Insect farming startup Ynsect has secured €160 million (roughly $175 million), but it has also laid off about 70 employees, or 20% of its workforce, in a bid to tackle rising costs.
The Paris-based company plans to use the funds to shift away from breeding insects for animal feed to target more lucrative markets such as pet food and ingredients. Ynsect said the pivot will reduce rising energy and materials costs.
The startup will close its production facility in the Netherlands, which it acquired with the purchase of mealworm ingredients company Protifarm in 2021, Bloomberg reported.
European agtech startups have struggled to raise capital amid the downturn in venture dealmaking. In 2022, VC deal count in agtech dropped 24.2% year-over-year, according to PitchBook data. So far this year, 42 deals have been completed worth a total €340.4 million—almost half of that deal value comes from Ynsect’s latest round.
VC investments in agtech grew significantly during the pandemic as investors increased their focus on startups solving environmental and food security challenges.
But unlike companies in sectors such as SaaS, agtech startups have much higher research and development costs and significant regulatory hurdles standing in the way of profitability. As VCs shift away from high-growth, loss-making startups, the agtech sector has suffered slowing investment.
Ynsect is hoping to become more sustainable by prioritizing smaller and less software-intensive facilities and setting up more partnerships to spread operation costs. It is also reportedly planning on raising additional funding this year for its Series D. Ynsect’s Series C reached $372 million in 2021.
Investors in Ynsect’s latest round or its valuation were not disclosed, but it has previously raised funding from backers including Bpifrance, Astanor Ventures and Talis Capital. As of 2021, the startup’s estimated valuation was around €615 million.
Featured image by Sebastien Bozon/Getty Images
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