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    37 min read

    [S2:Ep #12] Amazing women in the next gen proteins space

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    Extraordinary entrepreneurs in the next gen proteins space join to shed light to some of our main concerns. Watch Tommaso Di Bartolo, founding partner of Awesm Ventures, along with industry fellows Elif Ceylan, an Agricultural Engineer, Serial Entrepreneur, Co-Founder of Open Gate Partners, and Naomi Canty, Sales, Marketing and Growth Hacking Expert in the Food and Beverage Industry, hosts two passionate game-changers in the next gen proteins space: Virginia Emery, Entomologist, Founder and CEO of Beta Hatch; and Carrie Chan, Co-Founder and CEO of Avant Meats.

    TopFloor: Where handpicked startups present sector-specific innovations to a jury of industry fellows



    In Season 2, recognized world-class Researchers, Scientists, Faculty Members, Senior Executives, Experts, Chefs, Investors and Entrepreneurs from around the globe, engage in strategic exchange of views and share startling intel on viable transformative innovation in Agriculture, Food and Beverage, zooming in the next gen proteins space.

    Topfloor is where inspiring and passionate game changers, visionary entrepreneurs share startlingly impressive intel on food of the future with a panel of experts.


    With Special participation of



    [Industry Fellows] Topfloor: S2:E12 



    Elif Ceylan
    Naomi Canty
    Agricultural Engineer, Serial Entrepreneur, Co-Founder of Open Gate Partners

    Sales, Marketing and Growth Hacking Expert in the Food and Beverage Industry


    [Startup Entrepreneurs] Topfloor: S2:E12 



    Virginia Emery
    Kai Yi Carrie Chan
    Founder and CEO of Beta Hatch
    Co-Founder and CEO of Avant Meats


    Serial entrepreneur w/ 2 exits, author, advisor, faculty, investor.
    Tommaso Di Bartolo


    Key points:

    • Cell-based protein 
    • Animal feed: thinking insects
    •  Market and challenges in the next gen protein space



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    Episode's 🔖 Transcription


    Tommaso: Welcome to our 12th episode of Season 2 of our Topfloor.


    Optimizing the lab


    Tommaso: I want to kick off things with Carrie Chen. We are really curious to hear what you guys are trying to solve at Avant Meats. Take it from here, you have a good eight to 10 minutes followed by questions.


    Carrie: Thank you very much for the great opportunity to speak with and discuss with all of you about cultivated meat today here. And so it starts with. Okay, how is meat actually produced: so we actually get a lot of food and we feed the animal, and then the animal will break down the food into nutrients and feed into the cells and then then the animal will grow bigger, and then they grow more muscles, etc. And then we get the meat. So this has been doing this for many, many years. And then we realized that now the system is actually very inefficient for turning about 100 units of this energy in the form of animal feed, we only get about 10% each, and up to about 15% maximum of this in the output in terms of meat. 


    In addition to that, we actually have a bunch of the undesirable product side products, which are the parts that we don't eat greenhouse gas in case of a lot of cows for example, a lot of ways and see which as well. And in this case, because we industrialize the whole process anymore do live in very congested areas and then easily get ill and then we use antibiotics and no cannot be avoided from time to time. So we do have those that are residual in our food product from time to time. 


    What if we can actually remove the animal, the middleman in the process? By doing that, we can actually remove all of this waste and what we get is the cell and then we have the meat we want in a shorter time actually. So this is the idea of cultivated meat technology. We're developing this method to do different kinds of meat. 


    However, we start with fish in the case of fish, there are also other benefits. For example, we will be able to ensure that we do not have unnecessary or undesirable component elements into our supply chain such as pollutants, such as the other disease and microplastic. Now we know that is pretty much our important concern when it comes to seafood. And so imagine we are collapsing the whole supply chain which originally or existing is starting from fishing or farming some fish, cutting them up exactly, etc. And then we end up in our food product in the future the whole chain will be collapsed in one single equipment, which is a very controlled and clean environment and which is about reactors and then we can also manage the whole process and have it in a very stable manner. And so if we look at the demand for fish Asia actually consume a lot China long 35% the the issue that we would like to address also here is that with fish, the animal in the ocean, half of them are actually caught from the ocean, although half of them are farm is because a lot of fish species cannot be domesticated. So we end up with a problem of overfishing 90% of marine ecosystems are already depleted and the number of fish in the ocean are decreasing every year and the supply and demand will not be matching in the in future and there have been actually projection we see that the capture from the ocean actually already plateau we rely more and more on aquaculture production, however the demand is increasing. 


