Today, I’d like to teach you a new word: entomophagy. It means the eating of insects.

As well as telling us that we’ll own nothing and be happy by the end of this decade, those Davos dudes at the World Economic Forum would like us to switch a decent proportion of our protein intake to beetles, ants and termites. I can hear you salivating already…

Apparently, there are already more than two billion of us humans eating over 2,200 varieties of these little fellas in various parts of planet earth. Other than bush tucker challenges on I’m A Celebrity Get Me Out of Here, I can’t say that they’ve made it into my stream of consciousness so far.

But, if the ‘experts’ are to be believed, they’ll be coming to a High Street near you very soon. Why? Because they are a more environmentally friendly way of generating protein than those four legged moo cows with their planet warming flatulence.  Producing a kilo of insect protein consumes only a tenth of the water, food and land as a kilo of beef. And the greenhouse gases are as little as 1% of their bovine competitors.  

Which makes it a slam dunk for the UN tree huggers and their political allies still wedded to the seventeen Sustainable Development Goals. So the idea is unlikely to go away any time soon.

But will Western consumers buy it? It’s one thing for Mexicans to put grasshoppers in their tortillas or to accompany a beer in Thailand with deep fried beetles, but what about us more refined types in Europe and America? I’m surprised by a 2021 Yougov poll that suggests a quarter of us are willing to add creepy crawlies to our supermarket shopping list.

There could be a half way house whereby insects are used as an ingredient in a product that gets converted into foods that we’re more familiar with. Have you tried losing weight on a caveman high protein diet? Maybe you could switch from a conventional flour to one made from pulverized crickets. Lots of protein and minerals and, allegedly, a nice nutty aftertaste. Yum yum.

OK, I may not have done a great sales job on you so far. But there’s more. The success of insect farming as a business does not depend on you and I dropping out into a commune to sing Cumbaya around the camp fire while nibbling on the nearest swarm of dung beetles. There’s plenty of money to be made while doing good simply by focusing on insects as part of the animal food chain.

I’ve seen high end pet foods appealing to environmentally aware owners with insect protein as a core ingredient. But the big bucks are in livestock feed. We can delegate the virtue signaling to farmer Giles and his cattle herd while still savouring the medium rare sirloin steak in pepper sauce that we’ve always cherished.

Insect farming is not a capital intensive business. You don’t need to clear the land and you can feed them on waste products like vegetable peel. The resulting protein can be used to feed chickens and as fishmeal as well as forming part of the diet of larger farm animals.

It probably hasn’t hit your radar yet, but insect farming start-ups have raised over $1 billion from venture capital firms in the last four years. And that’s in a market that has generally been tough for new raises thanks to a combination of a pandemic, inflation and higher interest rates.

And, just for a change, America is not leading the way. French company InnovaFeed raised $250 million from the Qatar Investmet Authority which has funded a 35,000 square metre plant producing black soldier flies. Fellow French outfit Ynsect raised €160 million to expand their business growing molitor and buffalo beetle mealworms used in fish feed and pet food. Not to be outdone on size, American firm Protix is building a 45,000 square metre site that will start operations in 2025.

Here at Inside Investor Club, we are keeping our finely tuned antennae on the lookout for a direct private equity investment opportunity in this new sector that clearly has some tailwinds pushing it along.

Watch out for dung beetle canapes at our next live event…