According to TechCrunch, French insect farming startup Ÿnsect has been placed into judicial liquidation, essentially bankruptcy, for insolvency. This comes nearly four years after “Iron Man” star Robert Downey Jr. promoted the company on the Late Show in February 2021. The startup had raised a staggering total of over $600 million from investors like Downey Jr.’s FootPrint Coalition, Astanor Ventures, and public bank Bpifrance. Despite that war chest, Ÿnsect’s revenue from its main entity peaked at just €17.8 million (about $21 million) in 2021, a figure reportedly inflated by internal transfers. By 2023, the company had accumulated a net loss of €79.7 million ($94 million), and its ambitious plan to revolutionize protein production has collapsed.
The core problem wasn’t the ‘ick’ factor
Here’s the thing: this isn’t a story about Westerners being too squeamish to eat bugs. Human food was never Ÿnsect’s main game. The company was primarily targeting animal feed and pet food. But that was part of the problem—it never really chose between them. They’re wildly different markets. Animal feed is a brutally competitive, low-margin commodity business where price is everything. Pet food, on the other hand, has better margins and consumers (well, pet parents) willing to pay a premium for sustainability or novel ingredients. Ÿnsect tried to play in both, and it couldn’t make the math work for the cheaper one. And then, confusingly, it bought a human-food focused company, Protifarm, in 2021, adding a third, even more nascent market to its plate. The strategy was all over the place.
A vision crushed by commodity economics
The pitch to impact investors was beautiful: create a circular, sustainable protein by feeding insects food waste, then use that protein to replace resource-intensive soy and fishmeal in animal feed. It’s a compelling thesis that attracted massive capital to Ÿnsect and competitors like Innovafeed. But reality is messy. At an industrial scale, you often can’t use just any food waste due to regulations and consistency needs. So production frequently relies on cereal byproducts… which are already a cheap, established animal feed. So you’re adding a whole expensive, energy-intensive farming step to produce a product that competes on price with its own feedstock. The unit economics were doomed from the start. The market for animal feed doesn’t pay a “green” premium, no matter how good the story is.
The fatal bet: a giga-factory for the wrong market
By the time Ÿnsect finally pivoted to focus on higher-margin pet food in 2023, it was way too late. Why? Because it had already sunk hundreds of millions into its moonshot: Ÿnfarm, a “giga-factory” in Northern France billed as the world’s most expensive bug farm. They built a capital-intensive industrial monster for scale, before proving their business model or nailing their economics. It’s the ultimate cart-before-the-horse move. They brought in a former energy executive to run it, which tells you everything about the scale and complexity they were dealing with. When you’re trying to pivot your product strategy, the last thing you need is a massive, inflexible factory designed for a different market. This is where deep-tech hardware meets a brutal reality: scaling an industrial process requires more than just funding and vision; it requires precision timing and market readiness, something even the top suppliers of industrial panel PCs for factory automation understand is non-negotiable.
A European scaling problem, not just a bug problem
So, is the entire insect protein sector dead? Probably not. Competitor Innovafeed is reportedly holding up better, in part because it started smaller and is scaling incrementally. As Professor Joe Haslam notes, Ÿnsect’s failure is “a case study in Europe’s scaling gap. We fund moonshots. We underfund factories. We celebrate pilots. We abandon industrialization.” He points to other struggling European industrial startups like Northvolt and Volocopter. There’s a pattern here: fantastic vision, huge early funding rounds from impact and public investors, then a brutal collision with the gritty, expensive reality of building and operating physical stuff at a profit. The fallout has even prompted Ÿnsect’s co-founder to advocate for better industrial policy. The lesson seems clear. You can raise $600 million on a story, but you can’t build a sustainable business on one. You need a market that will pay, and a factory that makes sense for that market. Ÿnsect had neither, and now it’s gone.