    Then we see that the gap will be arising between the demand and supply. And let's say in the case of China some of the production even for aquaculture already plateau because of various environmental and also the operational challenges as well. And so of course we can also consider upon base which is actually a very good option, we are actually doing another option for consumers in case we would like to have more choices and this option we actually going to sell in entirety and then for the nutritional profile, our chemical properties is exactly the same as the cell we find in the piece of meat. So there we are, this new product, the development of the technology is an ongoing, and is expecting about a year or two that we will start seeing this product in the market and in the future. Indeed we will see multiple sources of the meat were coming from including cultivated meat of course plant based version and of course conventional meat will continue and then however the distribution will be a bit different according to at Kearney's analysis. 


    In our case, how we started we actually take cell from fish and then develop them into cell line and then produce them in a in a vessel actually a bioreactor and then in a shorter time, in this case about two months time, then we can get the fish meat or the fish protein we want and so in in my son very unfamiliar when it comes to meat however. 


    Think about it. We have been using these bioprocesses to make a lot of delicious food such as yogurt and beer. So why not meat? It is very similar even the equipment is almost the same very similar process indeed. And so here we are offering meat. We are the very first cultivated meat technology company based in Hong Kong Science Park. And this other core area that we are working on in our r&d. So cell lines, cell culture media, scuffle and scalar production, I do not go too much into detail of that. But what we would like to mention is already having a lot of proprietary solutions for three core areas and they are patent pending. We're looking to launch our product in the coming couple of years, and we have of course done a series of prototype tasting with different groups of audience, different chefs and different recipes all of them are very interested and finding the product very tasty. 


    In future we look to produce ingredients that we can supply to food and beverage companies as a branded ingredient, we are producing some fish more, which is from the Asia market, we're actually launching a prototype in November in a public event online event, we're actually showcasing our free lay prototype in the future. Of course, everything in the middle including fish cakes can be produced using this method. And of course, other marine protein applications even for external use as well. 


    How is this going to be appealing to the consumer in the future? First of all, what we use as a method, we do not use GM. And then it is 100% sauce to product traceable, very environmentally friendly, we do not use any more components into the production process. What's more, is that we can actually customize the nutritional profile of our product. Let's say we want more lean meat muscle, or we want more collagen, it can be done so much more easier using this technology. So it's very, is a very good solution to be working with consumer products, especially in this case, we do not need to take out the bones and skin is so easy to be incorporated into a food product processing. So this is Carrie from Avant Meats. 


    The cell-based market


    Tommaso: Naomi, what are your thoughts?


    Naomi: I think like you said, if we're launching in a couple of years, what have you done to look at that supply chain in terms of how you're going to get it to market? And I would imagine you're looking at all the retail channels and the food service channel, right?


    Carrie: Indeed, the scale is actually one of the major r&d that we're actually working on. So we have the cell line. We have the medium already zero free as of July. So, we already cut down the cost by about 90%. We also have the scuffle is a very technical term basically it gives a structure to the product that it can hold a sell three dimensionally. So we have the texture for that for the fillet we're presenting in November. Indeed, what you have mentioned is a key point is a scale up. 


    We have actually two approaches. One is that of course we can, we also have a proprietary solution for a machine which is an improved version of a bioreactor we can find nowadays in the market that are more suitable for making biologics. But we actually have a proprietary solution to develop a prototype for the director that will be more suitable to make the food product and of course, the scale is a very important part. We're in it, we're in the middle of putting together a bioprocess team. And so we actually will be in the pilot scale up our very first step. So we go from the benchtop scale to about 50 liter to 100 liter in 2021 and is basically a learning it's kind of a learning curve, but there's no totally new scientific principle involved. 


