Ynsect SAS, a startup in the insect farming industry, has successfully raised additional funding to support its global expansion plans and prioritize producing higher-value food for both pets and humans.
Having recently closed a financing round of €160 million ($175 million), the French company’s total funds raised to date amount to roughly $625 million. With the aim of increasing profitability in the face of soaring costs of energy, raw materials, and debt, the company is transitioning away from animal feed – such as mealworms for fish – and towards higher-margin products, such as pet food and food ingredients.
“We are really focused today on where the value, the revenue are the highest,” and where the climate and biodiversity footprints are best, Ynsect co-founder Antoine Hubert said in an interview. “Animal feed is a good market, but it takes more time to make a positive financial and economic impact.”
Insects have gained recognition as a sustainable protein source, with regulatory approvals in Europe. However, they remain a niche market and comparatively expensive food item in the West. Additionally, securing funding for startups and new technologies has become increasingly challenging due to heightened investor scrutiny and limited funding opportunities.
Hubert emphasized the difficulties the industry confronts, noting that investors are now more thoughtful about their investment decisions.
“It’s positive to see in this tough environment, to find support and people who believe in what you are doing,” he said.
The identities of the investors in the latest funding round were not disclosed by Hubert, as Ynsect is currently in discussions for a second tranche of funding set to conclude later this year. Ynsect has previously received backing from investors such as Astanor Ventures, Bpifrance, and Robert Downey Jr., who played the lead role in the Iron Man movie franchise.
Ynsect, whose farms are located in France, the Netherlands, and the US, is currently expanding its operations in Mexico and exploring potential entry into the Asian market. With approximately $175 million in secured supply contracts and ongoing negotiations for customer deals worth around $1 billion, the company is poised for further growth.
Ynsect is pursuing an “asset-light” business model that involves a combination of joint ventures and licensing agreements, requiring less capital investment. This shift in strategy will result in a reduction of the company’s global workforce of 360 employees by approximately 20%. However, Ynsect still intends to hire around 40 people for new positions.