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

French startup Ÿnsect captured global attention in early 2021 when actor Robert Downey Jr. praised the company on The Late Show during Super Bowl weekend. Nearly four years later, the insect-farming company has entered judicial liquidation — effectively bankruptcy — after becoming insolvent.

While the collapse may still feel striking given the company’s high profile and massive fundraising, it was not entirely unexpected. Ÿnsect had been struggling for months, and its downfall offers a revealing look at how a startup can fail despite raising more than $600 million from a mix of celebrity backers, public institutions, and impact-focused investors.

At its core, Ÿnsect sought to “revolutionize the food chain” by producing insect-derived protein. However, its failure had little to do with consumer discomfort about eating insects. Human food was never its primary focus.

Instead, the company concentrated on insect protein for animal feed and pet food — two markets with very different pricing dynamics and margins. Crucially, Ÿnsect never fully committed to either.

That lack of focus extended to acquisitions. In 2021, Ÿnsect acquired Protifarm, a Dutch company specialising in mealworms for human consumption, thereby adding a third market segment. Even at the time, then-CEO Antoine Hubert acknowledged that human food would remain a small share of revenue for several years, estimating it would account for only 10% to 15% of sales.

Pet food and fish feed, Hubert said then, would remain the company’s primary revenue drivers. In practice, that meant Ÿnsect spent money expanding into a marginal segment while urgently needing stronger revenue growth elsewhere.

Revenue, ultimately, was the company’s central problem. Public filings show that Ÿnsect’s main entity generated peak revenue of €17.8 million (around $21 million) in 2021 — a figure reportedly boosted by internal transfers between subsidiaries. By 2023, losses had ballooned to €79.7 million (roughly $94 million).

How did a business with such limited revenue raise more than $600 million?

The answer lies less in hype and more in impact investing. Rather than chasing inflated valuations during the 2021 tech bubble, Ÿnsect attracted sustainability-driven investors, including Astanor Ventures and France’s public investment bank, Bpifrance. The company promised an environmentally friendly alternative to resource-intensive proteins such as fishmeal and soy—a thesis that also attracted funding to competitors such as Better Origin and Innovafeed.

On paper, the idea made sense. In reality, it ran headfirst into market economics.

Animal feed is a commodity business where price matters far more than sustainability credentials. In theory, insect protein could be circular, with insects fed on food waste. In practice, large-scale insect farms often rely on cereal by-products that are already suitable as animal feed. That makes insect protein an expensive extra step rather than a cost-effective replacement.

The economics doesn’t work.

Ÿnsect eventually recognised this and shifted focus toward pet food, a market more tolerant of higher prices and better suited to insect protein. By 2023, the company officially repositioned itself around higher-margin segments, with Hubert citing inflation, rising energy costs, and higher borrowing costs as reasons for abandoning low-return animal feed markets.

But the pivot came too late.

By then, Ÿnsect had already made its most consequential bet: Ÿnfarm, a massive production facility in northern France, the company once described as the world’s most expensive insect farm. The giga-factory consumed hundreds of millions of euros before the company had validated its unit economics or proven sustainable demand at scale.

To oversee the factory’s rollout, Ÿnsect hired Shankar Krishnamoorthy, formerly of French energy company Engie. When the pet-food strategy failed to reverse the company’s fortunes, Krishnamoorthy replaced Hubert as CEO.

Cost-cutting followed. The company ceased operations at the Protifarm facility and laid off staff. But closing one plant while operating a capital-intensive mega-factory designed for the wrong market couldn’t resolve the underlying structural issues.

For Professor Joe Haslam, who teaches scaling strategies at IE Business School, Ÿnsect’s collapse was neither mysterious nor primarily about insects. Instead, it reflected a more profound mismatch among industrial ambition, capital allocation, and timing—compounded by execution and strategic missteps.

Ÿnsect’s failure doesn’t necessarily spell doom for the entire insect-protein sector. Rival Innovafeed appears to be faring better, in part because it began with smaller facilities and expanded incrementally rather than betting everything on scale upfront.

To Haslam, Ÿnsect highlights a broader European challenge. “We fund moonshots, but underfund factories. We celebrate pilots, then struggle with industrialization,” he said, pointing to other troubled European ventures such as Northvolt, Volocopter, and Lilium.

The collapse has prompted reflection within the ecosystem. Hubert has since co-founded Start Industrie, an advocacy group advocating for stronger policy support for industrial startups—an acknowledgement that building deep-tech champions in Europe requires more than capital alone.