Buzzy Business: This Singapore-Based Startup Raised $28 Million To Grind Flies Into Farm Food

“People approach insects with a lot of baggage, a lot of fear and disgust,” says Martin Zorrilla, CTO at Nutrition Technologies, in an interview at the startup’s headquarters in Singapore. “We take advantage of the fact that society has looked away, and instead look very closely at these organisms and recognize how remarkable they are at what they do.”

Founded in 2015, Nutrition Technologies processes black soldier fly larvae into supplements for animal feed and fertilizers. Its products include Hi.Protein, a protein powder for usage with pet food, aquatic feed, or feed for chickens and pigs, and Vitalis, a liquid fertilizer the startup claims can prevent fungal disease and improve plant health.

Chiefly operating out of a two-hectare factory across the border in Malaysia, the company aims to double down on its expansion in the country and eventually expand into new markets across Southeast Asiaincluding Thailand, Vietnam, Indonesia and the Philippines.

Investors have swarmed to Nutrition Technologies. To date, it’s raised a total of$28 million, with its most recent $20 million funding round in 2022 led by the venture capital arm of Thailand’s state-owned oil and gas giant PTT. In June, U.S. agricultural giant Bunge invested an undisclosed amount in the startup, as part of a joint venture to expand in Southeast Asia. Two months earlier, in April, the startup inked a partnership with Japanese trading house Sumitomo Corp., which committed to import and sell 30,000 tons of Nutrition Technologies’ fish feed by 2030.

Across previous rounds, Nutrition Technologies’ investors have included Hera Capital, Openspace Ventures and SEEDS Capital, an investment arm of Enterprise Singapore.

The company declined to disclose its current valuation and most recent revenue. NTG Holdingsthe holding company of Nutrition Technologies, reported revenues of $380,855 for the year ended October 31, 2022, up from $73,402 the year before, while losses widened from $4 million to $7.9 million over the same period, according to its latest annual financial statement on Singapore’s Accounting and Corporate Regulatory Authority (ACRA) website. Thomas Berry, cofounder and co-CEO of Nutrition Technologies, says the figures “do not reflect sales or productivity” after the company’s factory completed construction in 2022.

“We found that Nutrition Technologies has the first mover advantage in Southeast Asia,” says Buranin Rattanasombat, chief new business and infrastructure officer at PTT, in a video interview. “They are not early-stage, they are in their early commercial stage…if they can improve in terms of efficiency and in terms of product quality, they can be cost-effective to run their product in the Thai market or overseas market.”

An employee mixes black soldier fly larvae at Nutrition Technologies’ factory in Johor, Malaysia. COURTESY OF NUTRITION TECHNOLOGIES

In the buzzy insect-as-feed sector, Rattanasombat says Nutrition Technologies’ edge lies in its proprietary fermentation process and its low-cost facilities. PTT’s investment involves providing expertise and resources–for one, Mekha V, PTT’s AI robotics arm, collaborates with Nutrition Technologies on “operational projects,” such as automating production tasks.

Tapping into agritech is part of a forward-looking strategy for the 44-year-old petrochemicals company, which has a market capitalization of almost 1 trillion baht ($28 billion). “Now we have a new vision for our company…we try to diversify our vision from fossil fuels to future energy that can serve global climate change,” says Rattanasombat.

To feed cratefuls of black soldier flies, Nutrition Technologies bacterially ferments raw agricultural waste, such as palm oil fibers or coffee grounds. The fly larvae consume the fermented waste until they’re fully grown, a process that takes up to 10 days. Producers at the startup’s facilities then grind the larvae into powder or compress them into oil for animal feed. Separately, producers mix the larvae’s frass, or debris from its digestion, with a microbial inoculant extracted from the black soldier flies. The resulting product is a fertilizer containing living microorganisms, known as a biofertilizer. Producing one kilogram of Nutrition Technologies’ flagship Diptia biofertilizer requires a bioconversion process with 200,000 black soldier fly larvae, the company says, andat any single point in time, there are roughly 3 billion larvae in cultivation.

“People approach insects with a lot of baggage, a lot of fear and disgust…we take advantage of the fact that society has looked away.”Martin Zorrilla, CTO of Nutrition Technologies.

Nutrition Technologies specifically selected black soldier flies for their immune system, says Zorrilla, a former postgraduate fellow at Cornell University. Unlike mosquitos, the flies are not vectors for diseases otherwise known as zoonoses, illnesses that certain animals can pass to humans. The genes of black soldier flies can potentially produce over 50 antimicrobial peptides, molecules that can assist immunity, according to an open-access research paper published last January in the American Society for Microbiology’s journal, Microbiology Spectrum.

