A new trend is cropping up around the world that will see plant-based products lose their pole position as a sustainable protein to challenger brands making food from microbes and edible insects. NutritionInvestor speaks to the food innovators and the investors tapping into the trend in the US, Israel and Argentina
Lila Preston of Generation Investment
Lila Preston, partner and co-head growth at Generation Investment

Food products made with plant-based protein are a millennium-old business. For centuries, humankind has sourced protein from fungi, grains, legumes and a variety of vegetables to produce meat and dairy substitutes to satisfy vegan and vegetarian dietary requirements or preference in the community. Today’s buzz on plant-based protein is really due to the increasing awareness of the environmental impact of livestock production on the planet. But there are more protein alternatives under the sun, and investors are looking at challenger brands pioneering the sector. 

Good for you 

Protein is a macronutrient and a building block of life. A complete protein consists of nine essential amino acids, which are responsible for repairing and growing cells in the body, hence its popularity among bodybuilders and athletes, for example.  

Scientific studies have proven the role protein plays in weight management. High-protein diets are based on the premise that by replacing carbs and fat with protein, in a specific ratio, the body reduces the hunger hormone and boosts several satiety ones instead, thus helping people control how much food they eat. 

The protein crisis, however, has been voiced loud and clear by the World Economic Forum. Politicians and scientists agree that by 2050 it will be impossible for an expected global population of 10 billion to consume the amount and type of protein typical of current diets if we want to achieve the UN Sustainable Development Goals (SDG) set by the 2015 Paris Climate Agreement.  

This challenge has prompted new business propositions from food innovator who have turned to microbes and edible bugs to produce powder, oil and packaged food products. They argue the macronutrient extracted from these sources are of improved nutritional values and require a manufacturing process of minimal carbon footprint compared with its plant-based and animal counterparts. 

Nature’s Fynd, Hargol FoodTech, Flying Spark and Chepulines are early-stage companies, operating in the US, Israel and Argentina, respectively. These challenger brands are tapping into the new trend, attracting multimillion-dollar funding from world-class venture capital and equity firms. Founders, investors and high-rank executives explain. 

Microbes from Yellowstone’s hot spring 

Think about bread, beer, wine, vinegar, yoghurt, and cheese. All these products, as well as today’s trendy kefir and kombucha, are made with some sort of microbial fermentation, using either yeast, moulds or bacteria. A biological process, microbial fermentation aids the preservation of food and improves its nutritional and organoleptic qualities: the taste, sight, smell and texture. 

Nature Fynd CEO Thomas Jonas
Nature’s Fynd co-founder and chief executive Thomas Jonas

US-based Nature’s Fynd is pioneering the production of sustainable protein via microbial fermentation with a technology developed in-house. The company, formerly operating as Sustainable Bioproducts, was founded in 2012 by Mark Kozubal, Matthew Strongin and Thomas Jonas. The trio and its team have focused R&D on producing the macronutrient using fermented microbes found in geothermal pools located in the Yellowstone National Park.  

The microbe — trade-marked Fy (say fai) as short the fusarium strain found in Yellowstone — is the main ingredient of a soon-to-be-commercialised protein for meatless burgers, dairy substitutes and powder. Fy is produced by feeding sugar to the microbe on tray-based fermenting chambers. 

Nature’s Fynd’s new protein is trade-marked Fy (say fai) as short the fusarium strain found in geothermal pools located in the Yellowstone National Park

Nuture’s Fynd closed an $80 million Series B funding round in March, totalling $113 million to date. Generation Investment co-led the round with Breakthrough Energy Ventures. Other participants included 1955 Capital, Mousse Partners, ADM Ventures (ADMV), the venture arm of Archer Daniels Midland, and Danone Manifesto Ventures of the French dairy giant. 

Lila Preston, partner and co-head growth at Generation, tells me the firm got onboard due to key factors in play. “We believe Nature’s Fynd has found an efficient and tasty solution to help address the climate crisis in a way that can both nourish people and nurture the planet,” she says.  

The start-up, Preston tells me, has carefully researched consumers and the major food trends around the world. “We are confident that Nature’s Fynd products bring a compelling combination of taste, nutrition, and sustainability that doesn’t exist out there right now. All of the consumer taste testing done to date has generated highly positive feedback and interest.” 

