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Photo credit: Protifarm

Protifarm raises Series B to scale robot-grown beetle “tofu”

December 12, 2019

Insect farming companies have closed a few big venture rounds in the past 18 months: France’s Ynsect, South Africa’s AgriProtein, Canada’s Enterra. What they all have in common is that they’re in the business of producing high-quality protein to feed the protein sources humans consume, like feed for fish or poultry farms.

Netherlands-based Protifarm has caught investor interest by taking insect protein straight to humans. The company raised an undisclosed amount of Series B funding to scale up its farm in Ermelo, in eastern Netherlands, and begin exporting its beetle-based “tofu” and protein powders to ingredients buyers outside of Europe. Protifarm’s CEO Tom Mohrmann says the round was well above the $10 million mark reported elsewhere.

Oost NL, the East Netherlands Development Agency, backed the round, alongside several unnamed investors.

Protifarm raises the beetle species alphitobius diaperinus, more commonly known as the “buffalo beetle” or (enticingly) the “litter beetle.” It raises the females and harvests their larvae for production into soluble powders that can be mixed into items like nutrition bars and sports drinks, and also into a tofu-like protein cake that Protifarm claims can be cooked or grilled like meat.

Operating at full capacity, the company’s 3,000-square-meter facility can raise enough bugs to meet the daily protein requirements of 90,000 people.

Insects and the “vegan lifestyle”

Protifarm’s general rationale for insect farming is the same as feed-based insect farmers: bugs are packed with nutrients; they multiply quickly and have short lifecycles; they require far fewer resources to raise than other animals, emit minimal amounts of CO2, and also solve another problem: they can consume waste.

But bugs also fit with another trend: what Protifarm’s CEO Tom Mohrmann calls (somewhat controversially) a “vegan lifestyle.”

“The number of vegetarians and vegans isn’t growing that much. What is growing is the number of people with that lifestyle,” Mohrmann tells AFN, perhaps referring to what’s more commonly known as flexitarianism. That means healthier food choices and conscious meat consumption. It’s a trend supported by the weekly tide of alternative-protein venture capital news. (This week’s exhibits: plant-based ingredients company Nutriati’s $12.7 million Series C round, plant-based meat company Meatable’s $10 million seed round, and Perfect Day’s $140 million Series C.) 

But growth of the vegan protein sector doesn’t mean consumers are eliminating meat and animal products from their diets. “There’s a high correlation between vegan [product sales] and expensive meat,” Mohrmann claims. “That’s to do with choosing healthy and sustainable foods. People want to change their lifestyles.” 

Insects fit into that picture for all of the aforementioned reasons around waste and resources. Mohrmann also argues that many of the ethical issues around animal consumption don’t apply to insects. The beetles Protifarm raises naturally have short life-cycles—28 days—and live in densely-packed colonies amid their own food and waste streams.

“For this species, if you pull them apart, they’ll all be on top of each other again in a minute. That’s their optimal climate,” explains Mohrmann. “It’s not like bringing animals together on a small piece of land.”

He adds: “But yes, we are killing billions of animals. I can’t argue that.”

Netherlands loves bugs?

Protifarm isn’t the first to use insect farming to bring new protein products to the mass market. Indeed, the company got its start in earnest with the acquisition of Kreca Netherlands, a decades-old insect ingredient and feed producer, in 2014.

The Netherlands hosts a number of other companies selling bug-based products and ingredients for human consumption: Tjirp makes cricket-based Dutch croquettes, or “bitterballen”, De Krekerij makes cricket burgers, and Cricket One (based also in Vietnam) takes a similar approach to Protifarm, selling cricket-based powders as a food ingredient.

Few have announced sizable funding rounds, however. Mohrmann says he believes Protifarm’s market advantage is that they have operations that can produce both at scale and affordably for the consumer market.

“If you’re selling two burgers in the grocery store for €8, that can never be sustained,” he says, alluding to the cost of other alternative-protein retail products. “Insects will always be niche and a little more expensive [than other protein sources], but our objective is to offer affordable ingredients to the market.”

To deliver affordable products, Protifarm has to scale-up its operations enough that it can run cost-effectively. The key to doing that is high-tech facilities and operational automation, says Mohrmann, who adds that this is also the only way to safely rear and scale from millions to billions of organisms. Protifarm’s facility in Ermelo is a fully “robotized” vertical farm, which is well suited for buffalo beetles because they naturally live in close proximity to one another.

“If the food industry wants to do this at large scale, there has to be automation. Otherwise you’re hiring hundreds of people,” Mohrmann says.

Also read: “Inside Insect Farming: Former CEO Reveals Tactics & Trends.”

Mohrmann adds, however, that some manual farming processes must still be translated; the few people working on Protifarm’s site are in tune with the conditions and issues in the vertical facility and the overall wellness of the animals.

Sort-of natural selection

One of Protifarm’s other potential advantages in achieving scale is its use of selective breeding to decrease the life-cycle of the buffalo beetles it raises. It has reduced the bugs on its farm to a 21-day life cycle—a process made possible only because of the insects’ already short lifecycle.

“That’s just through natural selection, not genetic modification. We have been developing the stronger animals that can convert faster to the pupae phase”—when insects reach maturity—“and grow faster,” Mohrmann explains. “When you can increase your capacity by 25%, that’s massive.”

Protifarm’s products are currently being used in health bars, pastas, burgers, and sports nutrition products across Europe, including the Netherlands, France, Germany and Spain.

The company intends to use the funding round to ramp up production at its Ermelo facility, which is currently operating at 50% capacity, and to begin developing relationships with ingredients buyers in North America and Asia.

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