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For a world that is safer, cleaner, and fairer
    33 min read

    [S2:Ep #3] Waste-to-protein and next gen edible insects

    Featured Image

    Can we feed emerging economies with what was doomed to go to waste? Watch Tommaso Di Bartolo, founding partner of Awesm Ventures, along with industry fellows, Paulo Silveira, founder and CEO of FoodTech Hub in Brazil, Navneet Deora, food engineer with a PhD from Indian Institute of & IT, and entrepreneurs George Thorpe, CEO and co-founder of MagProtein, West Africa’s first waste to protein initiative, and Kevin Wu, CEO and founder of ento, a startup in Malaysia, that rolls out protein from insects.

    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:E3 

    paulo

    navneet

    Paulo Silveira
    Navneet Deora, PhD
    Founder and CEO of FoodTech Hub, Brazil’s most advanced FoodTech innovation hub
    Chief Technology Officer / Future of Food / Alternative Protein



    [Startup Entrepreneurs] Topfloor: S2:E3 

    00

    avatar-17

    George Thorpe
    Kevin Wu
    We produce sustainable Protein, Oil and Fertilizer from Insects
    Co-Founder & CEO at Hargol™ FoodTech Serial entrepreneur for food and healthy eating

     

    Host

    TOMMASO-AVATAR
     
    Serial entrepreneur w/ 2 exits, author, advisor, faculty, investor.
     
    http:///tommasodibartolo.com 
    Tommaso Di Bartolo
     
     

     

    Key points:

    • Crickets: a great horizon of opportunities in a growing market worldwide
    • Standing out in the shelves as “clean protein” is the way to go
    • Innovation and automation are key to promote next gen proteins growth

     

     

    I prefer 📹 watching the episode's video

     

    I want to listen 🎧 to the episode's podcast


    Episode's 🔖 Transcription

     

    Tommaso: Hello! Good morning for those here from San Francisco, and obviously, good evening, or good afternoon, depending on where you're tuning in from. We already have our participants, our jury and our entrepreneurs with us. Thank you for joining George, joining us from Nigeria, Kevin in Malaysia, Neel from India and Paulo in Brazil. Awesome...

     

    I would like to kick off things by introducing from left to right, our amazing participants, our great entrepreneurs and startup founders that we have here, let me kick off things with George Thorpe, CEO and co-founder of MagProtein, West Africa’s first waste to protein initiative; Kevin Woo, CEO and founder of ento, a startup in Malaysia focused on edible insects; our jury, with Paulo Silveira, Founder and CEO of FoodTech Hub in Brazil; and Neel Vora, VC private equity LP strategic investment in corporate finance head on one of the largest family offices in India, Dr Reddy's Lab. Thanks so much!

    Tommaso: George, are you ready to rock this stage virtually? Let's do this. 


    George: Okay. I'd like to introduce you to my protein, which we sell in the local market here in Nigeria.

    I can begin by giving you some more detail about our business... We started in 2017. We live in Africa, lots of insects, you know, and when we tried, we found out that the process is very complex, and we had to partner with other people to really get to prove our concept. However, we were not able to do that until 2019. Actually, I started the business with a friend of mine that used to work in the feed ingredients value chain, and in the feed mixing business here in Nigeria. I used to work at Standard Chartered Bank in trade finance structured trade and credit risk roles. Before I set up the business in 2017. 

     

    We are a full cycle operation. Right now we're focusing on strengthening our production program, and our interest is to scale up to a particular capacity at the end of the year. We think of the big problems in the protein supply chain here in Nigeria, especially because of the fact that protein is not produced locally and there's lots of imports. We also believe that the tropical climate, the low cost, and the favorable regulation here, allow us to, you know, set up a business that can supply protein into the local market as well as export protein out to America and the EU. So today we produce a 45% protein meal, through a dry rendering line, projecting to reach between 60 to 65% protein soon, depending on the customer specifications. We project to scale up to about 60 to 75 tons of protein meal per month early in 2021.