    I will give an example. It is more like I bake a cheesecake at home and now I need to produce 1000 cheesecake every day. So is the process of devising the whole machine and sequence and how I can have 100% replicable and control of the input output the control of the food safety and everything into the process. So this will take about nine months in a year ish to reach the stage and we can have a pilot small production and then we actually have already sent out some initial sample to a couple companies as well as an external US Marine trucking company who are interested in adopting this technology in their product for product ideation, etc. After, there are quite a bit of things to think to still work on. But we're looking at you in about 24 months each that we will have something very much close to, that we can produce to fulfill meaningful demand.


    Naomi: Have you thought about specific channels where you're going to be launching? You're talking to food companies, so is the direction and focus more as an ingredient, or a standalone product that because you did mention branded as evod in the supermarket aisles or in chain restaurants? Is there a specific channel that you will be focused on initially to get that trial and sample?


    Carrie: We would like to work, we're actually in discussion with a couple of food product companies. And so it will be more like through them rather than retail restaurant for surface to begin with, we will supply so in the case of these fish cake as the example that I've shown, instead of getting the fish meat from whole piece of fish that the food product company need to clean chop up, remove the skin, the bones, etc. In order to plan into the food product, we actually can supply this, our filet in are almost ready to be baked or bread, that kind of format. That could even help to streamline a lot of the product processing. And so this is what we're offering as a value proposition to food product companies. And of course, there's I would have to say, some product out there. Let's say for some Chinese or Asian dishes, where you want to see the whole shape of the fish, this technology is not really the best. So that's why in the future, we do see there will be still some conventional source of fish. But then using this technology, we can actually offer a much more convenient ingredient to be combined into a ready to consume and ready to cook kind of consumer products really working with product companies that can streamline their production process.


    Tommaso: Elif, what are your thoughts?


    Elif: So the first thing that comes to mind, I know cell based agriculture is pretty fascinating. And I know it was up to about 500 million investments that went to this in 2019. I think if I'm not mistaken. What I'm really focusing on, though, is if you did touch base a little bit on this, but plant based versus cell based. Why would the consumer go for the cell based when there's the plant based? What do you see as the pluses and minuses? 


    Carrie: That's actually a very good question. I actually, personally, am vegan. And I do see that there is definitely value. Also, that's a very meaningful test option, I have been eating some time based and a lot of fish as well. But however, in my circle, or maybe a bit more so in Asia, I will say that in us or in Europe, the idea of picking up our plant base is a bit much faster. In Asia, I see that the tradition, the food preferences is still a lot of us surrounding the meat version of that. So I see that the momentum, the speed that it is going versus the speed of turning more the primary time base is not offsetting each other that much. So that's why we think that here, we would like to over and in particular, and other options there. And for people who would like to get the flavor a bit more like neat, of course, there are a couple of methods out there. One is fermentation, the other is really getting the actual cell. Because the cells that we manufacture in the lab, I taste it myself actually, they do taste very highly of animal protein and fish kind of flavor. So that will be something that could either be combined with plant base, of course, or alone in the future. And for people who are concerned about the nutrients for example, This, of course, will be offered the whole full range of amino acids that we will find in the meat. I personally think that vegans are also very healthy, but for people who actually would like to consume directly, the whole range of amino acids, of course, this is a very good option to actually make use of this method.


    Naomi: Have you visualized your target audience like, who's your persona? If you were to think of age groups in terms of awareness. In terms of the geographical region, I'm curious who would be going for the style bass fish? 


    Carrie: That's a very good question as well. So we know that for sure, we know that the price point at the beginning would not be super affordable. So we will guess that at the beginning, it worked a bit for the people who actually have a certain kind of affordable budgets to go for something like at the moment, maybe organic versions of the equivalent of the meat version. And then we also think that the people who care a lot about the environmental impact of what they choose in terms of a food source, as well as in particular for Asia, I will have one more extra benefit is that the traceability because food scandals or fake products are actually quite abundant. I went to say, unfortunately. So those are transparency and traceability and provenance that we can offer to people who care a lot about those and willing to pay a bit more premium for that they would be our first segment, first bunch of consumers to address.


    Tommaso: Carrie, you were mentioning IP intellectual property and that you have fair remember correctly, two or three patents pending in your food. Patents are always a big challenge, right? Do you mind breaking down? What angle are you embracing to tap into the IP space? 


