French startup Ÿnsect has made insect farming its mission. It is a symbol of the ambition that characterizes the ag innovation sector. Founded in 2011 with an audacious plan to produce animal feed and pet food from sustainable insect protein, Ÿnsect is now a global front-runner. The company’s mission received national attention when Hollywood actor Robert Downey Jr. publicly endorsed it during a Super Bowl weekend appearance on the Late Show in 2021. The company has since raised more than $600 million from investors that include a number of impact-focused firms such as Astanor Ventures and the French public investment bank Bpifrance. Sadly, it has recently gone into judicial liquidation, or in other words, totally judicial aware bankruptcy because of insolvent.
Ÿnsect’s lofty goals prompted the company to open a 240-acre/100-hectare facility in Northern France that is dubbed Ÿnfarm. This “giga-factory” was meant to produce insect protein at a completely different scale than had ever been tried before. The facility went on to squander hundreds of millions in federal funding. This was even before the company proved out its business model or fully understood its unit economics. By 2023, Ÿnsect announced a jaw-dropping net loss of €79.7 million, or about $94 million. This enormous loss — a post-pandemic record — calls into question the company’s financial viability.
In 2021, Ÿnsect’s revenue jumped to €17.8 million, or about $21 million. This impressive accomplishment reflected their early success and set the stage for the complications that would come after. Acquiring Protifarm allows Ÿnsect to build on its strategic move of diversifying its offerings. This fledgling Dutch venture is focused on raising mealworms for human food uses. This acquisition ultimately became the litmus test. As market conditions shifted, Ÿnsect realized that investing in a segment that would remain marginal for years was a critical misstep.
Antoine Hubert, the CEO of Ÿnsect, recognized the difficulty that increasing costs for energy, raw materials and capital have had on the sector. He stated, “In an environment where there is inflation on energy and raw materials but on the cost of capital and debt, we cannot afford to invest loads of resources in markets which are the least remunerative (animal feed), while you have other markets where there is a lot of demand, good returns and higher margins.”
In 2023, Ÿnsect narrowly averted a financial catastrophe by refocusing its strategy away from these lower-margin segments towards pet food and other higher-margin segments. Hubert remained upbeat about the pivot. Perhaps most importantly, he touted that pet food and fish feed will remain our biggest drivers of our revenues in years to come. Sadly, this shift in strategy didn’t happen soon enough to save the company’s sinking ship.
The downfall of Ÿnsect is a cautionary tale on the challenges of scaling breakthrough agricultural technologies. Professor Joe Haslam remarked on this phenomenon, stating, “Ÿnsect is a case study in Europe’s scaling gap. We fund moonshots. We underfund factories. We celebrate pilots. We abandon industrialization.” This underscores a key, wider issue all startups experience when they’re unable to grow past early funding rounds into long-term operational viability.
Ÿnsect’s meteoric rise and equally as spectacular fall. Its journey serves as an inspiring and cautionary tale of the promise and peril present in the fast-growing agtech landscape. The company’s founders aimed to lead a revolution in sustainable food production but ultimately succumbed to financial pressures and market realities that proved insurmountable.