     

    George: So, what specifically are we working to solve? I think there are three major problems but the first one is the protein gap. Everyone says, In 2050, we would have 9-10 billion people in the world. What we are doing today is to try and fix the potential problem in 2050. For us in Africa, the problem we are starting to face today is a situation where you cannot have large scale protein production, using traditional types of protein like soy and fish meat locally. There are certain risks. Locally, it's very difficult to scale protein production, but another issue is that if you cannot scale local protein production, then you cannot scale livestock production for poultry and for Agriculture. So, we are seeing those implications impacting the economy right now, especially because of COVID-19, but also the fact that there's a large middle class population that's moving into a much better tax bracket and they're willing to buy, much more interesting white meats like poultry and chicken. 

    So there's a huge demand for poultry and for aquaculture. The last thing we want to do is to close the loop for many producers. We are aware that in Nigeria, for example, there are many large players who produce a lot of organic material, but do not get the kind of value that they require from the material. The second problem that they have is that they are also importers of feed ingredients. So, if these producers had a partner, who could take organic material converted into valuable protein, or other products that are required for feed, then it would be a much more sustainable relationship. In this case, it would be easier for local producers in Nigeria to plan and scale, especially when we talk in terms of our value proposition, or simply get through the future. The cost of importing creates hurdles for the local producers and for the growth of waste-to-protein in Nigeria.

     

    George: How do we position our value proposition and measure success in the marketplace? Well, the first thing we want to do is that we want to be able to provide our customers with long term supply at a fixed price for high quality. We're currently doing that for one large buyer, and we intend to do that for about four new buyers, by the end of next year (2020). Our intention is that if we do this kind of structured sustainable approach, we’ll be able to take a larger chunk of the protein ingredients supply chain by 2025. We expect that by then we’ll achieve somewhere around 15%. If we're able to lock in these guys for a long term commitment and promise to provide ingredients that are valuable to them. 

     

    The second thing would be, sustainable partnerships so beyond providing low cost products to these guys that are flat, over time, we want a situation where they're immune to commodity marketplace. They're also immune to risks, and they have a much shorter supply chain. We want a situation where we can set up very close to a larger user of our product and be able to ship the necessary requirements to their facilities to produce the protein that meets their demand. We think that if we do that, we can scale to meet our vision and our mission, which is to ensure that Africa is a sustainable continent that will not lack for anything. 

     

    We also think that the reason why agricultural production is very low in Africa, and very low, particularly in Nigeria is because most of the ingredients used for feed tend to be dumped into the market or tend to be low quality material. We believe that by providing high quality material at a stable fixed and low price, producers could spur on much more interesting agricultural production, like prawns, shellfish etc. This, however, is not not happening today. We also expect that, in the near future (2-5 years), we will have much more customized protein and liquid production, such that we can tailor make products for our customers. In addition, we expect that the kind of integration we want to have between suppliers and buyers will allow us to have the widest scope of organic material, and will most likely put us in a position to stop the amount of waste that goes into landfills or dumped on the wayside. So, we plan to turn waste into much more valuable and useful materials.

     

    Tommaso: What a beautiful value proposition and inspiring vision. Congratulations, George! Let's switch over to the jury. I would say let's start with Neel.

    Neel Vora: Yeah. Great presentation, great concept. George, in the market that you're planning to launch in Nigeria, in the African markets, I'm sure there will be other insect base code in production as well, so how are you stacked against the competition? Or should it be considered a completely novel concept in Nigeria?

     

    George: Right now, what we do is a novel concept in West Africa. There are two potential competitors trying to do what we're doing already. We see them in a very stage, without a clear value proposition (in comparison with us), but showing interest in complementing the value chain for local producers. In comparison to our “competitors” we are taking a much more direct approach. We are going directly to the producers in the suppliers, and we pursue to sign long term contracts. We also want to ensure that our breeding program is the most efficient. So, we are upscaling our breeding right now to ensure that we have the maximum capacity possible for every square meter in our breeding unit. 

    Now we think that if we have competitive advantage on the egg side, which is only the beginning of the value chain. It allows us to make better use of that egg to either make finished products, or to make other products that are required in various industries. We also think that the only way to scale and secure growth is to build a tent in egg production. So, that approach we feel is what will set us from the rest. We see the industry as such that, you know, because it's a new industry, and lots of people are trying to decide where on the value chain they fit some others are trying to do everything on the value chain. We have picked a position where we think is best, where we sit on the breeding and, and then we have a partnership relationship with buyers, such that, you know, we can share the risk, but also tie up our sales for a long term period. This allows us to plan future scalability initiatives for the business part.

