Welcome to an insect biotech podcast with me, Toby Webb. I’m one of the co-founders in charge of external affairs and sustainability. Joining me in the podcast today is Ben Brown, our CEO and founder. So, welcome back to the podcast, Ben. You’ve just been at the Insecta Conference in Berlin, which is a big insect conference with lots of academics and scientists. What is this event all about and what did you learn from it?

Ben: Learned a lot of new stuff. The event is an academic one spread over three days, presented by researchers, professors, and scientific institutes. It’s really focused on scientific research and not just networking events. Day one and day two were a bit easier to handle, but day three was strategically difficult. The main thing I learned is that the industry is really focusing on utilizing waste. Many companies are trying to find the most optimal substrate for their insects, but we’re about taking true waste and turning it into useful ingredients like protein, fertilizer, and oil. The event highlighted that we are on the right track.

Toby: You’ve been studying this area for about a decade and have set up a company in this space with demonstration plants in Spain. What do you think this conference says about where the industry is headed and how it’s matured in recent years?

Ben: The industry has matured significantly. There are now more service providers and big capital providers entering the space. There’s also more funding heading into this area, although some research may be too academic for the business world. Overall, the industry is still in its early stages, but it’s attracting serious interest.

Toby: Even though we’re called insect biotech, we’re trying to shift the focus towards valorizing waste, with insects being the mechanism. Do you feel the industry is too focused on insects rather than what they can deliver at scale?

Ben: Some people may be too focused on insects, but the industry is realizing that it’s about delivering sustainable protein and other products. The focus is on using waste streams responsibly and being environmentally responsible.

Toby: How do you see the outlook for the next year, especially considering the challenges the olive industry has faced?

Ben: The outlook is positive. If you look at the feed requirements of animals, the potential for the insect industry is huge. With sustainable farming practices, insect farming can compete with other industries. The industry is looking supercharged, and conversations with pet food businesses and aquaculture are promising.

Toby: It’s always tough starting a new company, but the future looks bright for insect biotech. Thanks for your time, Ben.

Ben: Thank you.

[TW] Hello, welcome to another Insect Biotech Group podcast, an interview with our CEO, Ignacio Gavilan. My name is Tobias Webb. I’m a co-founder and Chief Sustainability and External Affairs Officer here at IBG. Ignacio and I, along with our colleague Ben Brown, also a founder, are here at the University of Granada in Andalusia, Spain.

Ignacio, before we talk about what we’re doing here at the university and where we’re going next, for those who aren’t familiar, what does the InsectBiotech Group do? What are we doing now what are we aiming to do in the next few years.

[IG] Very good day to everyone. We essentially created this company almost a year ago to rear insects, specifically Black Soldier Flies, with full circularity in mind. So, we aim to take agricultural waste, particularly from Spain, especially from Andalusia, and convert it through BSF larvae into three products.

The first one is the insect protein, which will feed pigs, salmon, trouts, sturgeon, your dog, and your cat. The second one is the excrement from this insect. This insect has a lifespan of 10 to 12 days; all the direct excrement becomes organic fertilizer, which regenerative agriculture companies will benefit from.

And the third product, which comes from the skin of this larva, is chitin, used in oils that the pharmaceutical and beauty product industry can utilize. So, that’s, in essence, our purpose. That’s why we are here, and today is a very important day for us at the University of Granada.

[TW] What are we doing here? We’ve just been around the labs; we’ve just been meeting with lots of scientists. What are we doing here today?

[IG] As we said from the very beginning, research and development are key for IBG. So, we want to partner with universities. We started with the University of Granada, with whom we have an agreement for the next six months to look into the digestibility of substrates.

Going back to my original point, we’re going to use agricultural residues that come in different shapes and forms. We want the university to help us with the treatment, the pre-treatment of those substrates, to find the right mix. It could be olive pomace, brewers’ spent grain, or other residues from various industries, but these need to be pre-treated in order to maximize the digestibility by the larvae.

In other words, we want the larvae to grow strong in 10 to 12 days by making these residues highly edible for them, and that’s what the University of Granada is helping us with.

