Protenga raises $2m to scale its insect farming technology
The company’s flagship products include Hermet Protein, Hermet Oil, and Hermet Frass.
Protenga’s production is based on the Black Soldier Fly (BSF): it uses a scalable, insect-based bioconversion process that recaptures nutrients from organic side-streams via its proprietary ‘Smart Insect Farm’ systems.
With its previous $2m seed round in 2020, Protenga said it built and launched three sites: a breeding facility, a production farm, and a manufacturing plant producing double-digit tonnage every month, while using less than one third the capital compared to the industry.
Debt financing
Leo Wein, CEO, Protenga, spoke to FeedNavigator yesterday about the company’s growth strategy and how accessing debt financing represents a paradigm shift for the producer.
The company’s ambition is to be a vertical integrator, to scale insect farming, to decentralize it, and to make that happen, a move to alternative financing structures, beyond venture capital, is required, he said.
“In 2020, we raised our first institutional round, a pure equity round, with venture capital. We are still going to raise venture capital and bring straight equity into the company but that will be focused more on technology and on commercial aspects - on the R&D and product development – rather than on building the facilities. And that is what we are really excited about in relation to this step.
“Debt financing is a cheaper and more scalable way of financing. It shows confidence in our business model. Debt finances profits and equity finances losses. Debt investors are comfortable that we will generate profit from the facilities.”
The debt investors, this time, are family offices and would prefer to remain anonymous, said Wein.
“In the last one and a half years, we have developed our first generational facilities in Malaysia, and then operationalized them, brought them to production capacity, and we are now in a position to replicate that.
“We have also operationalized our own software system, insectOS, on top of that. We are generating about 600K data points every day across process and environmental parameters. We have used that to intensively study the process, to learn from it, to improve it, and to develop a second-generation [facility] blueprint. The first of those second-generation plants will be built this year. After that we will start to work with external partners to replicate them.”
Pet food brand
As well as that build, the company is also going to launch a pet food brand this year: “We actually spent quite a lot of R&D, prior to 2020, on pet food formulations and product development. After that, we made the decision to put that work on hold and focus on technology development, validating production at scale. We have done that now; we have shown that we can produce at scale, at commercial quantities and with the quality required.
“And, as such, we have decided that it is now the time to drive the commercialization process. The launch of Yum Grubs and our commercial pet food production line is one of our priorities for this year. While producing our own brand, we will also be able to produce sustainable and affordable pet food, white label, for other brands.”
The company has significant formulation expertise within its team, but it has hired product development experts from the food industry as well. “We are also working with veterinarians on the formulation side.”
Genetic advances
As part of its ongoing collaboration with Roslin Technologies, the lead investor in the company’s seed round, Protenga is looking to identify new, high-efficiency genetic strains of BSF. “The pathway of commercialization of these higher performing strains will run through our breeding facilities. We are already seeing improvements from the selection work, at lab scale, [the idea is that] will be validated in the field, within our farms, this year. Our technology and data driven approach gives us enough visibility and granularity to detect those improvements and correlate them to genetics as opposed to other factors.”
Turnkey farming system
Protenga is rethinking insect farming through a technology-driven circular ecosystem approach. Its decentralized ‘Smart Insect Farm’ is designed for intake of 20-60 tons of feedstocks daily: they are intended to overcome the cost and sustainability pitfalls of centralized mega insect factories.
The farming system can operate with minimal labor. Mechanized and fully automated versions will eventually be available, all supported by software, breeding and processing services.
Biomass producers using this system can convert their waste to high value insect feed products. “In some cases a farm is co-located on a site, in others it involves localized sourcing from multiple outlets. It essentially means that every second or third tier city is a candidate for having a farm,” said Wein.
The CEO outlined how, within Malaysia in 2022, the company will fully operationalize one additional farm and kickstart the development of two others at the end of Q4. “2023 will see replication in other parts of Malaysia and preparation for regional expansion towards the of next year or early 2024. We are confident that we will be regional. We have interest from Malaysian biomass owners but also regionally. This is where we are headed and this is where we see the opportunity to realize our mission and to drive measurable impact, at scale.”
Gloss