     

    Navneet: I had a follow up question as well... So, what are the present consumption statistics for insect protein in Nigeria and water growth trend, it has been showing. And why would people want to switch to this sort of a protein is it cost effective or what's the exact reason. 

     

    George: Thank you so much. This is a very important question. I would say that the total protein required by the feed industry in 2018 was about 3 million tons of protein per year. Now, if we were going to break that down into animal protein we would say maybe about 500,000, tons of that is animal protein, which includes everything from poultry meal fish meal etc. Now, if we break it down to insect protein, I will say that we are the only ones producing bulk protein from insects today. We are the only ones doing that because we are selling directly to the users while the “competition” is trying to do the same. You know, maybe they're subsidiaries of fish businesses that are thinking of ways to reduce their fish meal costs, or soybean meal costs, but they're not able to gain the capability yet. We, on the other hand, have been able to gain capability on breeding and processing. So, we're able to tie up directly with buyers. As of today, we have only produced maybe about 100 tons of protein into the market in the last two years (2018-19) now between July and the end of the year (2020), we expect to do maybe about three times that value.

     

    George: Now, we expect to do that because we already have tied-up with potential buyers. Now, we will only go ahead the scale further if we can secure additional tie up with the buyers. Now what convinces a buyer to switch to us, many guys here they're only thinking really about price for now. Sustainability is an interesting conversation, but it's not really a driver for you. The real driver for us is immunity from commodity risk and immunity from ethics risk. Now, working with a customer under a long term contract and a fixed price allows us to sort of shine the light on sustainability and solve their problems and risks of commoditization. So, I can say today that, yes, there is still not a significant use of insect protein, but it will happen in the near future. As long as we're able to get access to reasonably priced organic materials, we can continue to drop costs. Then I believe that we can at least put a lot of protein into the market in the next four years. We expect for example that in 2021-22, to reach about 1,000 tons of protein meat. We will likely be doing that volume every month.

     

    George: But it really does depend like I said on signing-up those contract relationships that secure our ability to scale with our customers. We see a bright future ahead, but we consider it necessary that we join efforts with our customers in order to develop the local market and eventually scale.

     

    Paulo Silveira: Congratulations, George! Very impressive. As you may know, in Brazil, we have large national as well as international meat producers and sellers. Meat that comes from cattle and poultry. But we do see things moving strongly towards next gen proteins.

    Tommaso: George, what is the biggest challenge that you have on the table right now?

     

    George: A tough one, actually... I think COVID-19 is what we call a shocker here. It really exposed a lot of things on the fiscal side for the economy. And it meant that for us as a business doing upgrades at this time, we were expecting some equipment at the port, you know, and we had lots of delays because of lockdowns etc. You know, but there was a huge supply and demand gap for protein products as well as livestock products. Now, you would imagine that, because there's a lockdown you cannot have hotels and restaurants in full operation. And if you don't have them in full operation, it would mean that the farmers that supply into their businesses will be impacted. So, about two three months ago we had like a freeze in purchases, because many of our buyers were already feeling the sting of the lockdown. Now they're coming back on to, you know, production, and we are seeing some, some increase in demand. But for us, it's taught us that we need to diversify our scope for sales, we cannot focus just on the local market for now, we'll be able to scale and to do that we need to sell products. And we need to sell to a wide client base. It also means that we need to ensure that our supply chain for raw materials is also just as wide, and that the contracting is very tight. 

     

    George: In addition, if there are any delays, any risks that impact our production, we share some of the pain with suppliers. It's a difficult proposal for some of them, but we put in scope the long term view to say we are in business with you for not one year but maybe four or five years, and our intention is to buy bulk from you so we need the relationship to work, so that that plan will work. But in essence, it's been a tough one. But I think that this is just the circumstance for now. Everything will get better as we go. And people will start eating. Once they eat, we can eat.