    Carrie: We have three core areas that we focus on are in a proprietary solution. One is without the genetic code modification, how we can improve the cell productivity in a way that is not drastic, so it's not double or triple because that won't be natural. But we will marginally to a certain extent reasonable percentage, we can improve the metabolism or some of the action of the cell without touching the genome causing in Asia, in China, and GM is not allowed for food production. So we will need to stick to that principle. Then we managed to improve the productivity of the cell. In particular, the protein that's produced by the cell and the other we try to address, this will help us to reduce the cost because if the cell is more productive, by consuming less nutrients, then we can reduce the cost. The other is that we replace the protein factor which is the most important and the major key driver cost driver in the process, we can actually produce that in a more bio bioactive form, and then in a way that we can also use less in order to drive the cost down. So these are the two key major areas that would like to drive the cost down. The third is that through the improvement of the bio processes, we can also reduce the consumption of the medium and others to drive the cost down, as well as having equipment that's most suitable to produce a cultivated beat in the future. So these are the three key areas, we have to say cost is still our top priority here. 


    Tommaso: How big is your team? Give me a bit of a sense of your startup. When did you start again? And how big is the team? And maybe the three in one question, but it is also related to startup? What's your funding either strategy or your funding situation right now?

    Carrie: We started at the end of 2018. Myself, and co founder Chief Scientific Officer, Dr. Murray, who has been very successful with entrepreneurs in his previous company, before joining us. We now have eight team members and r&d team, there are five and among them, two of them have a PhD in cell biology background as well as tissue engineering, etc. We are going to team up to process our talents as well at the end of this year. And so in terms of funding, we actually have completed institutional investment rounds when we started last year. So it's a very tiny small seed round, and with international investors in this space, and then we are actually closing an interview round. Now, before we go on to a larger round to do our app, the machine cap packs investments go up sometime in 2021.


    Insects for feed


    Tommaso: I'm really curious to switch to the other side of the screen. Virginia Emery, founder and CEO of Beta Hatch. What you guys are up to, how you guys are different and how you are trying to make a dent in the world? 


    Virginia: I'm Virginia founder and CEO of Beta Hatch. We are one of the world's leading producers of insects on a mass scale, we're producing these insects for animal feed, and I thought I'd continue in the fish theme today and talk specifically about the opportunities in aquaculture. So aquaculture is an incredible market opportunity. As Carrie already mentioned, most people don't think about what it is that their meat eats. And we really should be thinking about this because there's a lot of challenges and a huge amount of opportunity and nearly half trillion dollar market opportunity globally in animal feed 60 billion alone just in aquaculture with a direct opportunity for us. That's over $10 billion of market share. The Aqua feed industry. As with all the MLP Industries has a lot of challenges and really needs to evolve. These are very seasonal ingredients that we're using things like fish meal, soy, other types of protein ingredients that are producing just small portions of the world but demanded globally. 


    A lot of challenges there particularly around storage as well. They're seasonal ingredients harvested just once a year, so we get a lot of spoilage in the supply chain, the impact of our meat can be directly traced back to feed up to 23% of emissions directly from feed. And when you look at things like products of digestion, it actually accounts for the majority of the impact of our meat. So we can really have an impact on sustainability here. With the changing climate, we have all kinds of instabilities that are cropping up in the supply chain and pricing is very unpredictable. 


    Beta Hatch is industrializing insect production to solve these problems. We grow insects at a large scale, the mealworm in particular, and we're producing the mealworm. Because this is a superbug, you can grow them year round matching that year round demand with a year round supply. We can grow them virtually anywhere. So we're producing them right now out of a converted warehouse. But there's a vision to convert an old poultry house and a barn an opportunity to have a much shorter supply chain as a dry adapted beetle with virtually no water to produce them. And the environmental footprint of this ingredient is significantly smaller than a lot of the conventional existing ingredients is nature's by recyclers, they can eat almost anything including plastic. So there's a huge range of diets. We're focused on agricultural and food processing byproducts and co products basically taking low value inputs and converting them to very high value products. 


