October 13, 2020

By Lynda Kiernan, Global AgInvesting Media

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 – the largest of which has just been announced by Paris-based insect farming startup Ÿnsect. 

Having already raised a record-setting $148 million Series C last year, the company has now announced that it has extended the round by another $224 million to land at $372 million – bringing total funding to-date to $425 million, or more than what was raised by the entire global insect protein sector last year. 

Led by Astanor Ventures, this round also included Robert Downey Jr.’s FootPrint Coalition; Hong Kong-based Happiness Capital; Supernova Invest; and Luxembourg-based Armat Group, who joined the original Series C investors Bpi France; Talis Capital; IdInvest; Finasucre; Bois Sauvage; and Vis Vires New Protein Capital. The round was also supported with capital committed by a bank consortium including Caisse des Dépôts, Crédit Agricole Brie Picardie, and Caisse d’Epargne Hauts-de-France, along with Arkea, Crédit Mutuel, BNP Paribas, Credit Agricole Franche Comté, and Caisse d’Epargne Normandie.

“We have sealed a significant and innovative financial partnership with a pool of banks, led by Crédit Agricole Brie Picardie and Caisse d’Epargne des Hauts de France, to support this next phase of growth – with the help of Caisse des Dépôts, our partner for the real estate project financing,” said Françoise Lesage, CFO, Ÿnsect. “Their commitment to the development of French territories, supported by a strong desire to sustain French innovation, is in complete harmony with Ÿnsect’s mission.”

Founded in 2011 by Antione Hubert, Alexis Angot, Fabrice Berro, and Jean Gabriel Levon, Ÿnsect is working to create a sustainable food system, and to meet growing global demand for protein through tapping into insect protein at a mass-market scale.

As global protein consumption is on pace to climb by 52 percent between 2007 and 2030, Ÿnsect’s farming operations focus on the Molitor – a small common beetle also known as the mealworm – to make high-quality natural ingredients for pet foods, aquaculture feed, and plants.

The company’s patented cultivation process produces a variety of highly-digestible protein and fertilizer products suitable to replace animal proteins consumed in the supply chain by fish and livestock, by pets, or as agricultural inputs. Studies have demonstrated that using Ÿnsect protein in place of traditional animal protein or chemical fertilizers have resulted in a 34 percent increase in yields of rainbow trout, a 40 percent mortality reduction for shrimp, a 25 percent increase in rapeseed yields, a 25 percent reduction in mortality for sea bass, and a reduction in skin diseases among dogs.

“Our ambition is to revolutionize the food chain which, literally, starts from the basics: insects and soil. It concerns all of us, whether we are meat lovers or vegans because it is how our plants and animals are fed,” said Antoine Hubert, co-founder, president, and CEO of Ÿnsect . “Ÿnsect isn’t just about insect farming: with climate change and increasing populations worldwide, we need to produce more food with less available land and fewer resources, so that we’re not clearing forests and emptying our oceans. We believe Ÿnsect can play a pivotal role in this global solution.”

Looking Up

As the global pandemic creates havoc among supply chains, more and more agricultural and food companies are looking for ways to increase sustainability and incorporate circular economies in their business models.

“Three years ago, we were more pushing and advocating our technology,”  Hubert told Fortune. “The shift appeared to begin with the pandemic, as the world languished through months of lockdown, sending global supply chains into disarray. In the past few months, more companies are coming to us. Agricultural companies want to aggregate their waste.”

This peaked interest has led to Ÿnsect having signed contracts valued at $105 million. It plans to use this capital to complete construction of what the company claims is the world’s largest and first carbon-negative vertical farm, meaning it generates zero waste, sells everything that is produced, and has a sequestered value chain, avoiding more CO2 emissions, according to analysis conducted by Quantis.

‘Uniquely, Ÿnsect offers its customers significant nutritional advantage that helps them improve yields,” said Eric Archambeau, co-founder and managing partner of Astanor Ventures. “Its offer, combined with its proven ability to scale and a carbon negative supply chain, means Ÿnsect is bringing a highly disruptive scalable new technology that is capable of revolutionising an important segment of our most vital sector, agri-food, guided by a deep understanding of, and respect for, nature.”

Archambeau continued, “Astanor’s founding thesis has been to back globally ambitious businesses creating systemic change in food and farming while using technology to protect and restore a fragile ecosystem and we couldn’t be prouder of what the Ÿnsect’s team has achieved so far.”

With backing that will enable the company to become profitable, and its factory on pace to be online in a year, the company has its eyes set on North America, seeking out potential sites for a U.S.-based plant to likely be a joint venture with a global ag company, Hubert hinted to Fortune, adding, “It will be easier for us to rely on them for permitting, subcontracting for building, and so on.”

However, once trials are completed with the U.S. Food and Drug Administration (FDA) and the USDA, Ÿnsect is planning to sell on the U.S. insect-based pet food market by next summer. 

“Ÿnsect has proven resilient throughout the Covid crisis, with minimal disruption to construction and production,” said Hubert. “As a business currently focused on the production of animal feed and plant nutrition, protective equipment and the most stringent hygiene standards are the norm. We’ve shown that we can weather significant shocks like coronavirus, which in the coming decades is going to be a significant differentiator between businesses.”

– 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.