ADM Ventures investor relations Victoria de la Huerga
Victoria De La Huerga, vice president investor relations at ADMV

Victoria De La Huerga, vice president investor relations at ADMV, is also confident in the new investment. “Nature’s Fynd protein has benefits that will resonate with consumers. [Its] sustainable protein can be produced reliably, over a short period of time and at scale inside warehouses located in a city centre,” she says. 

Production of Fy protein is under way at Nature’s Fynd’s new 35,000-square-foot manufacturing facility on the site of the historic Union Stockyards — the meatpacking district in Chicago for more than a century.

The company prepares to commercialise food and beverage products across breakfast, lunch, dinner, and snack occasions. “We’ve made and tested a wide range of delicious foods.” Karuna Rawal, Nature’s Fynd chief marketing officer, tells me. She says the US market will be the first to see the products on shelves, but plans for going global are on the table, too. “We are now being smart about which ones come first. What we can say is to keep an eye out for both meat and dairy alternative foods!”  

According to Rawal, Fy is a highly digestible protein. “Our bodies can absorb the nutritious protein content easier than peas, peanuts and many other plant-based proteins,” she says, adding Fy also has calcium, fibre, and no cholesterol or trans fats. “Fy has only 1/10th the fat and 30x less sodium than ground beef. On top of that, Fy has 50% more protein than tofu and twice as much protein than raw pea,” she adds. 

Fy is a very versatile protein, and Nature’s Fynd plans to sell the protein in the food manufacturing sector, too. Rawal explains: “Fy’s unique filamentous texture makes it ideal for meat-like products while also being able to be blended to create a creamy texture for dairy and other applications.” 

Edible insects 

Israel is home to Hargol FoodTech and Flying Spark, food-tech start-ups producing food ingredients and products from edible insects. April saw Hargol close a $3 million funding round from existing investors, and Flying Spark’s next round is due to close in May. 

Hargol, headquartered in the northern city of Misgav, sources protein from grasshoppers farmed in four small-scale facilities the company operates across the region. The protein is then turned into powder and sold to supplements and meat replacement manufacturers. The company also sells the whole grasshopper, dried and ready to eat, to food companies and restaurants. 

Hargol FoodTech chief executive Dror Tamir
Hargol chief executive Dror Tamir

“One of our customers is in the UK. Eat Grub uses the insect on the snacks they make, which are sold in Sainsbury’s,” tells me Dror Tamir (pictured), Hargol chief executive. He founded the company in 2014 together with insect breeder Chanan Aviv, and Ben Friedman, a food regulatory expert. 

Tamir builds the conversation up by nailing the question about why grasshoppers. “Some 2.5 billion people in the world eat insects, mostly in Asia, Africa and Central America, and grasshoppers are widely eaten among them.” 

Hargol’s chief is bullish on the nutritional values the bug has over other protein sources. “Grasshoppers have a long list of benefits, but I always point to two key advantages: grasshoppers have a superior nutritional content with complete amino acid profile, and you have 70% protein content in the animal as it is.”  

Tamir says grasshopper protein boasts neutral taste and flavour — a quality that, according to him, makes grasshoppers a perfect ingredient for food and drinks. 

Commercial-scale grasshopper farming

Until now, all the supply of grasshoppers comes from locusts collection in the wild, which is short and limited by a season of about four to six weeks a year. That’s about to change with Hargol’s first commercial-scale grasshopper farm, as Tamir explains: “We have developed commercial-scale farming that is sole kosher and halal.” 

Tamir tells me Hargol’s grasshopper farming is at least 20 times more efficient than producing one pound of beef, and water consumption is 1,000 times less than livestock production. “Land use is 1,500 times less because we grow vertically, and we use 100% of the animal,” he says, adding grasshoppers are fed with hydroponically grown wheatgrass, which is also sustainable. 

Hargol’s grasshopper are commercialised whole and dry and ready to eat

The new farming facility is a 1,000 sqm site, and Tamir says such an infrastructure can produce 20 tonnes of grasshoppers annually. “We expect to reach 50 tonnes by improving our protocols and building more farms,” he says. 

Tamir tells me that today, even without marketing, the demand is ‘huge’. “I’d say [demand] is 60-80 times higher than our production capacity today. We need to scale up fast!” 