    It makes sense that animals would eat insects in nature up to 100% of diets are composed of insects, so that's why we like wild caught salmon and why we like pasture raised poultry bugs make meat tastes great, but they also have these values beyond nutrition. It's a prebiotic function in the gut that improves health outcomes you see as much as 50% increases in survival amongst animals like shrimp 35% increases in feed conversion, so huge efficiencies beyond just those nutrients. But those nutrients themselves are extremely dense in our ingredient as an ingredient across animal feed sectors. There's opportunities in poultry, aquaculture, pet food, insects, and mealworms in particular, which are uniquely suited to address a lot of challenges. There's no heavy metals, we have complete control of the process. And so we know that this is a safe, traceable, and sustainable ingredient. 


    We can also customize the ingredient because we have that control doing things like boosting refining content, so that our customers the animal producers don't need to supplement artificially. And so that is a big opportunity in organic production and allows not just one ingredient but multiple ingredients in a diet to be replaced with a complete amino acid profile and an omega three content similar to fish oil. It's not just fish meal, but fish meal fish oil, anthocyanins antibiotics that we can be replacing in the animal feed that these animals are eating. This is just an example of that huge value in it. In effect, we've done a bunch of third party testing. This is some data from a two year study. These fish were fed either control diet commercials control diet with nearly 30 different ingredients. And the experimental group was about 100% mealworms. So all these fish ate from hatching to harvest were mealworms most single ingredient tests, the animals die after a couple of weeks, they have, you know, few conversions that are, you know, 15 to one or worse, very poor results. This was a result that effectively completely surprised the nutritionist working on this project, but we got comparable results. The entire feed ration being replaced with insects, and we got similar growth amongst the insects. So a really high value high quality diet, Beta Hatch is one of a handful of producers or within the top 10, globally, the second largest producer of mealworms in the world, for this market. 


    We have some very unique approaches to how we're producing. So it's actually quite difficult to produce bugs, there's a lot of technology and to ensure that we're getting stable, predictable, reliable, and large scale production. And we have a unique operating approach we call our hub and spoke model at the hub the hatchery we focus on producing the eggs. And this is very similar to how other livestock are produced at the ranch they spoke, we focus on producing the product. So we have an approach that it has much more distributed production and emphasis on a smaller scale, but with multiple facilities that allow us to shorten all of those supply chains. Most of the technology, we have several patents pending, some proprietary breeding trade secret process lives in a hatchery, and the ranch uses off the shelf technology for rapid scale up so that we can be building those branches very quickly. 


    Why have we taken this hub and spoke approach? Well, there's a multitude of reasons. And we've seen a lot of the reasons for this. And the current year with the disruptions that we're facing in the pandemic. insects can get sick too. So there's distributed risk across our supply chain. With this approach frass, which is for those that don't know, your word of the day for us is insect poop. So we have a saying that France happens at Beta Hatch France's, as with any other animal production, a byproduct of what we do, it has an extremely high value in organic fertilizer, because as much as double the fruit yields in plants, having again value beyond just nutrition because of the natural intuitive nature of the product. But by having distributed production, we're closer to our customers. We can also co locate with feedstocks, different types of inputs, further reducing our footprints. And it's a lot cheaper to produce in this way. So our competitors, and this applies not just other insect producers, but any of the single cell production, algal production, other alternative proteins at these mega factories that are very expensive, we've taken a very capital efficient approach to production, we can more smoothly and rapidly expand growing our facilities online in a matter of weeks instead of a matter of years. 


    Ultimately, we have maximum flexibility with this approach. This allows us to have incredible competitive positioning in the alternative protein landscape, there was an announcement last week by insects over $200 million invested in their company to continue their expansion bringing their total funding to over 300 million. So I haven't even had a chance to update my animal feed investment numbers here. But when we look at the total dollar amount that's been invested in relation to the total market size, it's a small fraction within the animal feed market, the alternative proteins in the feed space, you look at sort of the relation between the dollars invested in the market opportunity, this is really under invested part of the agricultural landscape. And although there are some of these established players, were quickly on the heels of each of these different companies and sectors, for example, and again, this is not I haven't had a chance to even update this number $105 million of market demand that they've documented for mealworms specifically, and yet they won't be able to produce at their new facility until 2022. 


