How reality crushed Ÿnsect, the French startup that had raised over $600M for insect farming

Instead, Ÿnsect focused on producing insect protein for animal feed and pet food, two markets with very different economics and margins that the company never quite chose between. “We still see pet food and fish feed being the largest contributor to our revenues in the coming years,” Hubert declared at the time. In other words, Ÿnsect was acquiring a company in a market segment that would remain marginal for years — at a time when the startup desperately needed revenue growth. “In an environment where there is inflation on energy and raw materials but also on the cost of capital and debt, we cannot afford to invest loads of resources in markets which are the least remunerative (animal feed), while you have other markets where there is a lot of demand, good returns and higher margins,” Hubert said at the time. To oversee Ÿnfarm’s launch, Ÿnsect brought in Shankar Krishnamoorthy, a former executive at French energy giant Engie. When that move to pet food failed to save the company, Krishnamoorthy replaced Hubert as CEO. Ÿnsect then shut down the production plant it had acquired from Protifarm and cut jobs. But shuttering one facility while operating a giga-factory built for the wrong market couldn’t solve the fundamental problem. The company ultimately failed, and in a statement following the liquidation announcement just weeks ago, its newest and last CEO, a turnaround specialist named Emmanuel Pinto, said its remaining assets are now up for grabs. “We hope that the extensive technical and industrial expertise developed by the Ynsect teams, as well as the commercial relationships they have established, will be put to productive use and make a valuable contribution both to Europe’s protein independence and to the fight against climate change,” he wrote in a statement quoted by French media. For Professor Joe Haslam, who teaches a course on Scaling Up in the MBA Program at IE Business School, “Ÿnsect’s struggles are not a mystery and not mainly about insects. They are the result of a mismatch between industrial ambition, capital markets, and timing, compounded by some execution and strategy choices.”