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Ÿnsect’s $600M insect-protein dream collapses as the French startup enters judicial liquidation

Ÿnsect raised over $600M to scale insect protein for feed and pet food, but weak unit economics and a costly giga-factory bet ended in liquidation.

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The Ÿnsect logo, symbolizing the $600M insect protein startup's collapse into judicial liquidation due to poor economics.
Ÿnsect's $600M insect protein dream has collapsed, entering judicial liquidation.
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Once positioned as a flagship of sustainable protein in Europe, French insect-farming startup Ÿnsect has been placed into judicial liquidation after running out of cash. The downfall closes a dramatic chapter for a company that attracted celebrity attention, major impact investors, and substantial public support—yet never built a durable business around insect-based protein.

From Super Bowl buzz to insolvency

Ÿnsect broke into mainstream visibility during Super Bowl weekend 2021, when “Iron Man” star Robert Downey Jr. praised the company on the “Late Show”. Nearly four years later, the company has been placed into judicial liquidation for insolvency—an outcome akin to bankruptcy.

While the liquidation still landed as a stark moment for the sector, it wasn’t sudden. The company had been under pressure for months, and its collapse raises a central question for climate-tech and food-tech investing: how can a startup fail after raising over $600 million?

A big promise: “revolutionize the food chain”

Ÿnsect built its story around the idea that insect protein could offer a more sustainable alternative to conventional proteins used across the food system. The company framed its ambition as an effort to “revolutionize the food chain”—a message that resonated with impact investors and policymakers.

But the familiar narrative that Western consumers simply don’t want to eat insects misses a key point: human food was not the company’s main commercial target. Ÿnsect’s core focus was insect protein for animal feed and pet food—two adjacent markets, but with sharply different price expectations and margin structures.

A strategic tug-of-war: animal feed vs. pet food vs. human food

In practice, Ÿnsect struggled to commit to a single revenue engine. Animal feed offers enormous volume potential, but it behaves like a commodity business, where buyers often prioritize low cost over premium sustainability claims. Pet food, by contrast, can support higher prices and brand storytelling, but it is a different go-to-market challenge and doesn’t necessarily absorb the same industrial volumes.

That unresolved tension became more complicated in 2021, when Ÿnsect acquired Protifarm, a Dutch mealworm producer oriented toward human food. The move added a third commercial arena at a time when the company needed sharper focus and faster revenue growth. Even while announcing the deal, then-CEO Antoine Hubert acknowledged it would take a couple of years for human food to represent only 10% to 15% of Ÿnsect’s revenue.

Hubert also emphasized where the company expected to make most of its money: “We still see pet food and fish feed being the largest contributor to our revenues in the coming years,” he said at the time. The implication was clear—Ÿnsect was buying into a segment expected to stay marginal for years, while its immediate financial problem was insufficient revenue scale.

The revenue gap: big funding, relatively small sales

Publicly available financial data underscores how hard it was for Ÿnsect to turn industrial ambition into commercial traction. According to publicly available figures for the company’s main entity, revenue peaked at €17.8 million in 2021 (approximately $21 million). That number was reportedly boosted by internal transfers between subsidiaries. By 2023, the company recorded a net loss of €79.7 million ($94 million).

Those figures help explain why the business became fragile. Raising large sums can fund construction, hiring, and scale-up experiments, but without strong unit economics and repeatable demand, losses can outpace any runway—especially in capital-intensive manufacturing.

Why investors backed Ÿnsect anyway

Ÿnsect’s fundraising stands out not as a classic “2021 frenzy” story driven by crossover funds paying lofty multiples, but as a case where mission-aligned capital leaned into an environmental thesis. It attracted impact-focused backers such as Astanor Ventures and France’s public investment bank Bpifrance, alongside other sources including taxpayers and investors linked to Downey Jr.’s FootPrint Coalition.

The pitch was straightforward: insect protein could replace resource-intensive inputs such as fishmeal and soy. This same idea also fueled investor interest in other insect-farming companies, including Better Origin and Innovafeed. In theory, it offered a climate-friendly route to feeding animals and pets without expanding the footprint of conventional agriculture.

Where the sustainability thesis hit economic reality

The commercial challenge for insect protein becomes most acute in animal feed. Even when a product brings environmental advantages, animal feed buyers often optimize for price, because feed is a core cost driver in livestock and aquaculture. That means sustainability premiums can be difficult to sustain at scale.

