Singapore-based Karang Foodie, which specializes in upcycling food waste, has acquired feed company INSEACT. The all-equity deal will see 100 percent of INSEACT’s shares transferring to Karang’s control.
Amid rising global demand for alternative feed, as seafood companies seek to lower input costs and secure supply in the face of high fishmeal costs, there are also signs that high-interest rates are impacting the ability of firms to raise cash, which is one of the main reasons why INSEACT decided on selling its company rather than pursuing other forms of funding.
“We have been trying to raise Series A [funding], but the dilution would be too high and the runway too short,” INSEACT Co-Founder Tim van Vliet told SeafoodSource. “We made the decision that we’d rather sell than take investor money.”
Van Vliet said his company signed sales worth SGD 10 million (USD 7.7 million, EUR 6.9 million) since introducing its product to the market and that the firm is in “good hands” in the ownership of Stephanie Kudus and George Foo, the entrepreneurs behind Karang Foodie. Bug along with INSEACT’s fellow co-founder Michael Badeski, van Vliet rang alarm bells about the industry’s ability to raise money due in part to high-interest rates, which have dampened investors’ ability to borrow cheaply and combined with investor skepticism to hurt the sector's ability to grow.
“I don’t believe the alternative feed industry is doing that well,” van Vliet said. “The long road to profitability is not accepted by investors these days. The markets and startups in general are doing badly right now, and it’s hard to raise money at decent valuations, especially for capex-intensive projects.”
More established players in the feed sector are cheerier about the industry’s future. Gaetan Crielaard, the co-founder of Vietnam-based Entobel, told SeafoodSource that a combination of factors is buoying demand for his company’s output. He said high fishmeal prices and industry concerns surrounding El Niño, biodiversity loss, and general supply scarcity that have plagued traditional fish feed “are all coming together nicely” to ensure that seafood companies continue to turn toward alternative feed.
Leo Wein, the head of alternative feed company Protenga, is also bullish on the industry’s future. Wein told SeafoodSource he sees a “major tailwind for alternative proteins, [with] insect protein [being] the one [option] that is technologically ready, tested, and understood the most by the industry.”
Protenga, which has research and production facilities in Singapore and Malaysia, has a “significant backlog of orders” built up over the past year, according to Wein, adding that in the past year, he’s seen a shift from exploratory calls from prospective customers to more firms seeking specific supply commitments, and that customers are starting to work on firming up their supply chains for alternative ingredients.
Wein said his product is price competitive with Latin American fishmeal but still not on par with Asian-produced local fishmeal supply. Protenga supplies customers in Japan, as well as South Korea, Southeast Asia, and Latin American salmon-farming companies.
China – the world’s top seafood producer – is also seeking alternative feed, but some firms in the country are choosing soy-based feed instead of insect options, according to Jim Zhang, the head of the U.S. Soybean Export Council (USSEC) office in China.
“Because of the pandemic, the overall demand for soy products certainly was negatively impacted,” Zhang said. “However, the impact was not as huge as expected.”
Zhang said his organization is expecting an increase in demand for U.S. soy in China throughout the final quarter of 2023.
“With the improvement of the pandemic, most production is back to normal, which very much helps to drive the demand for soy products,” he said. “The soybean meal price has gone up – probably in the range between five and 10 percent, depending on where you are. The main reason for that is because right now it is the middle of the peak season for aquaculture in China.”
Though demand for alternative feed continues to grow, China’s production of higher-end carnivore species such as largemouth bass, Mandarin fish, yellow catfish, and snakehead carp requires a base of traditional fish feed, making it difficult for alternative options to fully conquer the market, Zhang said.
“In the diets for these species … there must be some fishmeal, and it will probably take some time to achieve 100 percent replacement of fishmeal with plant protein in these diets,” Zhang said.
Innovation in the alternative feed space overall continues to skyrocket, best exemplified by the contest for alternative feed ingredients run by Future of Fish Feed (F3), a collaborative effort between NGOs, researchers, and the seafood industry, which has been “inundated with new competitors who have sent me almost 30 products for us to test,” said Kevin Fitzimmons, an aquaculture expert and F3 member.
“I have also had discussions with several formulators from feed companies asking for opinions on which products they should be investigating and adding to their supplier list,” he said. “The more advanced companies selling algae meals, black soldier [fly] and mealworm meals, and fermented and hydrolyzed products are selling everything they can produce – same with the pea protein, byproduct nut meals, date palm meal, and any of the processed aquaculture byproducts.”
The Chinese seafood and feed industry is “very much interested in and participating in the shift,” Fitzimmons said. “The last Chinese Aquaculture Nutrition meeting I attended had scores of presentations on alternatives and a trade show with plenty of products being touted. A couple of them have also submitted samples for the F3 contest.”
Photo courtesy of INSEACT
