June 8, 2020

By Lynda Kiernan, Global AgInvesting Media

Seattle, Washington-based Beta Hatch, a startup focused on the commercialization of the sustainable production of insects as a protein source in animal feed, announced the successful close of A-1 funding led by Cavallo Ventures, the VC arm of Wilbur-Ellis, and Innova Memphis, an early-stage venture firm. 

Also participating in the $3 million round were Klein Private Equity Investment and Brighton Jones Investment Partners. 

This funding follows upon a $2.1 million Seed round announced by the company in April 2018, which at the time, represented one of the larger capital rounds secured in the U.S. insect protein industry, bringing total funding to-date to approximately $5 million. 

Founded in 2015, Beta Hatch applies both entomology and engineering expertise to superior genetic stock with the goal of developing systems that can disrupt existing food systems and make industrially produced insect-based, high-value proteins, oils, and nutrients for the poultry and aquaculture sectors. By doing so, Beta Hatch provides cost-effective support to meet the global demand for plant and animal nutrients.

“Whether for aquaculture, poultry or even for use in the domestic pet marketplace, we clearly see the opportunity posed by Beta Hatch in addressing the need for more sustainable sources of feed protein,” said Dean Didato, partner, Innova Memphis.

“The Beta Hatch team has engineered several innovative solutions to increase insect growth and mechanical processing efficiencies that provide a competitive edge in the space.

“In addition,” continued Didato, “…with consumer desires to know more about the origin of one’s food and its rearing, harvesting and processing, Innova fully believes that these trends will drive further market adoption of insect protein.”

Even beyond its work in meeting global protein demand, Beta Hatch is also contributing to the scientific community, having recently completed the first published assembly of the yellow mealworm genome. As an important resource for the advancement of commercially scalable insect species, the genome will be published as part of an open source article in the Journal of Insects as Food and Feed this summer.

With this new funding in-hand, Beta Hatch will be breaking ground on the construction of its new flagship facility in Cashmere, Washington, that will represent the largest mealworm production facility for animal feed in North America, with production capacity of a ton per day.

Currently working out of a facility in Sea Tac near Seattle, the Beta Hatch team also plans to expand its numbers by 10 to 20 new roles and shift its operations to the new facility early next year.

“Insects have the potential to be the world’s most sustainable protein,” said Virginia Emery, founder and CEO, Beta Hatch. “This new funding allows us to break ground on the construction of our sustainable flagship facility, so that we can scale up production commercially to meet existing demand of thousands of tons, and to continue our technology development to further bring down costs and increase efficiencies.”

Set to be on-line by early 2021, the facility will conserve energy by being partially powered by waste-heat sourced from a neighboring data center, reducing electricity demand.

Although still far from being mainstream in Western cultures, the numerous benefits of sourcing protein from insects – namely, high conversion rates, the need for less processing compared to plant protein, and being more palatable compared to algae – paired with the EU Commission’s approval of insect-derived protein for inclusion in aquaculture feed rations on December 13, 2016 – has prompted a range of startups in the space and interest from the investment universe.

This growing acceptance has been reflected in the number of startups coming online and larger investment rounds.

Most recently, in the final days of May, nextProtein, a Paris and Tunis-based producer of animal feed components and biological fertilizer from insect larvae, announced it has raised €10.2 million (US$11.2 million) through a Series A led by an investor consortium coordinated by Blue Oceans Partners.

Other insect protein startups gaining investor attention and capital include Protix, Hexafly, Ynsect, EnviroFlight, Enterra Feed, Flying SpArk, Midgard Insect Farm, Hargol FoodTech, and Millibeter N.V.

“A range of markets will benefit from access to a new source of healthy, sustainable alternative feed ingredients,” said Cavallo Ventures’ Managing Director Son Vo.

“This financing supports an essential next step toward commercialization, which will enable Beta Hatch to meet these markets’ needs while offering an innovative way to produce feed for our food, starting with aquaculture.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.