There was substantial international participation in the round. The financing effort was led by Sandwater, a climate-tech venture capital firm based in Oslo, alongside Bayern Kapital’s Growth fund, the Minderoo Foundation’s Strategic Impact Fund, which is Australia-based, and the European Innovation Council Fund.
Existing investors, HTGF and UnternehmerTUM, also participated.
Morten E Iversen, partner at Sandwater, said the VC fund had recognized the commercial and environmental potential of insects for a long time but had struggled with the existing business model, which, it claims, involves substantial capital investment and has proven difficult to scale. “We were missing a commercially available, low capex solution capable of driving meaningful volumes, and FarmInsect offers just that.”
Established in 2020, FarmInsect was one of the founding cohort of the Technical University of Munich’s Food, Agro, and Biotech Venture Lab.
Modular larvae production
The Black Soldier Fly-based insect technology startup provides a modularized, end-to-end model for decentralized, on-site larvae production.
The Munich-based company partners directly with farmers, equipping them so they can establish decentralized insect farms at their own sites.
The startup provides proprietary modularized hardware, customized software, and weekly subscription-based deliveries of young larvae – the larvae are then fattened onsite by the farmer, growing 250x their body weight over five days. The live insects can be used by the farmer themselves or for onward sale.
The goal of its production model is circularity - the unit takes in waste streams off the farm as feedstock for the insects.
Each step in the process is monitored by a proprietary software platform that guides the customer through production step by step.
The startup’s fattening system also produces compost as a byproduct, which the developer said can be sold as high-quality fertiliser or used for biogas production.
Offtake platform
Longer term, FarmInsect plans to establish a buy-back platform - EcoCircle - whereby farmers with excess volumes can sell to third party processors, who will then sell the product on to pet food or animal feed producers.
“FarmInsect has an existing contract with a processing partner and plans to sign several more to establish a network for offtake of the finished larvae to be processed into insect meal and oil,” a spokesperson told us.
The startup’s revenue model will come via three channels then: hardware sales for the initial set-up of modules, each capable of producing around 150 tons per year; weekly subscription shipments of seed larvae to the farms; and a percentage share of the revenue from the insect volumes sold on the EcoCircle platform.
Early adopters
FarmInsect has sold its system to 11 farms so far, which, for the most part, include a mix of poultry - broiler and laying hen - operations, pig, and fish farmers. “In addition, one farmer is converting an old horse stable into an insect farm and using grass cuttings as a primary feedstock. He has no livestock as he plans to sell the insects on to third parties through the EcoCircle platform.”
One of Germany’s largest trout producers has set up FarmInsect modules and is live feeding the larvae to the fish, reported the spokesperson. “Another farmer whose plant is currently being commissioned is a laying hen producer – he will use broken eggs as a primary feedstock for the insects, which will then be live fed to the chickens.”
Intensification of breeding, R&D activities
FarmInsect said it will use the proceeds of the financing round to support the commercial scale-up of its insect farming solution and to fund further R&D work to continue to improve its technology.
The team is looking to adapt breeding lines for different regional feedstocks from brewer grains to egg waste to grass cuttings, while the R&D focus will be on optimizing the feed conversion ratio (FCR), end weight of larvae after fattening, as well as egg production, and the egg hatching rate.
