Buggin' Out: Can Innovafeed Salvage France's Alternative Protein Dreams?

France has long been at the forefront of the insect protein revolution, positioning itself as a global hub for alternative proteins. As the world races to develop sustainable food sources, the insect protein industry has been heralded as a potential game-changer.

This concept aligned with major French tech goals set out by the government such as Green Tech and Tech for Good. In addition, these companies were are the vanguard of "lab-to-fab" goals that called for leveraging the nation's Deep Tech prowess to re-industrialize the country. With strong government support, including subsidies, favorable regulations, and strategic partnerships, several insect-based startups emerged with ambitious visions.

Alas, most of those bug dreams have been squashed.

Ÿnsect filed for court protection last year as it sought to raise additional capital to complete the construction of its mega-bug factory. The company had raised more than $440m over its lifetime, including $140m in debt. But it bet big that it could get a massive plant built and operational. When construction was delayed, the company changed CEOs and raised another $140m but it still wasn't enough. With investors swatting the company away, the bankruptcy administrator overseeing the file launched a desperate call for buyers by February 17. None have emerged, and so the company is expected to formally file for bankruptcy.

Meanwhile, Agronutris, placed its holding entity, EAP Group, into a similar safeguarding proceedings earlier this year. In a statement, the company said it wants to restructure debt and optimize costs. The company raised €100m a couple of years ago to scale up. But while its factory in Ardennes is operational, the company said the economy and the negativity surrounding the sector had it tough to raised additional money.

With these two hopefuls floundering, that leaves just one major bug startup to carry the flag: Innovafeed.

In sharp contrast, Innovafeed appears to have scaled successfully with strategic expansions and international investments. This past year the company has made a flurry of announcements that indicate it is gathering momentum.

Given the stakes for France's industrial economy, I want to look at how Innovafeed's strategy has left it poised for success. I'll add some notes of caution to that claim at the end.

Innovafeed’s Blueprint

Building industrial-scale insect protein facilities is an expensive endeavor. Both Ÿnsect and Micronutris decided to build big factories to scale. They required big capital expenditures even as they were not in a position to generate much revenue.

Innovafeed took a different route. It rapidly expanded its footprint, forging strategic alliances and successfully deploying its capital-intensive business model.

1. Strategic Partnerships and Co-Location Model

One of Innovafeed’s most significant advantages is its industrial co-location strategy. Innovafeed partners with major agricultural and food-processing players to optimize production efficiency and reduce costs.

For example, its Nesle facility in France operates in close collaboration with starch giant Tereos, using byproducts from its partner’s operations to feed black soldier fly larvae. This closed-loop system minimizes waste, lowers production costs, and enhances sustainability.

The company is also leveraging the same approach in the United States with its Decatur, Illinois, plant, in partnership with agricultural giant ADM. This strategic collaboration ensures a steady supply of feedstock, reducing supply chain risks that have plagued other insect protein producers.

2. Focus on Aquaculture and Pet Food Markets

Ynsect initially focused on feed for farm animals such as poultry and swine and dabbled a bit with the possibility of protein powder as an ingredient for human food. In 2023, it shuttered some facilities and laid off 20% of its employees as part of a pivot to a pet food mission.

Agronutris started life as Micronutris to make protein powders for people, but rebranded and also refocused on animal products.

Innovafeed has also targeted a wide range of uses, including fertilizer, pets, and farm animals. But it also identified aquaculture as a key market. The demand for sustainable aquafeed is rising as fish farming grows and regulators push for more eco-friendly alternatives to traditional fishmeal.

Innovafeed has successfully positioned itself as a key supplier of insect protein for fish farming, a market with immediate demand and strong growth potential. Its partnerships with global aquafeed companies have provided a steady revenue stream, something Ÿnsect and Micronutris struggled to secure.

“Insects are a natural part of the diet for fish and many animals, so using insect protein is simply mimicking nature in a way that’s both efficient and sustainable,” said Clement Ray, CEO of Innovafeed.

3. Smart Funding and Financial Discipline

While Innovafeed has raised significant capital—$450 million to date—it has strategically deployed these funds to scaling in stages. Ÿnsect faced liquidity issues due to its aggressive expansion.

The company has built its Nesle plant in stages. By developing the site in phases, the company was better able to manage risks. Last summer, Innovafeed finished the third phase – but only embarked on this part after the first two stages were stable in terms of technology and economic performance. The company claims this third phase will "enable it to reach the target production capacity and profitability."

“Innovation is not just about developing new products; it’s about building an entire ecosystem that makes large-scale insect farming viable,” Ray explained.

Additionally, the company has diversified its funding sources, attracting investments from major industry players such as Cargill and ADM. Innovafeed has also secured €1 billion in contracts from those two customers over the next decade.

This mix of strategic corporate backers and financial investors has provided stability, ensuring continued growth without over-reliance on government subsidies.

4. International Expansion at the Right Time

While competitors struggled to stabilize their home operations, Innovafeed was already laying the groundwork for international expansion.

In April 2024, the company inaugurated its North American Insect Innovation Center (NAIIC) in Decatur, Illinois. The $10 million pilot plant sits next to Archer-Daniels-Midland's large corn processing facility. Innovafeed uses byproducts from that facility to feed its black soldier flies via a pipeline that connects to ADM’s plant. Innovafeed is planning a large-scale manufacturing facility as part of its long-term plans in the region.

5. Technological Innovation and R&D Investment

Innovafeed placed a strong emphasis on research and development, continuously improving its production technology to enhance efficiency. The company’s recently opened Insect Innovation Center in Decatur is a testament to this commitment. According to CEO Clement Ray, the company has over 250 engineers and PhDs working on automation, robotics, data systems, and genetic improvements of black soldier flies.

“Technology is at the heart of what we do. The more we optimize processes, the more we can drive costs down and make insect protein a mainstream alternative,” Ray emphasized.

Ray also highlighted that their decision to focus on black soldier flies was driven by efficiency and cost-effectiveness. Compared to other insect species, black soldier flies have a much shorter lifecycle and can consume lower-grade waste, making them an ideal choice for large-scale industrialization.

But...

Even if Innovafeed is still standing, long-term success is hardly guaranteed. Its most recent financial report is for 2023, but it still offers some clues as to what challenges the company still faces.

Overall Financial Performance:

• Losses: InnovaFeed experienced a significant net loss of €32,545,186 for the fiscal year 2023. While substantial, it's worth noting that this loss is less than the €36,080,232 loss incurred in 2022.
• Revenue Generation: The company generated a net turnover of €3,086,687 in 2023, an increase from €2,116,449 in 2022. This indicates growth in sales of goods and services.
• Operating Loss: The company had a significant operating loss (€48,345,208), slightly worse than the previous year (€45,524,466).
• Equity: Total equity stands at €205,105,938, a decrease from €237,556,181 in 2022. This decrease is likely due to the year's losses.
• Debt: The company ended the year with €32.6 million in debt, up from €21.9 million at the end of 2022. A significant portion of the debt is in the form of loans from credit institutions, suggesting reliance on external financing:
  • Loans and borrowings from credit institutions: €17,956,716
  • Other financial debts: €1,144,384
  • Trade payables: €9,243,048
• Solvency: The company's total debt is lower than its equity, which suggests that it is solvent. However, the company's ability to service its debt will depend on its ability to generate revenues from its operations and profits in the future.

InnovaFeed is still in a growth phase and these numbers and the vast partnerships suggest it is stable. But it is far from profitable. In the coming years, it will still need to demonstrate that it close that gap and build a sustainable global champion.