The round was led by Futuregrowth Asset Management, with participation from E4E Africa, Oak Drive Ventures, and a raft of private investors.
Inseco currently produces more than 100 metric tons of defatted insect meal and oil per month, branded as EntoMeal and EntoOil, at its state-of-the-art 10,000m² production facility in Cape Town, which it took over from AgriProtein. Simon Hazell, CEO of Inseco, told us the company has also hired some former employees of that insect protein production pioneer. [AgriProtein was part of the Insect Technology Group, which went into liquidation in 2021 as its financial woes built up.]
Part of the funds raised by Inseco in this seed round will be used to increase the manufacturing capacity at that Cape Town facility to meet rising product demand and to carry out continuous research and development, he said.
At present, Inseco supplies the local aquaculture, pet food and poultry market, but it is planning to expand into the rest of Africa, Europe, and the US. It has the global pet food market, valued at $38bn, in its sights, along with the international aquaculture sector.
To expand its production capabilities beyond its Cape Town facility, and meet the rising demand for its products, the insect ingredients company has developed an innovative production model.
“Inseco utilizes a decentralized production model. The breeding of the insects is done at Inseco’s central facility, and the growing takes place at the source of the organic by-products. The biological inoculant - insect eggs - is then transported to the growing facility. Depending on location and plant size, the processing step - where the live insects are processed into a meal and oil - is either done on-site at the growing facility, or at a centralized location,” explained Hazell.
The CEO said the solution offers waste-generating organizations a way to manage their organic by-products more sustainably, while also generating a competitive financial return. “After years of research, we’re ready to deploy our technology in the market.”
It is in the process of partnering with various organizations, in that respect, with those entities either based locally or in international markets. Hazell said Inseco cannot disclose the names of those partners, for now, as it is bound by non-disclosure agreements.
The investor perspective:
Frederik Gerner, partner at E4E Africa, commented on the venture capital fund's decision to participate in the Inseco funding round: “We have been working with Simon and his team for over 1.5 years and are very impressed. We are active investors, focused on entrepreneurs, and we believe that the Inseco team has the capacity to deliver on its goal of becoming a market leader in sustainable protein production. In addition to the strong entrepreneurial team, we strongly believe in the positive impact that Inseco can create through its business”.
Amrish Narrandes, head of unlisted equity at Futuregrowth, said the financing of Inseco aligned with the equity firm's mandate and investment philosophy as a "responsible investor."
Inseco’s management team, he continued, is taking the business to new heights, while improving the sustainability of the global food production system.
And Narrandes claimed insect meal production is highly sustainable in comparison to traditional protein sources. "Insect protein has an inherently lower environmental impact, as the process directly reduces food waste, involves minimal greenhouse gas emissions, limited water usage and makes zero use of arable lands. In addition to the strong environmental, social and governance (ESG) case, insect protein has a superior nutritional content, which results in higher feed conversion rates compared to traditional protein sources."