🦐 Dissecting with INSEACT

Today, we speak with Tim van Vliet, CEO and Co-Founder of INSEACT, a food technology company producing sustainable insect protein for aquaculture.

Founder Journey:

I got started as an entrepreneur in my late teens. I was selling office furniture in Holland until I was 21, which was around the time I graduated with my bachelor’s degree in Amsterdam. I went on to study and live in China afterwards, where I started my second venture in infant nutrition. Our business produced infant nutrition products in Europe for the Chinese market. Throughout this experience, I’ve gotten to learn more about dairy and protein and draw parallels between both industries, something that would prove critical to my next venture. Less than a decade later, I decided to make a switch and pursue my MBA at INSEAD.

I have dual citizenship as a Dutch and Samoan. I’m well in touch with my roots back in Samoa, which is an island in the Pacific. My family members are locals and have been living off the ocean for generations. During my recent visits, I found it quite shocking that my family couldn’t make a living anymore catching fish. This was mostly due to overfishing, in which majority of these fishes caught would then go into a commercial product called fish meal. Fish meal is not meant to be used for human consumption; it’s the key ingredient for farmed fish and farmed shrimp. It can take up to 3kg of wild fish to grow 1kg of farmed fish. The process is extremely unsustainable. I hypothesized this idea of using insects to feed fish. To me, the idea doesn’t seem as foreign, as fishermen traditionally use worms and insects to catch fish. It’s part of their natural diet.

I toyed with this concept during my time at INSEAD. My co-founder and I submitted and pitched this idea for the INSEAD Venture Competition, in which we won and received a grant. We garnered initial traction in the first few months. Given the flexibility offered during our MBA, we had to quickly decide if this was a good opportunity to further explore. French biotech company InnovaFeed, which was the global market leader for insect protein at the time, eventually caught wind of our idea and wanted to work with us. I ended up working for them for a year but came back to our original plan of working at INSEACT full-time.

Pain Points:

In a palm oil mill, palm fruit traditionally gets pressed to extract oil. The material left over includes waste products like empty fruit bunches and sludge that gets funneled down into large ponds. These waste products emit methane, which is one of, if not, the biggest source of greenhouse gases in Southeast Asia. The pain point within the palm oil industry is that these waste products cannot be fed to other animals and lacks any use.

Market Size:

The global aquaculture market is worth $270 billion; 84% of that value is in Asia. If you zoom into our addressable market (shrimp feed), it’s between $10–15 billion in Asia.

The industry is booming, and it’s hard to set up shop because you need a specialized understanding of not only insects, but the mechanics of the industry. For example, there are already two insect-based protein unicorns in Europe: InnovaFeed (my previous employer) and Ynsect. Yet, these companies are based out of Europe, where the aquaculture market is small. They must incur higher costs for their feed stock, which isn’t as environmentally sound. We’re getting our waste products at very low costs and within the vicinity of these large palm oil producers. That’s our advantage.

Product:

Our solution lies in our insects. We take complete waste products that are produced from palm oil mills and feed them to the insects in our farm. As they grow, we take the protein from the insects and sell them as an ingredient to the aquaculture industry, starting with shrimp feed.

Competition:

Although we compete with plant-based and cell-based protein startups over funding, we operate incompletely different markets. For example, many alt-protein startups are premised on the end consumer (B2C) eating their products and driving demand, whereas we operate a B2B model within aquaculture.

The environmental impact differs as well. Plant-based or cell-based proteins claim that they emit 30–40%less greenhouse gases than traditional beef or chicken. For us, we’re producing an insect protein that’s carbon negative. For every kilogram of our protein that is being produced, we’re reducing 10kg of greenhouse gases. That’s due to the insect consumption of waste. Therefore, in terms of environmental impact, our solution is better than the commercial plant-based or cell-based solutions out there. Nevertheless, it’s inspiring to have different players strive to provide a better solution for the entire ecosystem.

Team:

My initial co-founder was having a kid, so his priorities in life shifted. We both had a mutual understanding that a change was needed. He decided to go back to his previous employer Procter & Gamble, while we agreed to make Michael, who was already working with us, co-founder.

We have 6 full-time employees, consisting of Michael and me, our head of engineering, our entomologist and her assistant. We are hiring a partnership manager to support business development efforts, including setting up partnerships with palm oil companies. We previously had MBA interns focusing on our expansion plans into Malaysia as well as our Series A fundraising efforts.

Latest Breakthrough:

We publicly announced the close of our seed funding, which was exciting. We’re using the funds to build our pilot and R&D site in Singapore, grow our team and improve our sales. We’re also setting up the foundation for our larger site, which is going to be operational after we close our Series A next year.

From a personal perspective, I find it satisfying to see the team collaborating well together and enjoying the journey. Seeing that we’re getting a lot of interest from people wanting to join us is great. The sentiment towards the insect space is very positive, and we strive to continue building out a strong team to deliver our mission.

At INSEACT, we are fortunate to have a large shrimp organization sitting in our board of advisors. They’ve been supporting us as we explore business development opportunities. As one of the largest shrimp companies in the world, getting access to such an expansive customer base is a major milestone. It opens doors for future partnerships and gives us further credibility into the space.

Recent Shortcomings:

Changing co-founders is always difficult, especially because it needs to be communicated to stakeholders and investors. When we were closing our seed round, we had the opportunity to sign the term sheet and not tell anybody. But remaining silent wouldn’t be a sound long-term solution. Therefore, we decided to disclose this ongoing transition to our investors upon signing to see if they had any concerns. Fortunate enough, many of them were surprised that we made the move to tell them in the first place. I’m glad we did it anyway because being transparent helps build trust.

While we were undergoing this transition, Michael was still in the UK. To be fully settled into his new role, he needed to apply for an employment pass and make the move over to Singapore. However, with the pandemic, moving between countries was anything but smooth. He managed to arrive a few months ago, right before the Singapore government decided to restrict access to foreigners. This process was burdensome, as his delay in moving here was something we couldn’t control. We’re fortunate that everything panned out at the end and that we can work side-by-side together.

Founder Wisdom:

On breaking into alt-protein: Alt-protein is a hot industry. Whether if you decide to break into plant-based or insect-based protein, you need to come in with a serious, unique angle to survive. We’re seeing a lot of companies trying to set up shop, but majority are struggling to differentiate themselves from the rest of the pack. Many lack specialized experience or understanding of the market. Make sure you do your homework beforehand and find your niche.

‍On becoming an entrepreneur: I’ve worked as an entrepreneur all my life. If there’s a common theme I’ve noticed amongst successful founders, it’s about having a strong mentality. Having the proper, complementary skillsets as a co-founder doesn’t necessitate success. You need to feel comfortable to go out there and sell yourself while being okay with bad news. It’s a long-term game and it’s easy to give up after a couple of months.

This interview was conducted by Jeffrey Dong. Jeffrey is an INSEAD candidate currently working within the investment team at Golden Gate Ventures.

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