Mealworm producer, Ynsect, is seeking to enter a judicial recovery procedure, having previously attracted more than US$600m in investments, including from the French public sector investment bank, BPI France.
It is a blow for the sector. Despite insect farming’s potential to reduce reliance on traditional livestock, lower greenhouse gas emissions, and conserve water and land resources, achieving profitability remains a challenging and risk-laden endeavor for industry players.
Ynsect filed the procedure with the Evry Commercial Court in France after failing to secure financing under its safeguard procedure, despite “extensive negotiations and efforts.”
“Given these circumstances and the company’s cash flow shortage... presenting a backup plan now appears impossible,” a spokesperson for Ynsect told us.
The request to convert the safeguard procedure into a judicial recovery process aims to swiftly initiate a call for tenders for a takeover under a transfer plan, stated the company representative.
“The judicial recovery procedure, and more particularly the call for tenders for the sale plan... will make it possible to offer potential buyer candidates who have expressed signs of interest, as well as any new ones, a different legal framework adapted to a rapid resumption of the company’s activities.
“Ynsect thus remains under the protection of the Evry Commercial Court and is more than ever actively seeking one or more buyers as part of a sale plan,” according to the spokesperson.
Headquartered in Essonne, Ynsect has two production sites, one near Dole, in the Jura region, and a second – the much-touted Ynfarm factory – in Amiens, in the Somme.
Another French insect player, Agronutris, which specializes in Black Soldier Fly (BSF) based meal and oil for aquafeed and pet food, is also facing financial challenges. Last month, that French company was placed under protection by a commercial court; it is seeking to stabilize its financial situation.
Founded in 2018 in Toulouse, Agronutris inaugurated a production plant in Rethel, Ardennes, in the summer of 2022. However, on January 23, the company announced that the Sedan Commercial Court had initiated a safeguard procedure for its holding company, EAP Group. The move is intended to strengthen its financial structure and support its continued development. The procedure was set to last for six months, with the possibility of a six-month extension.
EAP Group stated that this decision aligns with its objective of gaining time to renegotiate debts with creditors while ensuring business continuity. Agronutris attributed its struggles to a tough economic climate.
The struggles of those two French players follow the closure of US-based mealworm producer, Beta Hatch, a year and a half ago.
Cautious investors
A FeedNavigator report from October 2024 highlighted the challenging financial landscape for insect producers with Lars-Henrik Lau Heckmann of Denmark’s Better Insect Solutions (BIS) emphasizing the need for solid business cases, realistic production targets, and strategic partnerships. He noted that rising interest rates and cautious investors have made securing funding more difficult.
As part of the review, Cédric Provost, president of Canada’s Entosystem, reflected on the industry’s evolution, stating that the “era of easy money” ended two years ago, and investors now demand clear paths to profitability. However, scalable and sustainable companies continue to attract interest, he reported.
Given the economic headwinds, Entocycle founder, Keiran Whitaker, told us last October that investor education and transparency on risks were critical factors for attracting funds. Similarly, Gaetan Crielaard, cofounder of Entobel in Vietnam, also contributing to our insect market outlook, acknowledged funding challenges, with him claiming that some insect producers had failed to meet key milestones, increasing investor skepticism. However, he saw the industry’s economic pressures as a positive force, filtering out weaker players and driving long-term growth.
