Posted on 12/31/2025 6:49:27 PM PST by Governor Dinwiddie
French startup Ÿnsect shot into the spotlight when “Iron Man” star Robert Downey Jr. touted its merits on the “Late Show” during Super Bowl weekend 2021. Now, nearly four years later, the insect farming company has been placed into judicial liquidation — essentially bankruptcy — for insolvency.
The company’s demise is hardly a surprise, as Ÿnsect had been embattled for months. Still, there is plenty to unpack about how a startup can go bankrupt despite raising over $600 million, including from Downey Jr.’s FootPrint Coalition, taxpayers, and many others.
Ultimately, Ÿnsect failed to fulfill its ambition to “revolutionize the food chain” with insect-based protein. But don’t be too quick to attribute its failure to the “ick” factor that many Westerners feel about bugs. Human food was never its core focus.
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.
That indecision extended to its M&A strategy. In 2021, Ÿnsect acquired Protifarm, a Dutch company raising mealworms for human food applications, adding a third market to the mix. Even as the company announced the deal, then-CEO Antoine Hubert admitted it would take a couple of years for human food to represent just 10% to 15% of Ÿnsect’s revenue.
“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.
And revenue was the problem. According to publicly available data, Ÿnsect’s revenue from its main entity peaked at €17.8 million in 2021 (approximately $21 million) — a figure reportedly inflated by internal transfers between subsidiaries. By 2023, the company had racked up a net loss of €79.7 million ($94 million).
So how did a company with such meager revenue raise over $600 million? The answer wasn’t hype-driven crossover funds paying ambitious multiples during the 2021 funding frenzy. Instead, Ÿnsect attracted impact-focused investors like Astanor Ventures and public investment bank Bpifrance that bought into a compelling sustainability vision.
Its pitch to them was simple — offering an alternative to resource-intensive proteins like fishmeal and soy. That same thesis also attracted significant capital to competitors like Better Origin and Innovafeed, and it seemed promising.
But the vision collided with market reality. Animal feed is a commodity market driven by price, not sustainability premiums. In a perfect world, insect protein would be fully circular, with insects fed on food waste that would otherwise go to landfill. But in practice, factory-scale insect production typically ends up relying on cereal by-products that are already usable as animal feed — meaning insect protein just adds an expensive extra step. For animal feed, the math simply wasn’t working.
Ÿnsect eventually recognized this. Pet food proved to be a different equation: It is less price-driven than animal feed and a far better market for insect protein, even with competition from other alternative proteins such as lab-grown meat. By 2023, the company refocused its strategy on pet food and other higher-margin segments, with Hubert citing broader economic pressures.
“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.
The 2023 pivot to pet food came too late. By then, Ÿnsect had already committed to a massive, capital-intensive bet that would ultimately doom the company. That bet was Ÿnfarm, a “giga-factory” in Northern France that the company billed “the world’s most expensive bug farm.” Built for insect production at scale, the facility consumed hundreds of millions in funding — money spent before Ÿnsect had proven its business model or figured out its unit economics.
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.”
The fact that Ÿnsect failed doesn’t mean the entire insect farming sector is doomed. Competitor Innovafeed is reportedly holding up better, in part because it started with a smaller production site and is ramping up incrementally.
For Prof. Haslam, Ÿnsect exemplifies a broader European problem. “Ÿnsect is a case study in Europe’s scaling gap. We fund moonshots. We underfund factories. We celebrate pilots. We abandon industrialization. See Northvolt [a struggling Swedish battery maker], Volocopter [a German air taxi startup], and Lilium [a failed German flying taxi company],” he said.
The failure has prompted some soul-searching. Hubert himself co-founded Start Industrie, an association advocating for policies to support French industrial startups — a recognition that Europe needs more than just funding to build the next generation of deep tech companies.
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Tech investors are adverse to bugs.
Bill Gates and Klaus Schwab are both deeply saddened.
“a compelling sustainability vision.”
Oh just barf. There is very little “sustainable” about a product no one wants to buy. To Hades with our supposed overlords from WEF, etc.
I read today that the idea of the ‘computer bug’ actually grew out of a case of an actual bug getting into a computer and causing trouble; whereupon Grace Murray Hooper promoted the idea of a computer bug. It’s also said that Edison preceded her in referring to ‘bugs’ in a machine; but Hooper’s bug is now in the Smithsonian:
https://daily.jstor.org/the-bug-in-the-computer-bug-story/
More like "...despite burning over $600 million..."
Chickens LOVE freeze-dried bugs. There’s a good market for them...and they ain’t cheap.
Sorry; her name was Hopper.
You vill have nothing but insects to eat and you vill be happy.
Force feed Bill Hates of Hell and Krault Slobb a constant stream of bugs.
That’s true. Back when computers had vacuum lines, a bug getting inside one would cause it to malfunction. Thus an exterminator would be called on to open up the computer cabinet and de-bug it. Of course, that was a hardware issue, but the term lives on in software talk.
Eating bugs.
Can you say BULLpuckey?
Sure, I knew you could.
She looked like a wizened little old lady, but she was sharp, and I remember her smiling countenance and evident resident humor in her!
I later heard of her "founding" of the term "bug", and here is the "bug":
I don't remember if she mentioned her trademark "nanowires", sections of wire cut so that each wire showed how far an electric impulse traveled in one nanosecond:
I have always considered an unexpected privilege to have had her speak at my college graduation.
What the heck is wrong with you? Don’t you know you are supposed to blame that. on Spell Check?????
Yer gonna give us a bad name if you assume responsibility...:)
I was sure I remembered it as Hooper...no, I can’t blame SpellCheck for that one.
She seems to have been quite something.
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