12 October 2022
Alvan Hunt of Hexafly creates sustainable animal feed and fertiliser using flies that feed off food waste – and is closing a €40 million funding round to take his ideas even further.
Alvan Hut is essentially a fly farmer who is about to secure €40 million in investment which he hopes will allow Hexafly to revolutionise the animal feed market.
Walking around the ag-tech start-up’s facility in Rathdrinagh, Co Meath last week he enthusiastically shows off the black soldier flies, or hermertia illuncens, which feed off food waste to create sustainable sources of animal feed, insect oil and frass, an organic fertiliser.
These are hardy-looking bugs that go from egg to fully grown within two and a half weeks, a 2000 fold increase in size and they have a protein profile identical to meat.
As Hunt walks through the facility, he demonstrates the process. From egg to full larval form, the bugs feast on waste products from the food industry, which makes one part of the facility smell like a brewery due to the amount of yeast present. Hunt points out the larvae at different stages of feasting before becoming their hardened form.
At that point, 90 percent are processed into feed protein and other products, while the remainder are bred in a dark, warm and humid building to continue the cycle. “We look for ways to use every part of the fly: this is a zero-waste facility. There’s no waste product that comes out because every part of the insect is valuable. I think it’s like that for most of nature – people just forgot about it.” Hunt says.
“It’s a really quick turnaround for up-cycling. Its amino acid profile is identical to meat whereas with plant proteins there are a couple of key components missing. It’s a strong nutritional profile. Nature’s recycler. “
It’s a remarkable business that has attracted international investment, but how did Hunt, a history and geography graduate who did a master’s thesis on bitcoin, end up working with flies?
“You’ve got to realise, I was a 22 year old student at the time in 2013. It was a simple idea. Ireland had a great technology sector and a strong agriculture sector so the idea was to find a way to marry the two. That put us on the path towards something to do with animal feed,” he says.
“The remarkable thing is how few people were surprised when I told them what I do for a living. If anything they tend to say it’s the future and want to know if we’re ever going to look at a way to make food for humans with the flies, but that’s not what we’re focused on.”
An unmet demand
Hunt, 31, was studying in NUI Galway (now University of Galway) when he met John Lynam at a party and formed a friendship with the chemistry student.
“We wanted to set up a business when we graduated. We wanted to do something in agri-tech or agtech, which weren’t even really terms back then in 2013,” Hunt says.
“There was an unmet demand in terms of animal protein. The only option at the time was soya, but the only way to expand that was to chop down the rainforest. We started looking into other ways.”
During their ad-hoc research they noticed a footnote at the end of a magazine article which mentioned insects as a potential solution to feeding animals.
In 2016 they founded Hexafly with the aim to “bring an insect-farming revolution to the world”.
The business has been supported by Knowledge Transfer Ireland, the state body which helps businesses to access publicly-funded research, which allowed Hexafly to collaborate with Maynooth University to research the performance of its technology.
It has built its model on using the waste from other sectors to fuel its business, which means that its sources are sustainable. Its products are also in high demand, as Hunt remembers from the early days of the business.
At a point where it had produced barely 1kg in total of its protein product, Hexafly got an order for 200kg from a US-based fisheries business.
“We were in a biotech accelerator in Cork called RebelBio, run by SOS Ventures. We moved there in 2016 when we started the business. When we left we had €50,000 in funding to build our first pilot plant, pay ourselves, and showcase what we were doing,” Hunt says.
“A large customer asked for 200kg for a trial. There were four of us at the time. We worked so hard to make that sample, shipped it off – they did the trial, and they came back and said it was great. Even now, we can’t do what they’re looking for in terms of scale, but it showed the demand.”
Meeting that demand is a challenge, even though the flies themselves are remarkably well-suited to creating a great deal of product in a short time – though they have to be carefully managed as, being native to south-east Asia, they need to be protected from the Irish climate.
The pilot model
Like many start-ups, Hexafly depended on the help of family to get up and running.
The business started in an old schoolhouse in Kilskyre, Co Meath which was owned by Lynam’s parents. That was where the pilot model was built.
It then generated enough interest to raise the seed round which led the business to its current location and the new funding will allow the business to move on again.