    Tommaso: Thank you, George! Congratulations! Now, Kevin, are you ready to share with us what problems are you guys solving?

     

    Kevin Wu: Yeah. Sure thing. Hi everyone! Good morning, good afternoon, good evening depends on where you're tuning in… I'm the founder and CEO of Ento. We are an alternative protein company specializing in edible insects for human consumption. I'm just going to use my seed investment debt because currently we're raising around right now. So, I noticed that some VCs out there are interested in early stage startups. Please feel free to reach out to me if this is of any interest to you. We're a company based in Kuala Lumpur, Malaysia, with offices and operations in Singapore and some presence in the United States as well.

     

    The problem we’re trying to solve is that our current food supply chain is simply unsustainable to feed our future population. And right now we're seeing trends that millennials are not just preferring products that are healthier, but also more sustainable for the planet. So, it's a very simple problem, populations growing, and we need to figure out a way to feed our population sustainably. Herein lies, our solution: we specialize in insect based protein. And as you can see, our solution on the left hand side, comes in a form of consumer packaged goods, and currently we are retailing our products between five to eight US dollars per pack. 

     

    Currently we're already selling in various offline and online distribution channels, and we're currently generating about 77% average gross profit margins on our products. You can see a bit of our products in the form of granolas, cookies, as well as powderized form. So, today, our markets include proteomics and also manufacturers around the world. At this stage, a lot of people ask me, “Kevin why insect protein?” To put it very simply, two very simple reasons. Firstly, a base protein is more nutritious containing three times more protein than beef seven times more high end and kill and four times more fiber than oatmeal. In fact, based protein is also more sustainable to produce, requiring less feed, less land, less water, and also emit far fewer greenhouse gases. And this has led to our current beliefs on food and protein consumption around the world. So, the past 50 years, we've seen a tremendous amount and reliance on traditional lifestyle such as red meat, in particular, and we're seeing that trend moving towards more awareness of plant based protein for both health and environmental reasons. And right now we are building a company for the future. 

    We are predicting that the future protein reliance and protein sources, would not just be what we've relied on in the past, but also we are going to see the rise of insect base and cell based protein, which is a very new and exciting space. Our products are great as well, don't take our word for it. You can catch us at events we run a lot of roadshows and events. Obviously tremendous with this online thing, amazing feedback from customers, we've been seeing great retention. Customers come back to repurchase our products on a bi monthly basis. So, we're seeing great traction right now in terms of attracting hospice, but there's no doubt that intent based protein for human consumption is still niche, but we're right now, capturing all the early adopters, in this space, especially consumers who are looking for something that's healthier and more sustainable. 

     

    Let's talk about the market. The total addressable market is 8 billion US dollars for the above market. This sits within the massive global agriculture market which is valued at about $2 trillion. And we've seen huge growth in the alternative protein markets which practice 85. But although edible insect protein is still quite nice compared to the other protein sources. It still has a fairly sizable market. And this is research done by both McKinsey and also Barclays investment bank. So, what does this $8 billion translate to basically its massive growth potential, because the current market size is so small at 100 $15 billion globally. The market is expected to see 43% compound annual growth rate, with no clear market leader in this ability insight for human consumption. So that's where we see a massive opportunity. So contraction is that we've launched our MVP in March last year with minimal marketing efforts. Currently there are over 20 offline and online stores. Last year we grew our revenue growth hundred and 60% month on month until COVID set in. Earlier this year, that has put a stall towards our growth. But that being said, we use that time very effectively and efficiently by completing our product development, and have solidified our supply chain. So we aim to be profitable by late this year. Given things are recovering. We're on track, and we should be a breakeven slash profitable company.

     

    Our business model is very simple. We own the entire end to end process. We don't have a farm. So, we have our r&d team who was constantly researching ways to make cricket production more efficient. Higher nutrition, lower cost, lower mortality rate and all sorts of amazing things right in the core of it. Our core activities include a lot of r&d. We do our own processing. We do our own food technology development. We do our own marketing and also distribution. So our current core sets of customers include both consumers, businesses, and also retailers. These are our core segments, we're already selling to customers around the world, one of our largest manufacturer pioneer spaces in Portland. In the US our products are purchased as a white label product. 