“People may not really know what their food eats, but a lot of feed ingredients have pretty high-risk profiles,” says Zorrilla. Examples include grains contaminated with strains of fungus, known as mycotoxins, and feed consisting of the animal’s own species. While regulations on these ingredients exist, they vary worldwide–for instance, the maximum amount of deoxynivalenol, a type of mycotoxin, in animal feed is 10,000 parts per billion (ppb) in the U.S., but only 5,000 ppb in the EU. “Compared to conventional food production systems…insects are actually a really remarkably kind of clean and efficient way to feed animals,” he adds.

Buoyed by population growth and improved purchasing power in emerging, increasingly urban economies, global meat production reached 364 million tons in 2022, with meat prices reaching an all-time high, according to the United Nations Food and Agricultural Organization. Meeting sizzling demand for meat has far-reaching environmental costs, particularly for the staple crops of soy, corn and other grains that livestock must consume. Up to 80% of the world’s soy is used as a source of protein to feed land animals, according to the World Wide Fund for Nature, but farming soy is land and water-intensive, posing the risk of deforestation in nations that are major soy exporters, such as Brazil. More broadly, continued strain on staple crops is one of many factors making food systems more vulnerable, along with ecosystem degradation and an increasing global population–set to reach 9.7 billion by 2050–the United Nations Commission on Population and Development wrote in a 2021 report.

Insects like black soldier flies have emerged a potential protein sources for livestock, although further research may be required to prove their efficacy. Black soldier fly larvae are rich in fatty acids, proteins and minerals, although these larvae cannot “completely replace” soybean meal yet, according to a 2022 review by researchers in Thailand, published in the open-access journal Insects.

Cattle eating at feed troughs on a farm in Brazil. JONNE RORIZ/BLOOMBERG

Nutrition Technologies may face competition from other insect-as-feed startups headquartered in Singapore that aim to expand in Southeast Asia. Last May, Entobel, which focuses on aquafeed, raised a $30 million funding round; months earlier, last March, Insect Feed Technologies raised an S$1.25 million ($918,000) seed funding round to develop black soldier fly fish feed and pet food. Larger, EU-based companies in the sector have also announced plans to expand in Southeast Asia. These companies include Netherlands-based Protix, which raised an undisclosed investment from billionaire John Tyson’s Tyson Foods in October, and Paris-based Innovafeed, which raised $250 million last September in a round led by Singaporean impact investment firm ABC Impact.

Regulations for the use of insects in animal feed vary greatly worldwide, posing potential headaches for manufacturers. In the U.S., authorities prohibit producers of pet food, fish bait and animal feed from importing live black soldier flies to use in their products, but they can apply for a permit to import crickets, mealworms and other insects. At present, black soldier flies cannot be used to feed livestock intended for human consumption, but can be used for pets, in products such as dog food. Manufacturers of animal feed in the EU and U.K. are allowed to incorporate animal remains, including insects, into their products, even for livestock intended for human consumption–but these insects cannot be fed any waste containing animal remains, according to legislative reforms from 2021. Scientific regulations on breeding insects are not well-established, with some academics questioning the ethics of such breeding when there is no scientific consensus on whether insects can feel pain.

“The most challenging part of our expansion has definitely been understanding the different biological limitations, and finding out what the unknown unknowns are,” says Berry, referring to the challenges in optimizing variables like temperature, airflow, and the proximity of larvae in their growing trays. “Luckily, where we are today, with all kinds of industrial proof of concept, we believe that most of these are now being met.”

A former program manager at the UN, Berry met Nutrition Technologies’ fellow cofounder and co-CEO, Nick Piggott, when they worked on the UN’s food security programs in Sierra Leone, West Africa. Piggott was a program consultant for the United Nations Population Fund, but “whilst working in a big institution, we weren’t able to hit our personal goals,” says Berry. Their idea for an increasingly circular economy, in which agricultural waste could serve as the basis for fertilizer, served as the inspiration for Nutrition Technologies.

Samples of different Nutrition Technologies materials. SHANSHAN KAO FOR FORBES ASIA.

Next year, the agritech startup plans to unveil several new black soldier fly biofertilizers, building off the startup’s most recent product line, Diptia. The biofertilizer incorporates insect chitin, which the startup claims can stimulate the immune systems of plants. To increase its production capacity, Nutrition Technologies also aims to raise “a mixture of debt and equity” as capital to start building a second industrial plant in 2024, which Berry says will be three times larger than its current plant.

“Within five years, I would hope to have a network of different Nutrition Technologies factories around the region…supporting local economies and improving food security,” says Berry. “That’s what we’re passionate about, and that’s what we want to see done here in Southeast Asia first, before we can branch out to other regions around the world.”