[TW] We’ve got our demo R&D unit here to grow larvae and feed them, testing the feedstock. We’ve got this team of amazing scientists, which means phenomenal labs at one of the best universities in the world for this sort of thing. Let’s say this works in three runs; we’re going to then take our pre-treated substrate or pomace blended with carbohydrates. What are we going to do with that?

[IG] We’re going to bring two R&D facilities in the form of a container. This is a 20-foot container. We’re going to install one here at the university and another one in the field in Jaén, in an olive crushing facility called Casa Grande. So, we’re going to start with the substrates.

Yeah, we’re going to test them, and those that are successful, we will progressively send to the other grow boxes. This container, in essence, is a mini plant. Once we finish this process in three to six months, we will be in a position to scale up into a plant, a proper big block, with the substrates that are more successful.

[TW] And what is the objective after that? Let’s say we get the feedstock, the substrate we want. We get it to Casa Grande. We start feeding it to black soldier fly larvae. They start spitting out this product that we want. What’s the next stage for the InsectBiotech Group? Let’s say, you know, March or April next year.

[IG] So, once we validate all this substrate, we’re going to go into the commissioning of a larger plant. Most likely, it’ll be in the province of Jaen. We’re already in conversations with the government of Andalucía, with research organizations, with other universities, and business schools in Sevilla. Of course, we are raising capital. So, if you happen to be an investor listening to us, please do contact us.

We’ve managed to successfully get enough to take off with these agreements, but we need the second round of seed money to continue with this process and to move into Series A, which is the bigger project. The government is very enthusiastic. There’s a strong likelihood that this project will be considered strategic for the region. Then, we will seek EU funding. Of course, we’re going to have to have some debt, some bank support, but as soon as we choose a few substrates that are good, we’re going to move into scale, starting by a big plant, moving into four or five units in the next five years.

[TW Ignacio thank you so much for your time.

[TW] Hello, and welcome to the Insect Biotech Group podcast. My name is Toby Webb, I’m one of the co-founders and look after sustainability and external affairs, and I’m here with my CEO, Ignacio Gavilan. Welcome to the IBG podcast, Ignacio.

[IG] Thank you Toby

[TW] You’re the CEO. What does that mean? What’s your job at IBG?

[IG] After 23 years spent in sustainability, I decided to move into the real world, basically moving away from pledges, from high-level stuff, into on-the-ground operation. What I have to do here is set up the company in Spain, and of course, as any other CEO, build the structure, the financial targets, and then of course, set up the operation, which is what is keeping us busy these days.

[TW] What’s the product we’re selling here, what are we making?

[IG] The real purpose here is that we’re turning olive oil milling agricultural waste in Spain – that’s one of the main reasons we’re in Spain, because this is the largest producer of olive oil – into a number of things [01:00]. Animal protein will be the most important, but then there are some other uses, like organic fertilizer, oils, and something called chitin, that can be sold for pharmaceutical and cosmetic purposes.

[TW] So, we’re using olive pomace waste, which is blended with other non-food waste, and that’s going to be fed to these black soldier fly larvae. They will grow over how many days?

[IG] 14 to 16 days, and there are a number of reasons why we chose the black soldier fly. There are a number of insects that are approved by the EU to be reared in EU markets, but we chose the black soldier fly. And why? Because the larval growth period is short – 14 to 16 days means multiple growing cycles throughout the year. It’s reported as feeding on an immense variety of organic materials and has already been used in small-scale waste management, using substrates like manure, rice straw, agricultural waste, and distillers grains. So, it’s a very versatile insect. I could go into a lot of technicalities [02:00] , but I think the black soldier fly larvae produces highly valuable products: high protein meal, agricultural fertilizer (also called frass), chitin, and insect oil.

[TW] We’re here in Andalucia because that feedstock is right on our doorstep. We’re calling it ‘green gold’ in the business, and that will lead us to create large volumes of protein and fertilizer over time. But to do that, of course, we’ve got to build a big factory, and that’s going to take a couple of years. So, what are we doing in the meantime? What’s the plan?

