Ÿnsect, the French company producing insect-based proteins, has laid out a plan to lay off the majority of its workforce as it seeks ways to overcome long-standing financial difficulties.
The scaleup, which farms insects and transforms them into protein ingredients that can be used to create food for animals and humans, has spent nine months under the supervision of a French commercial court as it faces risk of insolvency. It is due to present a plan on 16 June with the objective of convincing the court that the business can still be turned around.
The plan includes laying off 137 employees out of Ÿnsect’s total workforce of 194 people, as well as freezing part of its flagship factory, Ÿnfarm, to test a new model for farming insects with lower production costs.
This will enable Ÿnsect to “continue adapting the business’s structure to the current conditions in financial and commercial markets, and to negotiate its debt with creditors,” the company told Sifted in a statement.
“We think this is not a good plan,” Florent Dupriez, head of research and development (R&D) in health and biosafety at Ÿnsect, who represents the company’s staff, tells Sifted. “It doesn’t preserve jobs, and it comes with risks… There are other possible ways.”
What happened to Ÿnsect?
Ÿnsect has raised more than €600m to date but since 2023 has struggled to find funding to bring Ÿnfarm, which launched in 2020, to full capacity.
This has proven difficult because Ÿnfarm is a huge 45k square metre industrial plant and includes complex technologies to automate insect farming.
The company entered ‘safeguarding proceedings’ in September, a voluntary procedure that occurs when a company is at risk of insolvency. It initially sought to secure an additional €130m in funding to scale Ÿnfarm; failing to do so in February the company filed for insolvency and opened a call for bids to sell for parts.
There has been one offer to buy Ÿnsect’s pilot factory dedicated to R&D in Dole in eastern France, from Keprea, a company founded last year by Ÿnsect cofounder Antoine Hubert. The offer is currently being scrutinised by the commercial court.
In parallel, under the new plan most of Ÿnfarm’s operations would be put on hold while a lower-cost method to farm insects is implemented, based on a model proposed by a partner company based in Germany. Ÿnsect says once the necessary volumes are reached at Ÿnfarm, “automated farming can be put back into service, integrating feedback from the experience.”
“We’ve built a new factory, a technological revolution,” says Dupriez. “The plant works… To stop everything and start from scratch is crazy. We lose all the know-how, the patents, the IP. We can’t abandon it just like that.”
Dupriez is calling for the government to subsidise the scaling up of Ÿnfarm over the next few years, which would enable volumes to increase and production costs to lower.
The plan put forward by Ÿnsect would require securing an additional €10m to fund testing of the new model. This would follow Ÿnsect securing €10m in bridge funding in April, which allowed it to remain operational for a few more months.
“This was largely public money,” says Dupriez. “And we keep asking for more [...] It’s not with €10m every three months that we’ll have a vision.”
It will be up to the court, later this month, to decide whether or not to greenlight the plan.