FlyFarm recently secured USD 1.2 million in seed funding to develop their heavily automated cloud-connected pilot farm in Brisbane, Australia where the livestock industry contributes AUD 31 billion (USD 22 billion) to the national economy annually.

The mission of Flyfarm is to upcycle the useful proteins in organic waste streams into insect protein for animal feed and to do so with negative emissions. They are looking to become a global agri-tech business with a network of cloud-connected, highly automated, BSF larvae farms that up-cycle organic waste into high-quality protein for animal feeds and other sustainably produced by-products

The future of this industry

Challenges in production and legislation are keeping insect farms and production for livestock feed from going mainstream. While plant-based meat companies such as Impossible Foods and Beyond Meat are expanding at an impressive rate, insect farming investors are grappling with scaling up. Agritech companies need to make use of robotics, IoT and cloud-based software together with AI algorithms in order to streamline processes, cut operating costs, and attain commercial success.

Insect production, despite the millions of dollars invested in automation, still needs to be more efficient, and current production is so expensive that it can’t compete with common feeds like soy and fishmeal.

Finding food for insects can also be problematic. Many large and small insect growers rely on food scraps from companies and landfills. However, this option is legally restricted in some countries. The E.U. currently only allows live insects and insect oil to be fed to fish. In the United States, edible insects are considered as food additives and only the black soldier fly has been approved as an ingredient for feed in aquaculture. In Canada, black soldier fly larvae can be fed to poultry and farmed fish.

The environment is friendlier in Asia, where insects have historically been considered as animal feed and a good source of protein. There are no specific regulations that limit their use in China and South Korea.

However, the sector of insects as food and feed is developing fast, organizations are being formed to embed the industry in a more conducive environment and the sector can only progress when the insect industry, the academic world, governmental organizations and public society closely cooperate.

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This article was first published here.

Aalia Shah is a Tech enthusiast and a Masters in Finance student at the London School of Economics, where her core focus is on Venture Capital, Private Equity, and Entrepreneurial Finance. She has spent time experiencing as much of the tech ecosystem as she can, from Bank of America Merrill Lynch, Google, Fintech startups, Venture Capital, and even taking part in a Kickstart Accelerator and teaching herself how to code along the way (with help from Code First Girls). When not studying or working in Venture Capital, she spends her free time interviewing innovative Entrepreneurs, Business mentors and VC Investors for the LSE’s Founders’ Club. She is a supporter of Diversity and is happy to help other women get into startups and Venture Capital.

Disclaimer: This article was written by a community contributor. All content is written by and reflects the personal perspective of the interviewee herself. If you’d like to contribute, you can apply here

WRITTEN BY

Aalia Shah

Aalia Shah is a Tech enthusiast and a Masters in Finance student at the London School of Economics, where her core focus is on Venture Capital, Private Equity, and Entrepreneurial Finance.

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