Africa-Press – Eswatini. After nearly seven years, Inseco, a Cape Town-based insect protein startup, has shut down its operations and sold its assets to industry partners, marking a significant setback for the emerging insect agriculture sector. The closure of the company comes just three years after it raised one of South Africa’s largest seed rounds—$5.3 million—meant to help it scale to commercial levels.
Founded in 2018 by Jack Chennells and Simon Hazell, Inseco’s business model focused on breeding black soldier fly larvae on organic waste from food processors, converting discarded materials into valuable protein meal, oil, and fertilizer for the aquaculture, pet food, and poultry markets.
Inseco was once hailed as a leader in the Southern Hemisphere’s insect protein sector. It won South Africa’s Global Cleantech Innovation Program in 2019 and attracted significant investor interest. However, a combination of operational challenges, infrastructure failures, and strategic errors eventually led to its downfall.
A key factor in Inseco’s closure was South Africa’s ongoing electricity crisis. Chronic power outages, known as “loadshedding,” wreaked havoc on the company’s operations for several months. The power disruptions, which typically lasted for four hours, led to temperature fluctuations in Inseco’s insect colonies. Manufacturing biological products at scale requires stable conditions, and the outages caused cascading problems across the facility. Although Inseco had backup power for essential equipment like ventilation systems, it was unable to run the energy-intensive processing areas during power cuts.
Inseco had planned to install a large generator system to mitigate the impact of load-shedding but chose to defer the purchase to manage its capital allocation. This decision, made in anticipation of a lower risk of power outages, proved costly when load-shedding intensified. The company eventually acquired a large generator, but by then, the power disruptions had subsided, leaving the investment largely underutilized.
The operational challenges were compounded by a series of internal missteps. Hazell acknowledged in a post-mortem analysis that the company’s rapid scaling, poor hiring decisions, and slow pivoting contributed to its demise. While Inseco had been developing technology to improve margins from insect biomass, it didn’t prioritize this fast enough.
Beyond the company’s internal issues, the broader market environment also posed a significant challenge. After years of easy capital during the zero-interest-rate era, fundraising became more difficult. This shift in investor sentiment was felt across the insect protein sector, with several high-profile companies, such as French insect pioneers Ÿnsect and Innovafeed, facing their own struggles.
Despite Inseco’s failure, Hazell remains optimistic about the future of insect protein. He believes the industry still holds significant potential, particularly if companies can unlock better margins. The global insect protein market, which currently stands at approximately 10,000 metric tons annually, is projected to grow to 500,000 metric tons by 2030, driven mainly by demand from the feed and pet food sectors.
While Inseco’s assets, including equipment and intellectual property, have been sold to industry partners, Hazell’s parting message reflects a sobering lesson: success in business, particularly in an emerging industry like insect protein, is not just about technology. It also requires timing, resilience, and, crucially, a bit of luck.
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