[IG] One thing we need to be very clear on is that we understand well the process with olive pomace and black soldier flies, but we need to make it extremely efficient. We need to get the conversion rates right. So for that, we’re setting up one or two small pilot facilities in Andalucia. It’s called a ‘grow box’ since it’s the size of a container, because we want to get it right on a small scale. After that, we will be moving to the first plant, 10,000 square meters, and in a few years, we hope to have at least five plants in Andalucia. [03:00]

[TW] So, this box, this demonstration plan, it’s a 20-foot shipping container, fully kitted out with air and heat control, perfect for R&D, that’s producing small volumes of product for testing. So that we can get customers to give us letters of intent, letters of approval, etc. Where are we going to put this grow box, this demonstration plant? I mean, the best place for it is right where the feedstock is.

[IG] Correct, we’ve spent the last six months talking to different suppliers of this feedstock. We have now secured two that are located in Granada and Jaen. This week, we sign an agreement with the University of Granada. They’re very happy to have one of these containers within their campus, which will be fantastic, because then the entomologists from the University and the scientists can collaborate with us. One thing we really want to do at Insect Biotech Group is research and development, and universities are at the heart of this.

So, we’re setting up these agreements with Granada to really go in-depth into the substrates, into the possibilities, again using olive pomace as the main substrate, but we will have to test as well other agricultural waste within Andalucia. So, to your point, we need to locate the plants right next to where the substrate is. These olive crushing facilities have very large ponds, very, very large ponds of olive pomace, which, to be honest, today is not getting any valorization. We will install our plants right next to them, so we avoid any type of transportation. It’s consistent throughout the year, and that’s a huge advantage when you’re dealing with insects, because consistency in the feedstock is critical.

[TW] So, we’ve come up with what we call the ‘Triple Play’ approach to our products and offerings, which very much fits with our sustainability strategy. The Triple Play sounds like some sort of American management jargon from the 1990s, but what do we mean by that?

[IG] There are three main things here, and circling our manufacturing: secularity is a key thing, regeneration, and sustainable inputs. Within that, I’m particularly interested in regenerating rural communities – well-paid local jobs, investment in local research and development, science research. Obviously, the whole purpose of this is also to displace unsustainable inputs, such as fish meal, fossil fuel, because fertilizers are basically today made out of fossil fuel. I think that’s the core objective. And then, obviously, manufacturing a sustainable 21st-century product – low impact, high efficacy. And to be fair, the lifecycle assessment of this whole project will be low compared to the status quo.

[TW] To summarize where we got to for our listener in the last seven minutes: what we’re talking about here is a Spanish company, which has shareholders and directors from around the world. Our co-founder, Ben, is Australian, a former marine biologist, and we’re bringing the idea of sustainable manufacturing and circular production down to Andalucia. Taking black soldier flies, using them as a bioconverter of olive pomace waste mixed with other waste products like brewers spent grain and bread waste, that’s being fed to black soldier fly larvae, which are converted to protein and fertilizer. We are in a stage of installing these demonstration factories to prove that our feedstock works optimally, which lab tests show that it will, but we need to prove that by making product. The next stage is where we move towards a large-scale factory. So, right now, what are we looking for from an investment point of view, Ignacio?

[IG] We’ve already raised capital, mainly from international investors. Now, the target is to develop local investors, so we’re beginning to speak with the likes of Santelmo Foundation in Sevilla, a very respected university. We are trying to attract that seed money that we need to get these two containers up and running. We’re very close to it, but we still need input. So, if you are an investor in Spain and have some spare cash, we’ll be happy to talk to you.

We would like investment that stays within the business, meaning we would love to have landowners, families from Andalucia, paying attention to this project because this is the future. So, we would like them to get involved with us, not only with cash, but we’ll be happy to have positions within the company for investors to work with us. We need doors to open in Andalusia; we need this to scale very quickly. The market is out there; aquaculture, for example, in Spain, requires millions of tons of insect protein. We need to scale up very quickly. So, I’m not worried about the funding coming in the long run; it’s, as always, the first million that’s a bit more difficult.

