At the end of August, Singapore-based Inseact raised US $ 1.3 million (EUR 1.1 million) in an oversubscribed financing round for seeds that will help advance its plans to become a manufacturer of insect-based aquaculture feed. In an interview with SeafoodSource, Inseact CEO Tim Van Vliet and COO Michael Badeski explained how the black soldier flies they produce for aquaculture feed using waste streams from palm oil processing are meeting the demand for alternative proteins in Asia, where most of global aquaculture is centered .
SeafoodSource: How did you get into the insect production business for aquaculture feed?
Van Vliet: I don’t have a long background in insect protein. I am Dutch, but I am also Samoan. I used to go there a lot [Samoa] a lot and over the years I saw the effects of overfishing, I saw my family there and that they could no longer make a living from fishing. I have to go through why that was. One of the main reasons is overfishing. It takes a lot of wild fish to breed farmed fish. I have a background in nutrition and protein. I thought, why can’t I do something around this idea? Then I realized that some other companies are doing this. Then afterwards [obtaining] an MBA [at] INSEAD, I switched to InnovaFeed, a French insect protein company. Then I decided, “I think we can do better.” So we started the business in Singapore.
SeafoodSource: What part of the palm oil waste stream do you use as raw material?
Van Vliet: The waste does not come from the plantations themselves. Rather, it comes from the mills and the downstream processing side. One of the main waste streams comes from palm oil sewage, a sludge-like substance that releases a lot of methane, which is a major ingredient that we feed the insects with.
SeafoodSource: Who do you see as your biggest competitors and what makes you different from them?
Van Vliet: The big players are in Europe. It’s a very young industry in Asia. Two or three companies have been with us for several years. They’re not to scale yet, and we think we’ll bring that up. We come from a business background. We believe we need solid business foundations. We also come from engineering and scaling. That’s Michael’s background. We know you can only do this if you grow up to deliver the quantities aquaculture needs. That is our mission – not to be small, but to be a big player with volume and size.
I worked for one of our competitors, the European one. Raw materials are an important element. It makes sense to use a product that is free instead of paying for it. Using a waste product is also better from an environmental point of view and that is really what we care about. Our competitors use waste, but mostly kitchen and municipal waste. We consider this to be a strategic mistake as scaling is not possible and the quality is inconsistent, i.e. inconsistent output. That’s one thing we believe we can do much better.
SeafoodSource: What phase are you in with the customers? One of your investors is a large shrimp company. Are you just talking to this investor?
Van Vliet: The reason we didn’t reveal the name of the shrimp company’s investor is because we don’t want to be limited to that one company. Because others might think, “You are using this player and I don’t want to work with you.” We also want to include other customers. We want to have a wide variety of customers and in different countries. Nevertheless, we were able to concentrate on this one customer. Their volumes are so great that they will have volume for many years [requirements], but we don’t want that for strategic reasons.
SeafoodSource: What attracts potential customers to you?
Van Vliet: When I was working in Europe, most of the interest was in sustainability, [and] that is also a personal interest. But we’ve done trials for producers that show how much better the results are [from our feed] are compared to the fishmeal they now use. And the real drivers of everything in Southeast Asia are margins and money. And that is our suggestion to you. We propose a product that will make you more money. Hence, they are very excited about the value proposition we offer. The only way it will work is if the shrimp farmers and mill can make more money from our product.
SeafoodSource: What margins are you looking at since your main entry is free?
Van Vliet: We have ideas about it, but we cannot share them. I can say that the margins we are looking at are better than those of our European competitors. Raw materials are fundamental to the cost. But we still have to run our supply chain and have some other ingredients that come from other processes. We also pay for work, utilities, and machines.
SeafoodSource: You have a pretty long list of investors. Was it easy to sell for the investment community?
Van Vliet: We had originally planned to raise funds a little before the actual date, but due to COVID we waited. The moment we posted the news it was moving pretty quickly, especially when we did the [Asian Development Bank] on board. When you have an investor on board, others follow suit. They are difficult to get on board and do a lot of due diligence. But then other investors want to be on board. They say, “We know these guys and they have their teams on site to check things out.”
SeafoodSource: Are you afraid that a great Chinese player will come over and copy you?
Van Vliet: There is competition from China. I lived in Beijing for many years and know the Chinese market very well. They are always looking to see what China is going to do. You like a lot of innovation [and] There is a great need for feed and ingredients. There are still regulatory hurdles [to insect-based feeds], but there could also be an opportunity. One of the companies we are in talks with is a very large Chinese conglomerate, one of the largest feed companies in the world. China is the largest aquaculture market, however [we] also know that it is difficult to get value from it. For this we are staying in Southeast Asia.
SeafoodSource: Her company and several other companies that produce feed from insects are based in the Netherlands. Is there any special Dutch expertise in this branch?
Van Vliet: We are very strong at food production and genetics. I come from a dairy farm. Holland also has world class universities like Wageningen [University]who has a very strong entomology department. Much of the work on the black soldier fly was happening at this university when the Protix people went there to see if this could be enlarged.
SeafoodSource: Why is the black solid fly so well suited for feed production?
Bathing ski: It is an amazing insect for some outstanding reasons. It has cravings and hunger for a wide variety of materials. Hence, it eats and grows very quickly. In addition, his diet breaks down with a lot of proteins and fats. There are several other insects that are cultivated, such as crickets and mealworms. But they don’t grow that fast. Likewise, [the black solder fly] is not a disease vector and is endemic to Southeast Asia – the climate here is perfect for it.
Photo courtesy Inseact