Biblical protein 

Hargol is stepping up the business with the launch of its first direct-to-consumer packed food. Tamir says the product will hit the shelves in the US branded as Biblical protein, targeting the evangelical community. “Grasshoppers are biblical food, mentioned in the Coran and the Bible as being kosher and halal. John the Baptist used to eat grasshoppers with honey. So, the new product line is focused on Christians. All the products contain honey, grasshopper protein and other ingredients featured in the Bible.” 

For a company in the Far East, why launching the product across the pond? Tamir says regulatory conditions in the market make export to the US a sound business. “Regulation is an issue when it comes to entering a new market,” he says. “Although people in Asia, Africa and Central America eat grasshoppers, there is no supporting regulation for importing insects as food; but there is in the US and also in Europe.” Tamir’s experience trading in the country and the size of the market have been factored in the decision, too. He says there are 18 million Christians in the US.

Look-alike John the Baptitst with Hargol Biblical protein
Hargol’s Biblical protein is set to launch in the US for the Christian community

Interest in Hargol’s grasshoppers and grasshopper products is on the rise, and Tamir tells me orders come from almost every part of the world, “except Antarctica”, he says. 

The Bible protein is the first of a new range in the making. Tamir tells me that ongoing plans will see the company launch sports protein powders, energy bars, and nutritional supplements in gummy form. “We’ll start with the US and Europe will follow,” he announces. 

Tamir knows the ‘yuck’ factor is still present in consumers’ mind, but he is positive that edible insects will go down the same path raw fish went on to become today’s trendy Sashimi, for example. “Look at the population that today eats edible insects: it’s a delicacy,” he notes. Tamir also argues that the world is changing, and consumers are looking for healthier and more sustainable food alternatives.  

“Even large food corporations are looking into these opportunities. PepsiCo has insects in the roadmap and has been experimenting with bug powders. IKEA has announced sustainability targets and has been experimenting on how to replace the beef in meatball with insect protein. I can say that Nestlé, Coca-Cola, and many more have insect protein on their radar, too. They understand the opportunity and what’s behind it,” Tamir concludes. 

Hargol has raised $5 million in funding from three rounds. The company is in the portfolio of the Trendlines, an incubator for early-stage ‘agtech’ start-ups in Israel. Other investors include Sirius Ventures of Singapore and Dutch firm SLJ investment, WeWork, and Agriline, the fund of Vincent Tchenguiz, Trendlines’ controlling shareholder. 

Flying Spark

Flying Spark founder and chief executive Eran Gronich
Flying Spark founder and chief executive Eran Gronich

Flying Spark, the company founded four years ago by Eran Gronich (pictured), produces protein powder and oil from the fruit fly larvae Ceratitis capitata. The company targets the consumer marketplace, but Gronich says business opportunities are in the pet and animal food market, too. He tells me the company has raised more than $2.8 million in funding to date, with private investors including Israel’s food-tech hub The Kitchen, Crimson Seed Capital, IKEA Bootcamp, Strauss Group, and seafood company Thai Union. Gronich says he hopes to close a $3 million Series A funding round in May. 

The protein that Flying Spark produces can be used in bakery, cereal, burgers and dairy products. “It’s tasteless and it’s 70% protein content,” says Gronich.  

The list of edible insects is long, but soldier fly, silkworms, buffaloworms, crickets, and grasshoppers are the main species commercialised today. Gronich’s Fying Spark is the first company in the world to sell protein from fruit fly larvae. He argues nutritional values, health benefits, and sustainability are superior. “Compared with traditional livestock farming, we are using less than 3% of the water and land, there are no methane gas emissions, and there is hardly any waste because we use 100% of the larvae in the production.” 

As for the nutritional content, Gronich says the powder is 70% protein with full amino acid profile, high in calcium, iron, magnesium and zinc, and low in fat. Flying Spark’s oil contains palmitoleate (Omega-7), an unsaturated fatty acid known for supporting good cholesterol, improving insulin sensitivity, and support weight management. 

The business, Gronich tells me, is a 24/7 protein production machine. “Fruit fly larvae production is done in trays stored vertically at 10-metre high ceiling warehouses. Every female larva lay around 350 eggs in 20 days, so the growth is exponential. The other amazing thing of this animal is that with a lifespan of only six days, it multiplies its body mass 15 times.”  

