April 27, 2022

photo credit: Inseco

By Lynda Kiernan-Stone, Global AgInvesting Media

South African startup Inseco closed on $5.3 million in Seed funding led by Futuregrowth Asset Management via its Futuregrowth Development Equity Fund. The round, which is one of the largest Seed rounds closed in South Africa’s history, also included E4E Africa, Oak Drive Ventures, and additional unnamed investors.

This is the ninth investment made by Futuregrowth Development Equity Fund – according to a media release issued by Futuregrowth – that reflects the fund’s strategy of diversification, and aligns with Futuregrowth’s growing focus on backing innovative and sustainable startups across the agricultural value chain.

Based in Cape Town and founded in 2017, Inseco looks to insects to help alleviate the sustainability challenges being faced by the world today. The company feeds black soldier flies on low-value organic by-products, converting what would have been discarded in landfills into valuable, high-quality insect protein, oil, and fertilizer.

The startup has launched two flagship products: EntoMeal, a highly digestible protein meal, and EntoOil, an extracted natural oil – both of which are nutritious and sustainable alternatives to conventional fish meal and fish oil used in feed rations and pet food.

Currently, Inseco is supplying EntoMeal and EntoOil to the local aquaculture, pet food, and poultry markets, but has plans to expand across the rest of Africa, and into the European and U.S. markets.

Additional products listed on the company’s website include EntoSoil, an organic fertilizer; NutriGrubs, dried black soldier fly larvae with a nutritional profile suited to livestock rations; EntoEggs, an alternative source of nutrition for feeding fry fish; and EntoChitin, a natural polysaccharide used across multiple applications.

“Now more than ever, we’re seeing the importance of food security and sustainability, and the responsibility that we have to be a more resource efficient society for future generations,” said Simon Hazel, CEO, Inseco. “At Inseco, we believe that insects will play an important role in this transition, becoming a widely available source of sustainable protein, and an important form of nutrition to help meet the food demands of the future.”

Flying High

Today, the market for insect protein stands at approximately 10,000 metric tons. However, authors of No Longer Crawling: Insect Protein to Come of Age in the 2020s, a recent report from Rabo, estimate that demand for insect protein, mostly by the feed and pet food sectors, could reach a market of 500,000 metric tons by 2030. 

Furthermore, the total edible insect market, across all product forms (whole insect, power, meal, oil) and all insect types (black soldier fly, crickets, mealworms) and all applications (animal feed, human foods, and beverages) is expected to be valued at $4.63 billion by as soon as 2027.

And despite the challenges, such as the lack of a standardized industry framework, the psychological or societal barriers to insects as food in some markets, limited production capacity, and cost of production, there are multiple drivers of growth for the industry including the need for sustainable food sources, the reduction of greenhouse gas emissions, and the need for greater food security.

“The investment into Inseco fits well within our responsible investment philosophy,” said Amrish Narrandes, head of unlisted equity, Futuregrowth. “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 ESG case, insect protein has a superior nutritional content, which results in higher feed conversion rates compared to traditional protein sources.”

With the capital gained through this funding, Inseco intends to increase its manufacturing capacity at its Cape Town facility, and to support ongoing R&D to ensure that the company remains at the cutting edge of its industry.

“Inseco is a market leader in this space,” said Ayanda Bolani, investment analyst, Futuregrowth.  “After years of research and development, the resourceful management team has developed advanced, state-of-the-art processing capabilities, placing it well ahead of its competitors. It is currently the largest insect protein producer in the Southern Hemisphere – and is the only company in South Africa that can produce defatted insect meal and oil – a product that is in high demand globally.”

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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