Test garden

Test garden

The Beta Hatch farm is right under the final approach to Sea-Tac Airport.

Benjamin Romano / Xconomy

Beetles

Beetles

Adult darkling beetles lay eggs for the next batch.

Benjamin Romano / Xconomy

Insects...

Insects...

...it's what's for dinner.

Benjamin Romano / Xconomy

Insect entrepreneur

Insect entrepreneur

Virginia Emery, Beta Hatch founder and CEO.

Benjamin Romano / Xconomy

Fertilizer

Fertilizer

Insect manure, known as frass.

Benjamin Romano / Xconomy

Mealworms

Mealworms

If you're a chicken looking at this photo, your mouth is watering.

Benjamin Romano / Xconomy

Beta Hatch goods

Beta Hatch goods

The company is beginning with the consumer market.

Benjamin Romano / Xconomy

SaaS

SaaS

That's for Styrofoam as a Soil. A beneficial microbe helps mealworms digest polystyrene.

Benjamin Romano / Xconomy

Bug city?

Bug city?

Benjamin Romano / Xconomy

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commercial poultry farmers, and Emery thinks mealworms will be a relatively easy sell: “The natural chicken diet is insects,” she says, and mealworms—which are about 56 percent protein and 33 percent fat—make great chicken feed. Much of the protein in chicken feed now comes from soy, the cultivation of which contributes to deforestation. Also, giving chickens more of their natural diet may have health benefits. “There’s some suggestion insects decrease the need for antibiotics, so that’s kind of an extra bonus,” she says.

Beta Hatch is selectively breeding its mealworms to optimize that nutritional profile, accelerate development times, and make other improvements. Emery says classical selective breeding has dramatically increased yields, consistency, variety, and manageability of most crops and livestock species over the last half century. She sees similar room for improvement in mealworms. “This is hard core, back to the roots of understanding your organism, knowing what you’re growing, and being aware of how it’s producing generation to generation,” she says.

Emery acknowledges that farmers in general are appropriately conservative about their practices and don’t look fondly on the “disruption” that startups proffer. “They don’t have a lot of room for error,” she says. “They want consistency. They want reliability.”

She sees a promising initial market in organic farmers, who may be more open to new products and practices. Beta Hatch also recently hired a head of research and development tasked with gathering evidence to support the case for mealworms and frass fertilizer. The company aims to eventually be cost-competitive with fishmeal and provide a feed source that is potentially healthier for livestock and more sustainable.

“I think there’s going to be a lot of demand on a commercial scale for this kind of product,” she says.

And she’s not alone. A U.N. report in 2013 advocated for insects as a sustainable food source in a crowded world. The last few years has seen a wave of insect protein startups, such as Tiny Farms, which is trying to do for crickets what Beta Hatch wants to do for mealworms, and cricket bar makers Exo and Chapul.

‘How to factory-farm bugs’

If that demand materializes in a meaningful way—still a big if—the scale could be enormous. Already, Emery sees enough interest to increase mealworm production to at least a ton a day in the next two years. Beta Hatch is producing around a ton a month currently and is on track to increase to a ton a week early next year.

It’s the supply side—the process automation and other production aspects at scale; the logistics of moving that much material out to customers—that Emery anticipates as the bigger challenge.

Indeed, agtech companies and startups handling physical things in all industries have run up against the challenge of logistics. Emery was disappointed to see New York-based Farmigo discontinue its farm-to-consumer delivery service in July, opting to focus instead on software to help small farms.

“Dealing with the logistics is tough,” she says. “But that is the problem that needs to get solved.”

Beta Hatch is developing its technologies and processes for more efficiently rearing bugs at scale, borrowing from other industries, automating whatever it can, and building slices of software to help manage it all. Emery says innovation in precision agriculture and indoor farming is providing momentum for insect farming businesses.

“My goal with the business is to be the world experts in how to factory-farm bugs,” she says, adding, “It’s kind of this interesting marriage of engineering, biology, and process engineering and operations.”

Emery began in a 100-square-foot shed in her Seattle backyard—the “Ballard Bug Barn”—where she experimented with a couple of insect species before settling on mealworms. (She says the practices she’s perfecting with mealworms could eventually be applied to rearing other species, too.) She raised the early generations in stacks of plastic under-bed drawers.

Beta Hatch moved to the current farm in January. It has churned through four generations of processing equipment—rack and tray configurations, shakers that separate the frass, freeze-driers to preserve the larvae. (The latter have proved more difficult to obtain as Washington’s growing legal marijuana industry is buying up similar equipment.)

Emery notes that there are other successful mealworm growers, mostly providing feed for pet reptiles or fishing bait. “But they’re not thinking about the scale and volume we’re trying to reach with what we’re trying to accomplish here in agriculture.”

Competition from pot growers notwithstanding, Seattle is a promising place to start a business like Beta Hatch, Emery says. The weather is mild, electricity is inexpensive, and there’s space available for building indoor farms—though not every landlord wants 100 million bugs in their building, regardless of how docile and contained they may be. Mealworms are not considered an invasive species or a health hazard, Emery says, so permitting is doable.

Moreover, Washington has a huge agriculture industry that could benefit as climate change makes growing conditions in the Northwest more favorable, particularly relative to drought-stressed ag kingpins such as California.

“As the agricultural industry expands in the state, I think it’s a great opportunity for us as a farming company,” she says.

Since late summer, Beta Hatch has grown to six employees. Emery says she’s been able to find people with the talent and values she needs to help her build this complex business.

Emery bootstrapped the company at first and then raised additional capital through a community sourced loan—contributions of $50 or so from family and friends, with help from nonprofit lender Craft3, to get the proof-of-concept farm off the ground. She took on outside investors in May. Emery is wary of saying much publicly about her private fundraising, though you can expect to see her talking up Beta Hatch and the broader mission at several events around the Seattle area this fall (including Xconomy Intersect on Dec. 8).

It’s clear that the company needs capital to expand the way Emery imagines it—into a modern agricultural operation handling tons of material each day—but she says there are lots of ways to keep it manageable, and enough market opportunity to justify an investment.

The next big step would be a 50,000-square-foot demonstration farm, which she estimates would cost between $4 million and $6 million to build.

“It’s a very hardware-intensive type of business, which is not where most of the activity in the startup scene has been,” Emery says. “There’s been a huge focus in software, which scales totally differently.”

She adds, “It feels really good to be creating something tangible… to be solving these big problems. That’s really the type of innovation we should be having in entrepreneurship.”

In other words, software may be eating the world, but 10 billion humans will need to eat, too.

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