    So there's an opportunity for Beta Hatch to start delivering to those customers within the next few months. And to start working as well and expanding that market opportunity here in the US because our focus has been mostly in Europe. And again, the key difference is that we're focused on capital efficiency of our facilities. With this focus on the dry adapted mealworm. A lot of advantages over blacksoldiers fly happy to address in the q&a. But this focus on a smaller, more distributed production really gives us maximum scalability. And this is a market with plenty of room for multiple winners. It's going to really come back to who has the best operating strategy and the best technology sustainability is a key factor as well in what drives customers to these products. We see sort of a range of numbers across the landscape. It's still really unclear what the assessors sustainability messages are. But we do know that the biggest contributors are what the insects are eating the heating load and the electrical load is really determining that footprint in these alternative protein spaces. Basically its inputs and electrical load. Being one of the disadvantages of say a plant based system, we've taken an approach that really specifically focuses on those areas. An example is that at our new facility, we're using waste heat from a data center to heat our insects and effectively reduce that electrical need to a point where we are producing a far more sustainable level than not just the other insect producers but conventional ingredients like soy. We've had incredible traction in revenue and financing nearly 5 million to date and different projects to develop our technology, including support from NSF and DARPA. And as I mentioned, this Clean Energy Fund that's allowing us to take waste heat and use that as a way to increase the sustainability of what we do. We have signed off take contracts for our entire capacity through 2021, with more than 11 million directly in our pipeline, and as I mentioned, well over $100 million of opportunity, we believe that market opportunity is well over several billion dollars of demand. as just an example there.


    One of our customers in Europe, the largest Aqua feed single Aqua feed producer has said that their monthly current demand for insect protein specifically exceeds global yearly supply. So that gives you a sense of the scale of mismatch between demand and supply. And this is something we're working very actively to try to fill that gap. We raised some seed funding a few years ago to allow us to build out a pre commercial facility. And we're actively working to finish out our next round of financing to build our flagship facility. And that flagship facility and the technology we've been developing is possible because we're a team of experts in engineering and entomology. 


    We've got an excellent team of scientists and entrepreneurs with several successful exits behind us. And as I mentioned, we're working on this flagship operation here in Washington state, the flagship facility is effectively the first hub in our supply chain. So it will be able to be profitable alone as an operating facility. But it opens opportunities for 16 spokes when it's operating as a hub. So immediately, some very rapid expansion opportunities are established with just this one location. As a point of context, this 30,000 square foot facility is being built in an old juice factory, so a brownfield approach to production here, we're using less than a fifth of the capital that insects use to build their core facility. And this will be operating at the scale that they were able to raise several 100 million dollars from. So this is really a unique opportunity with Beta Hatch. And that was a very early mover in the space, the dominant player in millirems in North America, and one of the earliest movers in the sector, generally here in North America, and globally and insect production. 


    I just want to end by reminding everyone of how important is the work that all of our farmers do every day, three times a day everyone needs to eat. And those farmers need products like that to feed ingredients, and the fertilizers and other inputs that Beta Hatch produces. Thank you.


    Competition and costs


    Tommaso: Elif, what are your thoughts on this?


    Elif: Would you say so if those are not really your competitors? Because they are not having this operator approach that you were mentioning? Who would you see as a competitor right now?


    Virginia: I will say, one of the reasons that I think we're going to be incredibly successful is that we're one of the few companies founded, in fact, the only company that I can name amongst the large players founded by an entomologist. So my background, if I didn't mention that is in entomology, got a PhD from UC Berkeley, we've been working with insects my whole life. And so I really understand these bugs and how they work. I will say that, you know, from a customer standpoint, we do compete with some of these other insects, producers, of course, we're very much on a b2b approach with our business model, large scale, large volume, industrial kind of wholesale production. We're an ingredient manufacturer, so we're trying to work with other  partners to supply their customers in the animal feed space. So yes, we are directly working to fill this protein gap. 