Another complication sits inside the “circular economy” promise. In an ideal model, insects would be fed on food waste that would otherwise go to landfill. But factory-scale insect production often relies on cereal by-products that can already be used as animal feed. In that scenario, insects can become an additional processing step—one that adds cost—rather than a clear efficiency gain. For commodity animal feed, that cost hurdle can be decisive.

Why pet food looked more viable

Pet food operates differently. It is generally less price-sensitive than commodity feed and can reward differentiated ingredients and sustainability narratives. Even so, it’s still competitive, and it competes with other alternative proteins, including lab-grown meat. But compared with animal feed, pet food gave Ÿnsect a better chance to sell insect protein at prices that might cover production costs.

By 2023, the company refocused its strategy toward pet food and other higher-margin segments. Hubert attributed the decision to changing macro conditions, including inflation and the rising cost of capital.

“In an environment where there is inflation on energy and raw materials but also on the cost of capital and debt, we cannot afford to invest loads of resources in markets which are the least remunerative (animal feed), while you have other markets where there is a lot of demand, good returns and higher margins,” Hubert said at the time.

The costly bet that locked in the outcome: Ÿnfarm

Even with a strategic pivot, timing matters. Ÿnsect’s move toward pet food came after it had already committed to an enormous industrial build-out: Ÿnfarm, a “giga-factory” in Northern France that the company described as “the world’s most expensive bug farm.”

The facility was designed for large-scale insect production and consumed hundreds of millions of dollars in funding. The problem, as the company’s trajectory later suggested, was sequence: massive capital expenditures were made before Ÿnsect had fully proven the business model or its unit economics at scale. In manufacturing, that can become a trap—once a factory is built, it demands throughput, but the market may not be ready to absorb the output at profitable prices.

Leadership changes, shutdowns, and cuts

To oversee Ÿnfarm’s launch, Ÿnsect recruited Shankar Krishnamoorthy, previously an executive at French energy company Engie. When the shift toward pet food failed to stabilize the business, Krishnamoorthy replaced Hubert as CEO.

Ÿnsect also took restructuring steps, including shutting down the production plant it had obtained through Protifarm and reducing headcount. But closing one site did not fix the deeper mismatch between the company’s industrial footprint and the market economics it faced—especially while operating a giga-factory built for scale in segments that may not have supported that scale profitably.

Liquidation and what happens next

After the liquidation process began, Ÿnsect’s last CEO, turnaround specialist Emmanuel Pinto, said in a statement reported by French media that the company’s remaining assets are now available. He expressed hope that “the extensive technical and industrial expertise developed by the Ynsect teams, as well as the commercial relationships they have established,” could still be used constructively, contributing to “Europe’s protein independence” and efforts against climate change.

What Ÿnsect’s story says about scaling industrial climate tech

Professor Joe Haslam, who teaches Scaling Up in the MBA Program at IE Business School, argued that Ÿnsect’s failure is “not mainly about insects.” In his view, the collapse reflects “a mismatch between industrial ambition, capital markets, and timing,” worsened by execution and strategic decisions.

Importantly, Ÿnsect’s outcome doesn’t automatically doom the insect farming category. Competitor Innovafeed is reportedly performing better, and it is said to have benefited from starting with a smaller production site and then ramping up more incrementally.

Haslam also framed Ÿnsect as part of a broader European pattern: ambitious funding for “moonshots,” paired with difficulty sustaining the long, expensive push from pilot projects to full industrialization. He pointed to other examples, including Northvolt, Volocopter, and Lilium, to illustrate how scaling hardware-heavy, factory-dependent businesses can break down when capital, timelines, and market readiness don’t align.

Policy aftershocks and a new industrial push

The failure has also sparked reflection among founders and stakeholders. Hubert went on to co-found Start Industrie, an association that advocates for policies aimed at supporting French industrial startups. The initiative suggests a lesson that extends beyond any single company: building deep tech and industrial capacity requires more than fundraising headlines—it demands long-term coordination across financing, infrastructure, and execution.

Conclusion

Ÿnsect’s liquidation underscores how difficult it is to industrialize sustainability ideas in markets that reward low costs over environmental upside. With revenue that never matched its capital intensity, and a giga-factory commitment made before unit economics were proven, the company ran out of room to maneuver—offering a cautionary case for investors and founders betting on large-scale climate and food manufacturing.

Based on reporting originally published by TechCrunch. See the sources section below.

Sources

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