     

    What I regard as very essential indicators would be coating content, as well as how natural the protein is so you can see. Until it has the highest one the highest protein content amongst our other competitors at 60%, and also is completely natural because there's no antibiotics, no growth hormones and no steroids used in our process. This is a complete, powderized natural source of protein that has not been highly processed, or extracted. In a good way, we do have other edible insect competitors around the world, primarily in the US, and also in Europe. But in terms of our business model we've crafted a business model, where we are able to produce a huge amount of volumes, as well as having that food technology asset to be a highly consumer focused consumer facing entirely new selling to our core customer markets. So, in terms of defensibility, there are plenty of defensibility but I would like to just highlight two. Firstly, where product development is a powerhouse. We have our own internal food technology needs. The leads the r&d, or the protein ization of our edible insect powder. We're also tying up with Emmanuel Strobel, who is a two Michelin star chef based in Singapore. So this is currently as part of our current investors’ portfolio; they own a bunch of FMB in Singapore. And we've tied up with one of them. The most famous restaurants in sample. We've also got a far reduced cost structure, on average, saving between 50 to 70% compared to our American and European counterparts, due to our warm and humid climate around, and also our low cost structure in terms of being based in Kuala Lumpur. 

    We have proprietary technologies and know-how, but all these are all big or defensible things that we've worked with over the past two years to solidify. So, why insect protein. Firstly, I would like to just highlight a case study of the first food technology company that IPO, just last year. most of you would have heard about beyond meat. Just a comparison, how I see it. Ento today is maybe what Beyond Meat was 10 years ago, when plant-based protein was a completely new space. It was a completely blue ocean market. And over the past 10 years Beyond Meat has gone through a lot of private markets investment and a very successful launch in the public markets. And right now, if I'm not mistaken, the stock is still going strong, valued at about eight to 9 billion US dollars today. So, these are some of the comparisons, or case studies of the potential investment viability and also public market appetite for beyond meat. In terms of a lot of investors like to see this, what are the exit strategies? Firstly, acquisitions potential would be highly likely. Or we could build a business and raise a series of investments. Or we could just build up a company and IPO the next five to 10 years. I would like to just highlight that there have already been three acquisitions in this edible insect space, the largest being an actual protein base in the US. They raised about $5.2 million. To date, they were acquired by an aspiring food group. So it's very interesting to see these acquisitions taking place in the US, in Asia and also in Europe.


    So, in terms of the current team being led about by training, training professionals and myself, I'm a trained lawyer. I've been quoted in London, and also Malaysia. Previously I led mergers and acquisition at large corporate private equity companies. My CEO, used to be head of strategy at one of the largest banks in Southeast Asia, and also my science lead, who also holds an MBA from NCR is a trained scientist and currently head of tech ventures, at what is the largest palm oil companies in the world. So, three of us always meet very frequently and we come up with amazing and innovative ways to build out this space siting and brand new industry. So that's about all I have to present today. So it basically is a huge market with huge potential. Today, we have high cost margins, and we have a product ready with a scalable supply chain. So, now we just need our seed investment to focus on sales and marketing. Thank you very much.

     

    Tommaso: Thank you so much for the great presentation!

     

    Neel: Great presentation Kevin, congratulations on starting off. I can relate to it because you've been from private equity m&a background so, I relate from that background and and leaving that and and to take up something on the entrepreneur journey. So, some ones are basic questions that I had so how are you seeing the trend post COVID at least in South Asia you're in India and elsewhere. The demand, or the shift, there has been a shift happening to more plant based meat and I completely agree with you, the future is cell based or more cleaner version of meat. And within, even the convention animal meat section, there is a demand for more premium versions of meats, at least that's what the initial trend post COVID seems to be with that kind of shift, how do you see the insect protein, which was already a niche segment. In many parts of the world how's that gonna take off now. Unless there is a cleaner version of aura, or a fermentation version of an insect protein.

