The French company closed a €160 million ($175 million) financing round, bringing the total amount raised so far to about $625 million. It’s shifting away from animal feed — such as mealworms fed to fish — to high-margin pet food and food ingredients to boost profit amid soaring energy, raw materials and debt costs.

“We are really focused today on where the value, the revenue are the highest,” and where the climate and biodiversity footprints are best, Ynsect co-founder Antoine Hubert said in an interview. “Animal feed is a good market, but it takes more time to make a positive financial and economic impact.”

Insects have emerged as a sustainable protein, helped by regulatory approvals in Europe, but bugs still remain a niche market and pricier food in the West. Securing financing has also been difficult for startups and new technologies amid increased investor scrutiny and more limited funding. 

Hubert reiterated the challenges the sector faces, saying investors are thinking harder about where to put their money. 

“It’s positive to see in this tough environment, to find support and people who believe in what you are doing,” he said.

He didn’t name the investors in the most recent round because Ynsect is currently discussing a second tranche of the funding, to be concluded this year. Previous backers have included Astanor Ventures, Bpifrance and Iron Man movie actor Robert Downey Jr.

Ynsect, which operates farms in France, the Netherlands and the US, is also expanding in Mexico, while eyeing a possible entry into Asia. Its Amiens plant in northern France, which it says is the world’s largest vertical farm, is expected to deliver as much as 160,000 tons of insects a year.  

The company has secured about $175 million in supply contracts and is in the process of negotiating customer deals worth about $1 billion. 

It’s seeking to follow an “asset-light,” less capital-intensive business model with a combination of joint ventures and licensing agreements. It plans to phase out production of food ingredients at its Dutch farm and gradually convert it into a scientific center.

The strategy shift will lead to the global workforce of 360 people being reduced by about 20%, though the company still plans to hire roughly 40 people for new positions.