How Reality Crushed Ÿnsect, the French Startup That Raised Over $600M for Insect Farming

French startup Ÿnsect captured global attention when “Iron Man” star Robert Downey Jr. praised it on the Late Show during Super Bowl weekend 2021. Fast forward nearly four years, and the insect farming company has been placed into judicial liquidation essentially bankruptcy due to insolvency.

While the outcome may not surprise industry insiders, Ÿnsect’s journey highlights how even well-funded startups can collapse despite raising over $600 million from investors like Downey Jr.’s FootPrint Coalition, taxpayers, and others.

At its core, Ÿnsect aimed to “revolutionize the food chain” with insect-based protein but failure wasn’t about the “ick” factor often associated with bugs in Western diets. The company’s primary focus was never human food. Instead, it targeted animal feed and pet food, two markets with distinct economics and margins that Ÿnsect struggled to reconcile.

This indecision extended to acquisitions. In 2021, Ÿnsect bought Dutch startup Protifarm, which raised mealworms for human consumption, adding a third market to its portfolio. CEO Antoine Hubert acknowledged at the time that human food would account for only 10–15% of revenue for years. “Pet food and fish feed will remain the largest revenue contributors in the coming years,” Hubert said meaning the company was acquiring a marginal market just when it urgently needed revenue growth.

Revenue problems persisted. Publicly available figures indicate Ÿnsect’s main entity peaked at €17.8 million ($21 million) in 2021, a number reportedly inflated by internal transfers. By 2023, net losses had ballooned to €79.7 million ($94 million).

How, then, was Ÿnsect able to raise such huge funding with such meager revenue? The answer lies in impact-focused investors like Astanor Ventures and Bpifrance buying into Ÿnsect's vision of sustainability-offering a protein alternative to resource-intensive fishmeal and soy. That pitch attracted investors not only to Ÿnsect but also to competitors like Better Origin and Innovafeed, a signal this could be a good opportunity.

But the vision then collided with market realities. Animal feed is a commodity market, price-driven rather than driven by considerations of sustainability. Whereas in theory, insect protein could be fully circular feeding insects on food waste in practice, large-scale production relied on cereal by-products already suitable as feed and merely added cost without evident value. Simply said, the economics didn’t work.

Insect-based pet food offered a more promising avenue: lower price sensitivity, higher margin, and better adapted to insect protein competition versus lab-grown alternatives. By 2023, Ÿnsect shifted towards pet food and premium segments. "Economic constraint" was the reason behind this shift according to Hubert:

"Against a background of inflation in energy and raw materials and increasing capital costs we cannot afford to invest heavily in the least profitable markets when other markets have high demand, good returns, and better margins."

The pivot came too late, however. The company had already committed to Ÿnfarm, a "giga-factory" in Northern France billed as the world's most expensive bug farm. Built for mass production, it consumed hundreds of millions before Ÿnsect had proved its business model or unit economics.

To manage Ÿnfarm, Ÿnsect hired Shankar Krishnamoorthy, a veteran executive of French energy giant Engie, who would later succeed Hubert as CEO. It shuttered Protifarm's production facility and laid off some staff, but one closed facility could not balance a huge, awry giga-factory.

Professor Joe Haslam, expert on scaling businesses at IE Business School, summarizes:

"Ÿnsect's struggles are not a mystery and not mainly about insects. They are the consequence of a mismatch of industrial ambition, capital markets, and timing, amplified by execution and strategy choices.

Ÿnsect's failure does not mean the end of the insect farming business; competitor Innovafeed, for instance, is said to do better by simply starting smaller and scaling up gradually.

As such, Ÿnsect is for Prof. Haslam part of a far larger European challenge:

"Europe funds moonshots but underfunds factories. We celebrate pilots and abandon industrialization. Look at Northvolt, Volocopter, and Lilium. This collapse has brought reflection. Hubert co-founded Start Industrie, an association for the promotion of policies to help along French industrial startups-producer of the needed recognition that more than funding is required to nurture Europe's next generation of deep tech companies.