     

    Kevin: Yeah, so actually insect based protein is a brand new space. I won't deny that there's a lot of a factor amongst the majority of consumers. Hence, why I mentioned that we are in the early adopters face right now. The problem that a lot of plant based meat like impossible foods and beyond meats what they have is that their products are highly processed and even the CEO of Whole Foods came out saying that, you know, it's not healthy for you it's not great. So, what we're trying to do right now is work with Emanuel stringband who is a two Michelin star chef, to create a natural all natural burger patty that's more nutritious and also more sustainable, because the key to unlocking this $8 billion industries to create products, because now we know if we can powderized inside baseball. It looks just like black pepper, and it tastes just like nuts, it's like brown flour. And it's high protein. So, we're taking it a step further, previously a lot of startups, they just, you know, roast a bunch of crickets, and some seeding seasonings and that's it you know we are sending insect protein, but we believe that we need to take it a lot further by powderized it, creating amazing delicious burger patties that is juicy and melt in your mouth and and that's also highly high protein and also sustainable. 

     

    There's a lot of work being done in Europe right now, even insect proteins are very favorably backed by respected institutions like Wageningen University in Netherlands. It's a very new space, but this whole thing, post COVID. I think it's going to be still a challenge because we're unable to get on the ground to share and talk to customers and get them to try is very tough to convince online. So, yeah, I think the past few months has just been really waiting it out and focusing on our internal structures of business, and then moving forward. What we're trying to do is get on the ground as soon as possible. Work with chefs, work with manufacturers, even manufacturers our b2b sales have been fragmented because manufacturers cannot operate. This is the speed bump.

    Tommaso: Just a question to both of you George and Kevin because you happen to be on a similar segment, have you tried your products for the animal feed market?

     

    Kevin: A few companies are really doing it for free, but because you just go back to your question, because they're already massive players in this field and raised massive bulk cash. Very very developed supply chain. It's a bit late for us to go into that and we just do not have the economies of scale. That's the first thing. The second thing is also quality assurance because we farm it for human consumption. All our feed is actually traceable, we use food grade foreign food grade soy, as our feed, so all our feed is completely human grade and traceable, whereas for animal feed. The majority of players are using pre-consumer waste.

     

    George: Well, I have a different view. So, luckily regulation allows us to have insect protein in animal feed. Also, locally. Most of the feed ingredients that come into the country imported in some way or the other. So I mentioned before that soybean for example is a rather imported material here, only about 10% of soybean demand is supplied in the country by farmers. So, there is a gap, created by this that allows players to comment. Now when you add the fact that, you know, labor costs here, you know maybe seven, eight times lower than maybe you will us. You add the fact that we have a tropical environment so I hate that back requirements are fairly minimal. You also have the fact that many suppliers are many buyers trying really hard to scale and having to deal with 50 different types of ingredients 30 types of protein, they're really looking for ways to streamline their supply chain and have sort of marginal gains that allow them, you know, reduce cost. 

     

    Now we already have a model that says we can produce one kg of 45% protein at less than $1. Now, we can produce 65% protein at maybe less than $2. Now, if we look at the International price for fish meal today it's between one eight to about $2,000 for 65 to 75% protein. It means that we can produce a product, where our buyers in the country don't have to worry about opening an LC waiting three months for the ship to come over, clearing it at the ports, then trucking it from the ports into the country. All of that is a big risk that many companies are managing efficiently, but would rather do without. So, a production system that enables them to have access to high quality protein that is fresher and at a lower cost is a very attractive premise in Africa. Yes we do eat insects, but we do not think that production for humans locally is something that would be a good return on our investment. 

     

    Why is it that the local market of food is very cheap? And we will not be able to produce at that efficiency yet. Now when we are producing much higher quantities per day, it is something that we can consider doing in the local market, but we are already exporting product to, you know, one or two buyers in the US, and we likely will continue doing that going for, for they're using that product for pet food. Because third grade requirements are quite different in some countries, they're not allowed to use a certain percentage of fishmeal etc. So there's some regulation that allows us to export our product to some buyers. There's also regulation locally that's aligned myself into the local market. So, that's why we believe that the feed supply chain is the best place for us right now. Once we scale. Now we can try other parts of the value chain.