Flying Spark lab-scale product sample
Flying Spark lab-scale product sample

Production capacity at the moment is lab-scale (pictured), but the company is building a scale-up facility in Thailand to meet the anticipated demand.  

For Gronich, the challenge in the edible insect food segment is not the ‘yuck’ factor as much as the cost of the ingredient. He explains: “Insect protein is still more expensive for food companies compared with pea protein, soy protein, and whey protein, for example. We are working on bringing the production cost down to achieve a price point that is attractive for food manufacturers. Only then, I think, we’ll see the uptake of edible insects in the market. We have had talks with food companies and done pilots together; many of them are waiting for us to scale up.” 

IKEA, Gronich tells me, is in the queue. The Swedish furniture maker met Gronich in 2017 when the meatball producer selected the company for its first accelerator Bootcamp in Älmhult. “We spent three months in Sweden, learning the needs and requirements of the company,” explains Gronich. He says IKEA’s strict milestones for reducing the carbon emissions has put bug protein in the radar as one sustainable alternative for the business.  

Commenting on the ‘yuck’ factor, Gronich says the cultural barrier exists, but younger consumers are more aware of the benefit that insect protein provides to their health and the planet, and that’s where the opportunities lay for innovators and investors.

Eating bugs in Buenos Aires 

Chepulines founder Rodrigo Llaurado
Chepulines founder Rodrigo Llauradó

Younger generations are not only into bugs for sustainability and dietary preference but also into it for the business. Rodrigo Llauradó is an Argentinean entrepreneur and founder of Chepulines, a range of cricket snacks seasoned with chilli, lemon and salt, and tomato, basil and garlic combinations. 

Based in Buenos Aires, Llauradó has engineering and gastronomy studies. He tells me Chepulines is a play on words from the classic Mexican grasshopper (chapulines) and ‘che’, the Argentinean slang for ‘hey’. 

“Chepulines’ flavoured crickets are baked until crispy, and sold in 8-gram jars,” he says, adding each jar provides 4.5 grams of protein, one gram of fat, fibre, calcium, phosphorus and B vitamins. “The only issue with eating bugs is an allergy reaction,” he warns, noting bugs are in the arthropod family, thus relatives to prawns and shrimps. 

The business was launched in 2018 and went through a whole year of trial and error, but it’s now seeing revenue. By the end of 2019, Chepulines had sold 500 jars at a gross income of $1,285, selling across social media channels and email. “Orders are from within the city,” says Llauradó. “I had a good understanding of my client’s profile, so I knew how to target the market: Chepulines are offered to those who enjoy gastronomic diversity and are constantly looking for new flavours. Chepulines is presented as a culinary experience.” 

Chepulines product showcase
Chepulines, a range of cricket snacks seasoned with chilli, lemon and salt, and tomato, basil and garlic combinations

The initial response of his client base, Llauradó tells me, is often of surprise, anxiety, but also enthusiasm. “People want to experiment and learn. That is very important. I constantly share information about the entomophagous culture, its advantages, regulatory status, and so on. This information is vital to communicate a proposition that is so disruptive for the gastronomy in Buenos Aires, but also because the consumer wants to know about it.” 

Llauradó uses crickets of the gryllus assimilis family, sourcing them from Grillos Capos, a bioterium dedicated to raising five species of insects as well as reptiles. Llauradó tells me Grillos Capos is run by Daniel Caporaletti, a biologist and member of the research team that is lobbying the incorporation of cricket consumption within the Argentine Food Code. 

The market exists as well as the interest for edible bugs, but Llauradó says regulation and red tape in health and food authorities are the main issues to develop the sector further. In March, Caporaletti’s team filed a motion for the approval of cricket powder, and Llauradó expects to hear news from the authorities in June. 

Llauradó has self-funded Chepulines, and tells me he is now gearing up for attracting investors. 

The edible insect landscape in Europe is gaining momentum, too. The European Food Safety Authority is expected this year to recognise mealworms, lesser mealworms, locusts, crickets and grasshoppers as novel food and safe for human consumption.

Date published: 14 May 2020

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