[TW] Thankfully, we’ve made great progress on that. We’re already quite well-funded; we just need to get that last bit in. And as you say, we’re very keen to be locally owned, at least in part, because we need that local buy-in. We have found that mother lode of feedstock, the green gold in Andalusia. We’re looking to convert that into 21st-century products using circular processes, so it’s very exciting. And if you want to know more, you’ll find out more on insectbiotech.eu. If you want to get in touch with Ignacio, you can just email ig@insectbiotech.eu

[TW] Hello, and welcome to an Insectbiotech Group podcast. My name is Toby Webb, and I am one of the co-founders and the Chief Sustainability and External Affairs Officer of the IBG. I’m here with our CEO, Ignacio Gavilan. So, welcome to the podcast, Ignacio.

[IG] Hi Toby, thank you.

[TW] We’re sitting here in Spain, discussing the sustainability aspects of our company. We’re doing separate podcasts about the pure-play financials and the plans, but we are also going to talk about that a bit here. However, we’re primarily focusing on the sustainability aspect because we’re a very mission-driven company.

We want to make a lot of money, but in a circular and sustainable way, by tackling serious problems and turning them into opportunities and positive outcomes. So, that’s what we’re talking about today. Let’s discuss the problem we’re trying to solve; there are a few of them, aren’t there? One of them is the enormous protein gap, meaning there’s a lot of protein needed and not enough available.

Secondly, there’s a big problem with climate change, and we think we can help with carbon removals by taking waste that would otherwise be burned or used poorly, and converting it into protein fertilizer.

Thirdly, there is a demand for non-fossil fuel-based fertilizer, specifically biogenic organic fertilizer, which can significantly impact agriculture. So, that’s another opportunity. I guess the last one, if we needed one more, is that we want to bring rural jobs to Andalucia highly paid jobs that deliver value for Communities and help secure the future of these regions because as we know we’re rural Spain like a lot of other rural areas of countries is fast becoming empty as people move to the cities.

So, we have an important social role to play as well. Those are the problems we’re trying to tackle. Ignacio why don’t you just give us a few key stats here perhaps to illustrate the points I’ve just made. [1:45]

[IG] Going back to your first point I think the animal in sector is right for disruption. Its based on rather unsustainable input those of us working on sustainability know it well, right? Roughly 5 million EU farmers raise animals for food production with a value for about 130 billion euros.

In addition, the 70 million pet owners in the EU buy roughly 10 million tons of feet for these pets and with the pandemic, this number has increased significantly every year. We need approximately 450 million tons of feed for animals. The current import for EU feed is basically compressive soy from Brazil and fish from the oceans to make fish meal.

If you look at soy, we all know Brazilian so production has recently seen deforestation, which is linked to 103 million tons of CO2 emissions, and if you look at the oceans, 37% of the almost 32 million tons of the world’s ocean fish that are caught are for animal feed. That doesn’t make any sense 90% of the catches turn into fish meal or fish oil, most of which is used as agricultural and aquaculture feed. Again animal protein sector – ripe for disruption. [3:00]

[TW] Well, that’s just one of the areas we’re tackling, but those stats are really, really helpful. Of course, the question the listener might have is, “Well, how are you doing that?” Well, in short, listener, what we’re going to do is take this olive waste and blend it with brewer’s spent grain and biscuit and baking waste. That will then be treated in some secret ways, and in a very sustainable way, of course, and fed to black soldier fly larvae. If you’ve ever seen the children’s cartoon or read the book “The Hungry Caterpillar,” it’s kind of similar to that.

The larvae eat voraciously for about two weeks, and while they eat, they poop and shed bits of their exoskeleton shell, whatever you might call it. That’s called chitin, and that drops in but with the poo below where they’re feeding. That’s our fertilizer, which also has a biopesticide element to it with the chitin and is also very good for soil health. Then, the larvae get fat, and we ethically slaughter them after 14 days with heat. They are then crushed, prepared, processed as required by customers [4:00] and then they are very high in protein, very high in amino acids, and minerals, the right kind of fats. They’d be perfect for a human diet, if only there wasn’t an enormous yuck factor which means none of us want to eat them. [4:00]

Cricket flour is one thing; black soldier fly protein bars, we’re not ready for them yet. But that doesn’t matter for us, because we know the demand for this product from pet food companies is enormous, from aquaculture companies, and then down the kind of pyramid, we’ve got chicken feed, pig feed, and possibly even cattle feed.

