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Enterra Feed Eyes World’s Largest Insect Farm in Wake of Series B Raise

August 28, 2018

Last week, Enterra Feed Corporation, an insect farming business from Canada, announced its latest round of funding and plans to construct three new insect factories in Canada and the US. The Cibus Fund, the food-focused fund managed by Asian investment group ADM Capital, led the Series B round, which also attracted new investment from PHW Gruppe, a German poultry products business, and a prominent Canadian family-owned investment group. Existing shareholders, Wheatsheaf Group and Avrio Capital, also participated.

Enterra, which has raised $10 million to-date from a Series A round in 2014, would not disclose the size of this round, but indicated that the funding puts the company’s valuation over $100 million. Each new facility will cost around $30 million with the aim of increasing the company’s production of black soldier fly 90 times.

Enterra says it has pioneered the regulatory environment around the use of insects in animal feed in North America, being the first company to receive approval from the Canadian Food Inspection Agency (CFIA) for the use of Enterra’s whole dried larvae in feed for salmonids (salmon, trout, arctic char) and chicken broilers. The company says it also led approvals in the US, with the Association of American Feed Control Officials (AAFCO) adding dried black soldier fly larvae and meal to its ingredient list for salmonids.

With its latest round of funding, Enterra is building its next facility near Calgary, Alberta, which is set to open in early 2019. An additional facility is planned in British Columbia in 2020, followed by another facility in Ohio is the US in 2021.

We caught up with VP of operations Victoria Leung to find out more about the business.

What is the background of Enterra?

We are the leading manufacturer of sustainable insect ingredients for the feed industry and have been around for 10 years, the last four year operating a commercial pilot plant just outside Vancouver. We have huge demand from our markets meaning we’re sold out most of the time so looking to expand quite rapidly as our space is emerging at a pretty quick pace. With all the knowledge we’ve gained from the last four years, we’re ready to build our second commercial production facility just outside Calgary, Alberta, where we’re moving into a 180,000 square foot facility; I can’t share the specific production volume details that will be coming out of that, but it will increase quite significantly from what we’re producing currently.

You’re not the first insect farming group to withhold details around production capabilities and funding achievements. Why is there so much secrecy in the insect farming space?

There is a race to commercialization: everyone wants to be competitive and the first to market, and to be the leader in the space, so that’s what’s fueling privacy. I’m not sure if it’s specific about our industry, but there are different ways to grow insects and rear them on a commercial scale; that information is not rocket science, but there are a few tricks to the trade that we’ve developed on our own where we’d like to keep a captive advantage. [On the funding side] we’re a privately held company, and our investors choose to keep funding details confidential. We’re confident about our position in the market with four years of experience at a commercial operation level. We do, however, like to collaborate with our competitors in some arenas such as regulation.

What types of animal feed do you produce?

A variety of different animal feed including pet food for dogs, cats, exotic fish and birds, as well as fish in aquaculture including salmon, trout and arctic char, and in poultry, feed for chickens raised at home as well as broilers raised on a commercial scale.

We are getting a lot of traction in the pet food segment right now as our black soldier fly-based feed competes with other novel proteins in the market, which are worth $1.5 billion in the US alone every day. There are a surprising number of pets with food allergies, so the market is always looking for alternative products to try on pets, and insects fit well, particularly as they’re more sustainably produced than other proteins. Generally, the aquaculture sector has a big demand as it needs alternatives to fishmeal. Insects fit really nicely as substitutes with their high digestibility and sustainable production which can be ramped up. We see a lot of demand from all different markets and even markets we haven’t really spent much time in like pig feed and cattle. There’s room for us to get more specialized as we develop products further for specific functional benefits and specific species at different stages of their lives.

What are your products?

We have three main products. Whole dried larvae are the purest form and can be fed directly to chickens and birds and also mixed with other formulated feed pellets. We also separate out the protein and fat content of the larvae, both of which represent 40% each. The high protein meal — Enterra Meal — can replace fishmeal, and the fat extract — Enterra Oil — can replace coconut oil and palm kernel oil with a similar nutritional profile. It is a healthy source of crude fat for inclusion in feed for aquaculture, poultry, and pets.

[Enterra also has a fertilizer product “made from the dried “frass” or manure of black soldier fly larvae. Loaded with beneficial microbes, it has a 3-1-3 NPK and diverse micronutrient profile that promotes plant growth,” reads the website.]

What is the exit strategy for your investors: for Enterra to be acquired one day or listed on a public exchange?

We have a few different investors at the table now who may have different strategies on how to go about this in the future but nothing is decided at this point, and we have lots of opportunity in the years ahead.

What are some of the biggest challenges of farming insects?

There are many, as with any new technology. But we’re growing livestock, tiny livestock and a lot of them and we probably have the largest livestock farm in the world in terms of numbers. So that obviously comes with a host of challenges and obstacles. When you think about poultry or aquaculture, or any type of livestock raising, they’ve had decades to refine their processes and understanding; we’ve done a lot in a very short period of time. One thing that’s unique to insects is that they do like to crawl and fly around, so that makes them harder to contain than other livestock.

What types of technologies are you using or will you be using in the new facilities?

A lot of it is traditional engineering equipment from other industries, and some custom fit large industrial equipment like cranes, dryers, conveyors, and hoppers; it’s similar to other manufacturing plants but the material we’re putting in is different, and that’s where the proprietary knowledge comes in. Sensing and IoT is a big part of it as well, making sure we have the right environment for the insects is pretty key to our success.

Any robotics?

I’ll refrain from answering that question.

Why black soldier flies and do you have any plans to farm any other types of insects?

Right now we’re sticking with BSF as they’re a really ideal insect species to work with. They’re non-invasive, they don’t bite or sting, so that’s super helpful. Also, the larvae, which is what the end product is, are full of protein and fat and nutrients making them an ideal feed ingredient. The larvae can eat a wide variety of material too, whereas other insects have more specific feed requirements. We can feed BSF a variety of pre-consumer food waste such as spoiled produce and expired bread, and that makes the process even more sustainable with the upcycling of nutrients from the waste stream, convening them into new nutrients for animals.

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