Indian insect breeder Loopworm secures $3.4m in seed funding

Indian insect biotech startup Loopworm has raised $3.4m in seed funding co-led by Indian agribusiness VC Omnivore and WaterBridge Ventures.

Loopworm is India’s first tech startup to breed insects for animal feed.

Titan Capital and leading angel investors including Godrej Agrovet, chairman, Nadir Godrej, former head of the R&D and sustainability group at Indian conglomerate ITC, Sanjiv Rangrass and Akshay Singhal, founder and CEO of Log9 Materials, also participated in the round.

This investment is Omnivore’s second investment under its OmniX Bio initiative, which supports agribusiness life science start-ups.

The funding will be used for talent acquisition, research and development acceleration, as well as the establishment of Loopworm’s first fActory in North Bangalore to increase production.

From waste to animal feed rich in protein and micronutrients

Loopworm grows insects on food waste and turns them into value-added products for the animal feed industry.

The company sources food waste – which it likes to call “organic by-product” – from food processors, retail food chains and fruit markets. Through biochemistry and fermentation, it is processed to make it suitable for insects, currently the black soldier fly, to reproduce. The insects are then processed into final feed for shrimp and poultry.

The concept of Loopworm was born when co-founders Ankit Alok Bagaria and Abhi Gawri met at Enactus, a non-profit organization that promotes social entrepreneurship among university students. They both had ambitions to start a social entrepreneurship business and solve India’s food waste problem, which Bagaria said was of the utmost importance given the country’s growing population.

The United Nations Environment Program estimates that India wastes about 68.7 million tons of food per year. The country also produces around 141 million tonnes of crop residue waste, of which 92 tonnes is simply burned.

“Our main concern was that we also had a significant amount of food waste in India across the world and there really wasn’t a meaningful solution, where the food waste actually gets recycled. There are solutions such as composting or the generation of biogas, which actually slow down the cycle of the product,” explains Bagaria. APN.

This led them to start paper and plastic upcycling projects, but then they came to another achievement; that food waste was seen as a resource of negative value.

“If you consider other types of waste like plastic, paper, aluminum, glass, batteries, electronic waste; all have markets in themselves. A reverse logistics mechanism is in place and recyclers are in place. But when it comes to food waste, people just want to throw it away. That was our starting point,” he says.

The two started working on Loopworm in 2019 and began their research with fish and poultry farmers.

Production and market entry

Loopworm has so far operated on government grants and foundation funding. It has a pilot breeding and processing facility that produces 50 kg of insects daily.

The product is not yet for sale because Loopworm is testing the feed and formulation efficacy of its product for different animals at different life stages.

This new round of funding will help them set up a commercial plant, which will be ready for operation by January next year. The startup is aiming for a full production capacity of 25,000 tons per year.

Over the next five years, the startup aims to produce 300,000 tonnes of sustainable insect protein per year, recovering 7.5 million tonnes of food waste and agricultural by-products.

Loopworm will also work with the B2B model, supplying the proteins or fats to feed manufacturers and pet food manufacturers who can formulate the feeds themselves to sell to farmers and pet owners. .

He wants to enter the market in 18 months, selling not only in India but also in the US and European markets where he expects to find higher demand and prices.

Regional fundraising

When it comes to fundraising, Bagaria notes that some startups might take longer to secure funding compared to their counterparts in developed countries where economies are more focused on sustainability and climate technology.

“People talk about climate tech and sustainability, but their confidence in the solutions as a business is limited. It actually makes the whole fundraising process difficult,” he says.

“They very much appreciate all of these solutions, because they understand the value of them, but the funding that is coming in is limited. You have to present and demonstrate a proof of concept before you can be awarded a contract and we have been doing this since we started. Once you get funding I guess the journey becomes easier as it shows the business is working.

The startup is currently stuck on revenue generation and scaling and will explore different properties or functionalities of insect-based products that could be, for example, human consumption in the future.

“Insect products are a major driver of sustainability, when I think they should promote health and nutrition first and then sustainability as a supplement,” he says.

“Sustainability alone cannot lead humans to insect-based foods because there are a number of choices. You have a lot of plant-based choices, fungus-based choices, and the choices are huge. There must be a significant health or nutritional benefit that would push this into the human market.

Other Indian companies in this niche include Insectifii, Keetup and Freshrooms Lifesciences.

What they say

“Omnivore is delighted to support Loopworm as part of our OmniX Bio initiative, which aims to pave the way for agribusiness life sciences in India. Loopworm sees huge potential in transforming cultivated insects into value-added nutrients and ingredients, and Omnivore believes the company will quickly become one of India’s leading biotech startups,” said Mark Kahn, Managing Partner at Omnivore.

Ashish Jain, Partner at WaterBridge Ventures, commented, “We are delighted to see Ankit and Abhi finding sustainable and scalable food resources that are traceable and therefore easier to adopt by the general public. Loopworm, sitting at the forefront of climate technology and food technology, has the potential to continue moving up the value chain as its product line evolves and emerges as a truly large-scale player.