This is a product with an incredibly low environmental footprint. It displaces those unsustainable inputs that Ignacio just mentioned, but it offers a nutritional profile which is absolutely unrivaled. If you look at the science of cats and dogs’ nutrition, which we have been studying quite a lot over the last six months in some of the studies and some leading studies recently, dogs and cats fed on black soldier fly and insect protein were healthier than those fed on traditional pet foods.

Now, there’s a long way to go to prove that case absolutely, but even if it’s just equivalent, the carbon benefit and the environmental benefit is enormous. So, as you can probably tell, we’re terribly excited about this. So, I think that’s probably laid out the opportunity. Ignacio, what are we doing right now about this? How are we trying to seize upon this opportunity? [5:10]

[IG] We’ve concluded the phase where we are analyzing the substrate and have reached a comfortable point. We know these larvae eat olive pomace, along with the other substrates that you mentioned before. Let’s bring this to practice. I’m now living in Spain. We recently completed a trip to Andalusia, where we met with a number of key stakeholders, among them the University of Granada, with whom we set up a very interesting partnership.

We’re going to set up a small container, it’s called a grow box, a traditional 20-40 foot container, where we can test all the different substrates to get to a point where we can scale that up. In the next few months, we’re going to install this container. We have the help of an entomologist from the University, and we need to add to conversion rates, temperature control, and animal health to a point that we can scale that up.

We’re extremely excited for the next three to six months, running all of those tests. It’s going to be at the industrial park within the university. I’m sure a lot of students will love to stop by and touch the larvae. And once we have a great control on all of these different variables, we’ll scale up to a 10,000 square meter plant, and from that, in the next few years, up to four to five plants. [6:28]

[TW] We also want to put one of these grow-box shipping containers next to an olive oil mill. Let me tell you more about that. [6:35]

[IG] One of the keys here is to be next to where the sub-product is. We have another agreement with an olive crushing facility in Jaén, who has agreed to have another grow box. So, we have two: one in the university, and the other one in an actual olive crushing facility, next to it. This means no transportation cost for our inputs.

The owner is terribly excited because, just thinking about valorizing his olive pomace, which as of today is not truly valorized, thinking about selling that to other farmers as fertilizer, excites him very much. Also, as animal feed for the region, so technically, we could take a residue from one plant and sell it to the neighboring plants, which proves the circularity of all of this project. [7:17]

[TW] Listener, we have raised quite a bit of capital already, which is our pre-seed round, as these things can be called. We’re now in our seed round, where we’re looking for about the same again, perhaps about a million euros. And we know that impact investors, climate funds, and all this kind of thing, private equity, venture capital—I mean, they’re all different groups, but there’s lots of interest in this. Whenever we talk to them, a lot of them say, “Come back when you want three million.”

At the moment, we only want about another million to complete this testing phase. We then need about 35 million for our Series A. If you’re listening to this and you’re interested in the Series A financing, which we’ll start looking for next year, do get in touch.

The bridge in the middle that we need to cross is that extra bit of funding to get us through the testing phase. We’re looking to get local stakeholders involved in that, so high net-worth individuals, family offices, businesses in Spain, but if anyone out there is listening to this and is interested in getting involved outside of these things, do let us know.

Or, if you know someone in Spain who might want to invest in IBG, do contact us. Or, if you’re interested in the Series A financing, which will have excellent returns by the way, and we can talk you through them. All our predictions look very good because our input cost is pretty low, and our footprint is very low, but our output is very efficient. This is truly modern industrial manufacturing in the circular economy. Looking forward to hearing from anyone out there who’d like to work with us.

In the meantime, Ignacio, thanks so much for your insights and your time. Looking forward to the journey together towards truly circular manufacturing that tackles climate change.