Creepy crawlies are set to invade investor portfolios as momentum continues behind sustainability and climate change action.
ESG investing is already entrenched in the investment landscape, with both institutional funds and private retail investors opting to put their money into ethical products and projects that benefit society, rather than harm it.
And while certain industries, such as electric cars and green hydrogen, are ascending as the ‘sexiest’ ESG investment, incredible insects are buzzing in the background, waiting for their time to shine.
The Black Soldier Fly
One of these insects, the Black Soldier Fly, is a promising solution primed to take off. The Black Soldier Fly, or BSF, is a powerful solution to a colossal environmental problem – organic waste.
BSF larvae are ferocious eaters of anything organic, consuming double their body weight each day. Around the world, innovative companies are feeding these flies tonnes of organic waste that may otherwise be sent to landfills. This is where the climate change benefit comes in – when food waste is dumped into a landfill, it produces methane, a dangerous greenhouse gas.
BSF are not only a clean, safe and environmentally healthy way to dispose of organic waste, but the insects also recycle their own food supply. After gorging on the organic waste, the larvae are converted into a range of essential products, all without emitting a single unit of methane or CO2.
Currently, this by-product is mainly used as feed for the aquacultural and agricultural industries and fertilizers, although there is research underway to identify other valuable uses. And it is valuable – a global shortage of protein-rich foods is forecast, and animal feed and aquafeed will be vital to meet the growing demand for protein.
On investors’ radar
From food to feed – this is the circular economy in action, and private investors are noticing.
Better Origin took home $3 million from a February funding round led by Fly Ventures and solar entrepreneur Nick Boyle.
Netherlands-based Protix raised $15.5 million as it seeks to expand globally, while the UK government has put £10 million into a multi-party project involving Entocycle, Betabugs and Durham and Warwick universities.
Businesses using other more established, yet less effective, insects such as the mealworm have also previously raised huge amounts, with French Ynsect raising $372 million in a series C funding round between 2019-2020.
Ones to watch
Two particularly exciting BSF-focused enterprises are the aforementioned Entocycle and Israeli Entoprotech.
Entocycle’s ultra-high-tech approach and collaboration in the UK government-backed insectrial revolution project certainly sets it apart from the pack.
Entoprotech, however, emerges as the frontrunner and should be on the radar of every savvy investor. It’s based in Israel, a bio-tech haven and one of the most innovative and research-centric countries in the world, and this gives it a real competitive advantage. Entoprotech is currently engaged in ongoing R&D collaborations with leading Israeli universities and research centres, and is also exploring BSF bioactive potential with a view to developing novel feeds that provide better nutrition for domestic animals.
Its geographical position also breaks the stranglehold that Western Europe has on the BSF industry and can serve as a jumping off point for expansion into neighbouring countries and regions. It’s solid positioning, considering that Entoprotech’s stated goal is to recycle organic waste by building plants around the world, implementing a truly circular solution to solid waste, climate change and protein demand in every community where they operate.
What comes next
Unfortunately for the average Joe, investing in these companies is still a proposition for the future. At present, no firms in this budding industry have gone public, with competition still centred around private funding in an attempt to scale and expand their businesses.
However, both the societal and investor climate are perfectly cultivated for this industry to explode, and it soon will. Savvy investors will keep a close eye on the BSF and the companies mentioned above, primed to strike when funding competition finally moves out of the private shadows and into the public domain.