In February, its current shareholders Aqua-Spark, Rabo Corporate Investments and BOM Brabant Ventures took part in a €15.5 million investment round. This included a €7.5 million investment in the form of a convertible loan from Invest-NL.
This is the Dutch state-backed development bank aimed at accelerating the transition to a carbon-neutral society, which launched in January last year.
Protix opened their world’s biggest insect factory in Bergen op Zoom, the Netherlands, in 2019. It breeds larvae from the Black Soldier Fly (BSF) and processes them into ingredients for use in animal feed.
Pioneer in multi-billion industry
“Protix is a pioneer in making a multi-billion dollar industry more sustainable,” Leo Holwerda, director capital at Invest-NL, said in an email. “In the long run, our society will become less dependent on soy, fish meal and palm oil for our proteins,” said Holwerda.
Protix plans to use the extra funding to invest more in technology, a further professionalisation of our commercial department and prepare for international expansion, said co-founder Kees Aarts in a phone interview.
Since its foundation in 2009, Protix has attracted €100 million in invested capital.
“By helping to grow the company into a world player in this new market, Invest-NL expects to realise an excellent return, both financially and in terms of impact”, said Holwerda.
From hobby to a new industry
Since Protix was founded by Kees Aarts and Tarique Arsiwalla, both alumni of Delft University, it has created an entirely new sector.
Eleven years ago, the insect industry was very much in its infancy, with no legislation for use in animal feed, and with mealworms ‘being grown in a cardboard box’, Aarts said.
Now, Protix sells products in fifteen countries. Last year it posted revenue growth of 400% to around €7 million.
“On all fronts, we have been able to create a switch from a hobby industry to a serious ingredient and nutrition industry,” said Aarts, who came up with the idea for an insect company during a trip to Mozambique in 2009.
No fish whatsoever
During the first two days of a diving trip to the African country, Aarts, then a management consultant at McKinsey, had spotted eight whale sharks. But when he went to a different diving site the next day, he saw no fish whatsoever.
That night, Aarts had an epiphany that would change his life and create an entirely new industry: with overfishing linked to food and feed production, how about producing an alternative source of protein from insects?
A couple of months later, Aarts and his colleague at McKinsey, Arsiwalla, quit their well-paid consultant jobs to breed insects.
Initially run from Arsiwalla’s attic in Amsterdam, Protix envisaged using local food waste as feed for insects, which would, in turn, be used as sustainable proteins for animals such as fish or poultry, thus replacing non-sustainable protein like fishmeal or soy.
“We are always looking for companies who can make a difference”
In the decade that followed, Protix developed new technologies, established an intellectual property portfolio and was instrumental in creating new legislation.
In 2012, Aarts and Arsiwalla also co-founded the International Platform of Insects for Food and Feed (IPIFF) that succesfully represents the interests of the insect production sector towards EU policy makers.
The Dutch founders' pioneering spirit attracted Rabo Corporate Investments (RCI) to Protix. “We are always looking for companies who can make a difference,” Arjan van der Hout, associate director at RCI, said in an interview via video call.
“And Protix is unique because it is such a pioneer in a really new industry.”
More productive than algae
Protix mainly produces larvae from the Black soldier fly, which is most suitable to grow on by-products and food waste.
Its products range from ingredients for pets, animals, fish and chicken feed to foods and snacks for humans, including consumer brands such as Oerei, Friendly Fish and Enough.
Its new factory has a production capacity of more than 5,000 tonnes of protein per hectare per year. That’s 1,000 times more productive than a soybean field and a 100 times more productive than an algae farm.
Addressing two very big problems
“The beauty of the concept of insects is that it addresses two very big problems,” said Van der Hout. “There is going to be a lot more demand for protein globally."
"But the way protein is produced has some issues, especially if you look at animal protein from beef or pork. The impact in terms of water and land is very high. Insects are much more efficient.”
“Second, it also tackles food waste, it's a very circular concept. The insects use waste streams from other industries. It tackles a combination of problems, and that's what makes it interesting for us.”
And finally, the international expansion plans of Protix – Aarts said it aims to have “two or three” large production facilities up and running in the next four to five years - also appealed.
“For us as investors, it's important that you can roll this out on a large scale,” said Van der Hout.
Overturning European ban
RCI works closely with the companies it invests in. “The relationship is all about where we can strengthen each other,” said Van der Hout, adding that one of its people will often join the supervisory board.
“We have a very large team of agrifood analysts who also monitor the insect market and the end markets, so we can help with that.”
The relationship with another early investor, BOM Brabant Ventures, is equally strong. When Protix needed help trying to overturn a European ban on the use of insect protein in fish feed in 2010, the southern Dutch province of Brabant and its development agency made its legal department and vast network in Brussels available to Aarts and Arsiwalla.
That support, when Protix was still a startup, made all the difference, Aarts said. The ban was lifted in 2017, enabling Protix to raise €45 million to build its new factory in Bergen op Zoom.
Search for new investors
In the next four to five years, Protix aims to raise between €200 million to €250 million from investors to fulfil its expansion plans, Aarts said.
“We have always approached investors ourselves. But since we reached the milestone of achieving 100% production capacity, we will intensify the search for investors. For example, we will add an investor relations department to our organisation,” he said.
"We now really want to focus entirely on the really serious financiers: the larger family office and ESG investors who can help handle our capital-intensive agenda and who can also help develop acceleration and decisiveness with their money, enabling more financial structuring.”
For Aarts, who has written a book called The Footprintarian about moving to a low footprint society, the world is at a tipping point.
“I am still an optimist but we don’t have much time left,” he said. “The difference between future or failure will be determined by the resource allocation in the next ten to twenty years.”