    Iit's an over $8 billion protein gap opportunity in the next few years and the animal feed sector specifically. And so we're looking at what we do not just as directly trying to sell our insect protein similar to these other companies that have these big mega factories on the insect production side, but also the bio single celled bioreactor type of approach. This unique operating model that we have, and there's a lot of technology that enables that, it's not simple on paper. The technology is quite sophisticated. 


    That approach allows us to sort of eliminate this capital constraint that has caused a lot of challenges. And we see that we've seen that in, for example, clean technology being a real challenge in the scaling of biofuels. And so really thinking about those challenges in terms of capital as being for us an opportunity to really differentiate how we're approaching this. Ultimately, I think it's going to allow us to produce much more cost effectively, much more risk adjusted, and that we distribute that risk in our supply chain and ultimately more sustainably, because we're able to be investing less in some of these elements like automation that are required when you have a big mega factory.


    Elif: I know you didn't dry investor deck, what I'm wondering when you are thinking to get cash positive? That's one question. And the second one is these model branches, do you see them sustainably scaling outside us as well?


    Virginia: Absolutely on scaling outside of the US, in fact, we've had some discussions already with customers in Singapore, Canada, Australia, around the world, I think there's an opportunity for this model to expand and even from our hub in Washington, we can be shipping eggs, by air virtually anywhere in the world. So there's a lot of opportunity for rapid expansion from this flagship operation, we should be able to get to a nice cash positive position by 2022. So within a year of operating, we should be able to get to that place. But obviously, we're very focused on rapid growth. And so there's a good possibility, we'll be reinvesting all of that profit back into further operations, as we scale our supply chain.


    Naomi: I'm just wondering if you know how you're thinking about the long term? Because there might be a gap today, but I think in the future, we'll probably close that gap a little bit.


    Virginia: I think a lot about supply chains, because that's certainly where we are disrupting. There's a lot of innovations in the plant protein space that have made very little impact on the supply chain. So you look at producers like beyond meat, and 80% of their p protein comes from one farmer, right, you've got these real challenges, because they haven't, they've impacted the product side, which is fantastic. But the supply side hasn't been keeping up. And so that is where I see what we do is really a supply chain innovation. Insects would in nature be the base of most food chains. And they're sort of the recyclers of organic nutrients. And so it makes sense to have them as part of the food supply. You know, food supply does best when it emulates nature. And yet, we just haven't had the technology yet to be able to have insects as part of this circular economy. By developing the ability to have insects, not just sort of in one central location, but multiple locations throughout the supply chain, we can serve that function taking low value inputs. So we're talking about, you know, right now a source. Apple cores is one of our inputs from a food processor that's down the road, about a mile and a half from us. So as short as a supply chain can get, and taking that product that would otherwise be composted, and more directly, immediately putting it back into the food supply system. What we do and enable to become a healthier and more sustainable part of the food system. We know that obviously, the plant based products are going to continue to grow and market share, but meat is still the dominant player and will continue to be important for a lot of consumers. Ultimately, you know, people could of course be eating insects directly. That hasn't been our focus because it's a small market right now. And there's a lot of challenges from a marketing standpoint, but as an ingredient producer, most people don't realize feed is more regulated than food so we can actually sell immediately into a food market. It's very high quality, FDA inspected USDA inspected production. 


    So we're constantly aware of what those opportunities are. Ultimately, we're happy to sell to the biggest opportunities for us right now we're getting $10,000 a ton for our products from some key customers in certain niches. That's where we're actually on a gross margin basis in the 40% gross margin territory right now, when we look at continuing to bring down our costs and increase our market share a huge amount of opportunity there for us to be again moving where those opportunities exist in the supply chain and in the customer base.


    Tommaso: What's the comparison to others in terms of costs?


    Virginia:  It's interesting, because certainly cost is a big consideration for most of our customers. But it's not the only consideration. And when we look at the performance of the ingredient, so you can't just say what's a ton of fish meal cost, what's a ton of bug costs, you have to look at the effect on the animals. And when you get things like 35%, better feed conversion, you have a premium product that you can actually charge a higher price per ton for, but ultimately, it's effectively cheaper for the customer. 


