Trendlines Group’s Agrifood Fund has made an investment of an undisclosed size into the Singaporean start-up Insectta, which is developing technology to extract antimicrobial materials from insect waste.
Insectta was founded in 2018 amid a surge of interest in insect farming and had originally targeted creating a more sustainable fish meal replacement by breeding the black soldier fly, said Anton Wibowo, chief executive of Trendlines’ Singapore-based AgriFood Innovation Centre.
But as the insect industry grows in the coming years, waste biproducts will also increase significantly and could threaten the sector’s environmental credentials – this convinced the company to pivot towards treating the waste the burgeoning area would create instead, said the CEO.
“At the early stage, the black solider fly grows into a pupa, a worm-like creature,” explained Wibowo. “When the pupa grows into the adult insect, they shed their shell. This shell is like a shrimp’s shell – that is one of the raw materials that can be used to extract chitosan. Other parts like the cuticles, the legs, which don’t contain a lot of protein can also be used.”
Chitosan is an ingredient that is used in the pharmaceutical and cosmetic industries due to its antimicrobial properties. It is used in areas such as food packaging and medical bandages.
Insectta is targeting a market launch for its extraction technology in the next 18 months and is also working on extracting other by-products from insect waste, but Wibowo declined to expand on this. The company currently only works with the black solider fly, but in future could work with crickets and meal worms, which are the other two main insect types being tested globally as protein and fish meal alternatives.
The Trendlines Agrifood Fund is a 2018 vintage and has a $40 million target, which it hopes to hit in November, said Wibowo. The fund secured a first close at $22 million in October 2019, receiving a $10 million commitment from Temasek, with British entrepreneur and Trendlines’ largest shareholder Vincent Tchenguiz also investing in the fund, along with an unnamed Indonesia investor.
Wibowo said the coronavirus pandemic has negatively impacted the fund’s ability to raise capital due to the cancellations of road shows in Europe and China, but it has led to more realistic valuations among agtech start-ups, he noted.
“For the past one or two years, we feel valuations have been rising rapidly because everyone was looking at agri and impact investing because of sustainability, and the UN’s Sustainable Development Goals. Now with covid-19, one of the first investor types that will be taking their money out is general investors who are not focused on this area,” he said.
“There is a realization that what drove valuations was not disruptive technology, but just a supply-demand gap. Now we see more realistic valuations.”