Strategic Mistakes in Insect Farming: Ynsect's Bankruptcy Process

France's Notable Initiative: Ynsect

The insect farming initiative Ynsect, based in France, has entered into a legal liquidation process due to serious financial difficulties it has faced recently. Once regarded as a "game changer" in the sustainable food sector, the company managed to attract significant investor interest in 2021 when famous Hollywood star Robert Downey Jr. praised insect-based protein products, successfully raising 600 million dollars in funding.

Inadequate Strategy and Poor Prioritization

However, over the past four years, Ynsect's production model based on insect protein has failed to deliver the expected transformation. The factors behind the company's collapse are associated more with strategic mistakes and misprioritization rather than the public's "consumer bias towards insects."

Indecision and Weak Growth Strategy

Ynsect chose to allocate its activities between the animal feed and pet food markets for a long time. Despite these two areas presenting quite different pricing dynamics and profitability structures, the company's inability to make a clear decision on which market to focus on weakened its growth strategy. Especially in 2021, by acquiring the Dutch company Protifarm, which produces worms for human food, Ynsect added a third area to its portfolio, investing in a limited space during a time when it needed revenue the most.

The Clash of a Big Vision with Realism

While Ynsect started with peak revenues of 17.8 million euros in 2021, by 2023, it had to report a 79.7 million euros net loss. The significant investment the company attracted was influenced by strong sustainability narratives from impact-focused investors such as Astanor Ventures and France’s public investment bank Bpifrance. However, this narrative did not align with the high price sensitivity of the animal feed market, failing to meet sustainability expectations.

Giga Factory: High Expenses and Consequences

In 2023, although Ynsect attempted to shift its strategy toward high-margin segments, this move was too late. At the same time, it continued to expend significant resources on its giga factory, known as “the world’s most expensive insect farm,” built in northern France. This facility quickly consumed hundreds of millions of dollars in serious investment.

Delayed Measures and Bankruptcy Process

In the final stage, although measures such as closing facilities and layoffs were taken, they were not sufficient to halt the financial collapse. The company is reported to have entered legal liquidation and its remaining assets have been put up for sale. Experts attribute Ynsect's bankruptcy to excessive industrial ambition, capital market expectations, timing mistakes, as well as poor implementation and strategic choices. The events underscore once again that a sustainability vision is not sufficient for commercial success.