    Right now, it's expensive to produce insects, we're sitting around $6,000 a ton in our current pre commercial facility, we'll know we'll be cutting that cost down almost in half as soon as we are operating early next year at our flagship facility. And so again, we've got that merger with our current customer base. But the goal is really to get to a price parody with fishmeal that is close to those ingredients that we're replacing in the diet to allow that to no longer be a limitation on the opportunity for this product. And so when you look at the cost of production, certainly some of the advances that folks like insects have made in automation and very large scale production, it's not clear to me what the cost structure is of any of these other companies. 


    But what I can say is that our approach has taken into account the cost of capital as part of that component of cost, because we look at a solution at scale, where we're trying to think long term about the profitability of what we're doing. That's something that we need to factor in. And that's been one of the drivers for us in trying to have this distributed more capital efficient production, because we know that that can often become a huge component of the cost, all other kinds of other innovations as well really targeted at bringing down the cost of production, but ultimately, increasing the value of the product as well.


    Tommaso: Virginia, you mentioned in your slide, the three main markets, the aqua farms, the pets, and the specialty poultry. What's the ratio between the three in terms of demand?


    Virginia: Right now, I would say some of the biggest demand is in the pet space here in the US. It's a market that mirrors a lot of trends in human consumption, wanting more sustainability, more traceability and ingredients, hypo allergenicity, which is a big selling feature of insects. So there's a lot of opportunity immediately there for us. But certainly, I would say Aqua feed being as well a huge opportunity, because there's this real need to replace fish based inputs like fish meal and fish oil that are sustainably harvested from the ocean.


    Tommaso: Give us a sense about if your sales and marketing strategies are more inbound or outbound driven. And why the originality of the United States, how did this come over?


    Virginia: I would say it's been a lot of inbound demand for us, we have had some of the world's largest ingredient companies extremely keen on the product. And demand far outstrips supply. So that's been this chicken egg called beetle egg problem where those customers say, I would happily buy, you know, several 1000 tons of this product today. But it just doesn't exist yet. So that's why this flagship facility we're building right now is really key. It's going to open up the opportunity for us to start meeting some of that customer demand.


    Tommaso: And if another country, what country would it be from a priority perspective?


    Virginia: Other countries? Well, one of the I think there's a huge opportunity here in the US, ultimately, especially in Aqua feed, we're an importer, and there's growing demand there. But certainly I think our model can be applied anywhere in the world. I think in Asia, there's a lot of growth in aquaculture in particular, again, the pet sector globally is growing. You know, we're very focused right now and sort of setting up roots here in the US, which presents a really great exit opportunity for us as well as some of our competitors or their players are looking to expand operationally into North America. But I think that that opportunity really is global. So for us, it's about having the right partners for expansion. Certainly, hopefully someone listening is keen to help maybe partner on expanding into Asia or Africa or other parts of the world.


    Making connections


    Tommaso: We're wrapping up things and usually we wrap up things always to the bottom line and bottom lining basically here, the startups and with what the industry fellows are thinking of. 


    Long story short, Naomi What are your thoughts? Would you like to begin a conversation with Virginia? Yes or no, thumbs up, thumbs down.


    Naomi: Thumbs up.


    Tommaso: How about Carrie? Thumbs up, thumbs down?


    Naomi: Yes!


    Tommaso: Elif, from Turkey Istanbul. What are your thoughts? Oh, here we go. Yes to Virginia. And Carrie? 


    Elif: Yes. 


    I love it. I love it. Thank you so much. This really makes me always very glad to see when in this episode when we find solution providers/tech players, innovators, right the industry fellows are intrigued and curious to meet obviously we'll make the introduction to startups and entrepreneurs to industry fellow both meeting that's great. I learned a lot. I always love to be the dumbest in the room. Thank you so much, Virginia. Carrie, I'm hooked intrigued about your endeavors about your team structure that you build really interesting. Definitely from the Awsm Ventures side I want to continue the conversations as well Virginia and Carrie. And I had the pleasure to be surrounded by four women, go females right? We need more female entrepreneurship and that's basically what we also focus on.


    I always  wrap things up with a quote, that's basically a quote that I learned to craft over the last 20 years of my activities as an entrepreneur and became an investor academia which goes like this:


    Tommaso: “Never forget where you come from, it keeps you humble. But where you come from, cannot limit you where you want to go.”


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