     

    Tommaso: George, a question from the audience… In Europe and in the US, do you think is it sustainable to use this protein to grow livestock, instead of sustainable solutions like cultivated meats? (that way would skip the problems of animal agriculture altogether)

     

    George: My response is that it will really depend on the mass production supply chain, as well as the model of the business for one to say whether it's sustainable, or a good approach. We think that in the EU and in the US, it probably is very expensive to grow insects, because there's certain parts of the operation that you cannot really automate yet, you know. Even those parts that can be automated, you know, they, you know, there's all sorts of regulation that says, This is what you should use the type of valve you should use, for example with the sorts of regulation that says okay use the type of tubular vow for this, we don't have those restrictions locally. Now, it might be a good or bad thing or fortunate or unfortunate but for us it means that we can start at a low cost base and then we can provide products into the market at that lower cost. But, you know, my answer to her would be, you know, cultivated meats is not something that we will do here, it likely will be better in the EU, but instead production, better in Africa Southeast Asia, etc. and exported into these markets EU and us world.

     

    Tommaso: another question from our audience... How do you manage a steady supply of feed for your insects, once a day?

     

    George: In December, for example, if we're going to be producing 75 tons of product, we would likely need somewhere around 300 to 400 tonnes of dry feed. And if you look at it on a web basis that's probably about 1200 tonnes of feed. So, there's a lot of supply. What we're doing is that we have a direct relationship with suppliers. So we have brewery partners and we have flat billing, and as we have wholesaling contracts with. And we buy directly from them. We have an allocation for the month, and we always take our location so that we have stock. We also ensure that we have one to two months' stock on hand, and we have two or three processes which we use to convert the stock into something as acceptable for our lobby. So we ensure that that buffer gives us the way to de-risk our supply chain and ensure that we have steady supply. So, two things contracting and direct relationships with the providers of these organic materials. Also, we could talk forever, very important and very interesting and topic, I actually do have one very last question for Kevin, based on what we have been experiencing here. Under Armour seasons, that go to market is a huge challenge for many of the new incubated startups right i mean i so you did in two years 2.8 million going to 3 million. You mentioned in good impact by COVID if you would split the relation between direct to consumers and channel business, what's the percentage that you are driving there, and then to the question that we would like you to share your thoughts on, would you see a new business model where this new products. Next Gen food products would rather be sold directly than through channels.

     

    Kevin’s answer: So, right now about 80% of our sales. Still directly to consumers. And about 20% of businesses. We're trying to grow our businesses and business line a bit more b2b and retail sales. But obviously, the market for manufacturers of insect protein is fairly small for now, but the EU is about to pass a law that permits edible insects, as part of food without any specific special licenses. So we expect the b2b market to grow significantly over the next 12 to 24 months. That's our b2b side. But, interestingly, you ask the new food product or market question. Actually about 50% of our sales are outside of Malaysia. We sell a majority of our products but 30% to sample and about 20% to the US, and we are about to launch on Amazon FBA platform. So we want Amazon to fulfill all the last one logistics, but due to this whole COVID thing they've been very bad with a lot of things coming in, and they're prioritizing so we've been having a bit of issues getting on the platform. So for new products. I think the best way to introduce new food products is very old school, it's just being on the ground, and just introducing to consumers because we've tried for the past six to 12 months, introducing a new food product as in a totally new category online and it's very tough. I mean, definitely we have a Guinness factor. But I think even amongst some of my other friends who are selling more traditional based products. It's tough to convert customers, especially for food products online. So, I think, working with retailers is very important for us. Working the right influences is also very crucial to our business plan, and hopefully post COVID, we were excited to get back on the ground.

     

    Tommaso: Okay, awesome well Thanks for answering and. Ladies and gentlemen, audience and thanks for watching.

    Tommaso: Let’s hear it from our jury… Paulo, will you see George again?

     

    Paulo: Yes!

    Tommaso: How about Kevin?

     

    Paulo: Sure!

    Tommaso: Let’s hear it from our Neel… Will you see George again?

     

    Neel: Yes. Sure.

    Tommaso: How about Kevin?

     

    Neel: Yes!

     

    Tommaso: Awesome. Two out of two is perfect! I would like to thank all participants, the entire audience and I always like to wrap up things with my quote that I've learned to share with other entrepreneurs and executives, which goes like the following... 

     

    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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