“Ultimately, it’s not big enough for what it needs to be, but it’s big enough for us to test the concept,” Hunt says.
“My parents, and John’s too, have been great at encouraging us. They know it’s not a normal job but they realised it’s an adventure. The people we first approached from the business side of things thought we were crazy. That has obviously changed now.”
The business has raised €5 million to date and is in the process of closing the €40 million round but, beyond saying the new backers are based in the United States – which is why there is an American flag beside the Irish one at the front gate – he will not reveal who they are.
He is, however, excited to talk about what the plans are for Hexafly, with drawings for a new site up in the Portacabin office beside the existing plant, and details how his business can further develop its fertiliser product, an idea that it discovered was an application for waste from the flies known as frass. This came about because of the duo’s approach to zero waste and they investigated uses for the frass, discovering its chemical contents made it effective as a fertiliser.
“Our plan is to build a much larger facility. That would produce up to 10,000 tons of insect protein annually – we’re at about 150 tons a year at present. We’re working on where we’re going to put it. We’d like to stay in Meath,” Hunt says.
“Ireland has a dependency on fertiliser imports. That’s because we don’t domestically produce it. We also have a dependency on feed imports. We’re trying to take the waste that’s produced in Ireland, feed it to the insects, and reduce the import requirements for feed and fertiliser.”
At the next site, which Hunt expects to be ready within 18 months of the funding round closing, the business wants to be energy-independent, using the fuel from the frass to power the whole facility.
As it stands, the protein product is approved for all animals except ruminants, which are grazing animals with more than one stomach, which in the context of Irish farming means cattle and sheep.
Hunt is awaiting its approval for those, but demand is such that he’s not concerned with that wait.
An oil product made from the processing of larvae has also proven an avenue for the business to sell to the sector. It is bio-identical to coconut oil and can be used as a feed supplement to piglets to improve the gut health of animals.
There are other applications, such as in soap, candles, wax, or even cooking, and Hunt is excited about the possibilities of other developments.
“We love R&D. We keep discovering amazing stuff the whole time. With the frass, we recently found out it can be used as a repellent against pests that are pesticide-resistant. We learned that through researchers in Trinity College and Maynooth University,” he says.
The core of the business for the foreseeable future is for its animal feed products.
“The protein isn’t just good for the environment, it’s better for the animal. It’s a natural diet. Chickens don’t eat soya, but if you throw an insect or a worm the chickens will run for it. That’s why we have so much demand,” he says.
“We’ve had rapid iterations in tech development. If something works, we approve it. If it doesn’t, we ditch it.”
With the new facility, Hunt wants to grow staff numbers to around 50, from the current 11, including more research and development and floor operations staff along with, unsurprisingly, insect farmers.
“It will be a lot more focused on the production side, we’ll need engineers as well. The processes are similar to a brewery. The insect husbandry isn’t a part we can automate away, it needs the human touch,” he says.
“We’re so good at producing eggs right now that we will soon be selling them to other companies. At the maximum that would be around 100kg of eggs.”
To save you getting your calculator out, that’s double the amount of eggs the business would need at peak capacity of the new plant.
“Scaling is the challenge. There’s a lot of capital expenditure. We have the demand and we have the research. The challenge is in the middle, to build and scale what we have,” Hunt says.
In his own words: The greatest mistake I made in business and how I learned from it
There’s no one single mistake, but more a few around the one aspect. I learned that the fundraising process takes longer than I thought and is extremely challenging. I definitely underscored the amount that was required.
You’ll always require more funding than you think you do because there are things you can’t factor in. There are so many unknowns. To start-ups, and I know this goes against conventional wisdom to bootstrap, when you are doing something that is a new technology it needs to be well funded.
It was a cause of stress for us because it makes it harder to achieve what needed to be achieved, and we had to achieve that to get to the next stage. If we had known what we needed when we were making that 200kg sample, it wouldn’t have been as breakneck.
We developed this technology completely from scratch, there was no handbook. Consulting engineers couldn’t help us because they didn’t know how to do it. The technology has evolved since, but we had to make the mistakes ourselves for every part of the process.
You have to be able to learn, adapt and be malleable.
Source: Business Post