SOUTH AFRICA – South African insect protein producer, Inseco, has raised US$5.3m in what is termed as the country’s largest ever startup seed funding round, to boost its production capacity.
The round was led by Futuregrowth Asset Management, with participation from E4E Africa, Oak Drive Ventures, and a raft of private investors, reports Feed Navigator.
Inseco currently produces more than 100 metric tons of defatted insect meal and oil per month from larvae of the black soldier fly, branded as EntoMeal and EntoOil, at its state-of-the-art 10,000m² production facility in Cape Town, which it took over from AgriProtein.
AgriProtein was part of the Insect Technology Group, which went into liquidation in 2021 as its financial woes built up.
Inseco plans global expansion
Part of the funds raised by Inseco in this seed round will be used to increase the manufacturing capacity at that Cape Town facility to meet rising product demand as well as to conduct continuous research and development.
At present, Inseco supplies the local aquaculture, pet food and poultry market, but it is planning to expand into the rest of Africa, Europe, and the US.
The company is targeting what it sees as a 500, 000-ton market for insect protein by 2030, and a global pet food market worth US$38 billion, alongside the international aquaculture sector.
Innovative production model
To expand its production capabilities beyond its Cape Town facility, and meet the rising demand for its products, the insect ingredients company has developed an innovative production model.
Inseco utilizes a decentralized production mode whereby the breeding of the insects is done at its central facility, and the growing takes place at the source of the organic by-products. The biological inoculant – insect eggs – is then transported to the growing facility.
Depending on location and plant size, the processing step – where the live insects are processed into a meal and oil-is either done on-site at the growing facility, or at a centralized location.
This solution offers waste-generating organizations a way to manage their organic by-products more sustainably, while also generating a competitive financial return.
“We are finding a new home for food products that would have been otherwise destined for landfill. After years of research, we’re now ready to deploy our technology in the market,” said Simon Hazell, Inseco’s chief executive officer.
It is now in the process of partnering with various organizations, in that respect, with those entities either based locally or in international markets.
Amrish Narrandes, head of unlisted equity at Futuregrowth, said the financing of Inseco aligned with the equity firm’s mandate and investment philosophy as a “responsible investor.”
Inseco’s management team, he continued, is taking the business to new heights, while improving the sustainability of the global food production system.
“In comparison to traditional protein sources, insect protein has an inherently lower environmental impact, as the process directly reduces food waste, involves minimal greenhouse gas emissions, limited water usage and makes zero use of arable lands.
“In addition to the strong environmental, social and governance (ESG) case, insect protein has a superior nutritional content, which results in higher feed conversion rates compared to traditional protein sources,” he added.
Inseco competes globally with enterprises such as the Netherlands’ Protix BV, France’s Ynsect SAS and Innova Feed, Canada’s Enterra Feed Corp and US company EnviroFlight LLC.