Virginia Emery is an entrepreneur with a passion for insects and the founder and CEO of Beta Hatch, a company that grows insects as sustainable protein for animal feed. Virginia’s current mission is the save the world by breeding a bug that tastes like bacon. Join Harry Duran, host of Vertical Farming Podcast, as he and Virginia discuss the fascinating world of insect farming, its impact on the vertical farming industry and the importance of promoting diversity in this ever-growing market.

Special thanks to our Season 1 Sponsor

IGS – https://intelligentgrowthsolutions.com/

Key Takeaways

00:01 – Virginia expounds on her background as an Insect Entrepreneur, speaks to the many ‘bug banquets’ she’s attended and shares her passion for changing the world

06:12 – Virginia speaks to how she educated herself about the indoor agriculture industry, the work she does with Beta Hatch and surprises she learned along the way

13:37 – Other vertical farming business models that inspired Virginia during the early stages of Beta Hatch

16:16 – Virginia breaks down the supply chain aspect of Beta Hatch and the impact of robotics technology on this industry

24:55 – How Virginia has grown and evolved as a business owner and entrepreneur

30:16 – Virginia shares her thoughts on opportunities for women and minorities in the AgTech industry and can be done to promote diversity

40:43 – The decision to seek out funding through a third party investor and a hard question Virginia has had to ask herself and answer recently

47:34 – Harry thanks Virginia for joining the show and let’s listeners know where they can follow and connect with Virginia and Beta Hatch

Tweetables:

“If you can identify what your passion is and you can use that to fuel your career, that means that work is not ‘work’ in a sense of something you’re not enjoying or something that’s burdensome but rather something that you feel passionate about.” (05:50)

“The U.S. is a net exported of feed – because we produce a lot of soy – but we’re a net importer of aqua culture, seafood and aqua feed products. So, there’s some interesting geographical components to the food system that, again, most people are not realizing when they go to the grocery store and get their food.” (13:09) 

“Frass is your word of the day. Frass is insect manure, so bug poop. We have a saying at Beta Hatch that ‘Frass Happens.’” (17:18)

“As an entrepreneur that’s one of the most exciting things I think about having a business is there’s always something new to learn. And that’s something that we really value at our company is we really work to hire lifelong learners.” (26:03)

“I’ve always tried to pursue my interests with a real drive, and I think that naturally being an entrepreneur fits really well with that.” (30:07)

“I think it’s the responsibility of anyone who’s working in an organization that’s not very diverse to really think about why that is.” (33:09)

“What I’ve come to realize is that investors and the people that are helping to scale this industry, they invest in people. So I think that it’s important that you are authentic with people and that you’re really using that to motivate and drive what you do.” (46:22)

Links Mentioned:

Virginia’s LinkedIn

Beta Hatch Website

Intelligent Growth Solutions

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Mentioned in this episode:

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information, visit intelligentgrowthsolutions.com. If

you can identify what your passion is and you can use that to

fuel your career, that means that work is something that

you feel passionate about. Welcome to the Vertical Farming

Podcast, weekly conversations with fascinating CEOs,

founders, and agtech visionaries. Join us every week

as we dive deep into the world of vertical farming with your

host, Harry Duran. Vertical Farming

Podcast, welcome back, episode 8. If you're new to the show, this

is the podcast where we interview fascinating CEOs and founders of some of the leading

vertical farming companies from around the world. In case you missed last

week's episode, I had a great conversation with Nikola Krsleki of

Contain. They're doing great things in the world of financing

for companies in the agtech and vertical farming space. It's a

really entertaining and lively conversation. Make sure you check that out,

episode 7. This week, I'd also like to call out a special

announcement from our friends at Agritecture. Last year,

with their partner Autogrow, they conducted the first-ever global census on

controlled environment agriculture and published a 52-page report

free of charge, with over 300 respondents from 54 countries. For

the 2020 Global CEA Census, they aim to reach even more farm

operators to gain an increasingly accurate picture of the industry. With

COVID-19 heavily impacting agriculture, they'd be interested to know how it

has affected your operations. You can fill it out at

agritecture.com/census. We'll also be including

a link to that in our show notes as well. And they've asked that the

questionnaire be completed by August 10th, 2020. What's more,

by answering this year's census, you'll have a chance to win multiple prizes,

including a free ticket to their virtual conference, Agriculture Exchange.

So make sure you check that out. This week, I have the privilege of speaking

with Virginia Emery of Beta Hatch. I really enjoyed the

energy and the vibe of this conversation. She's an entrepreneur with a passion

for insects. And if you haven't heard of Beta Hatch, it's a company that grows

insects as sustainable protein for animal feed. Virginia's current mission is to

save the world by breeding a bug that tastes like bacon. We

discuss the fascinating world of insect farming, its impact on the vertical farming industry, and

the importance of promoting diversity in this ever-growing market. We get

deep in this conversation and Virginia breaks down the supply chain aspect of Beta Hatch

and the impact of robotics technology on this industry and how she's

grown and evolved as a business owner and entrepreneur. She shares her

thoughts and opportunities for women and minorities in the agtech industry

and what can be done to promote diversity. She also talks through the decision to

seek out funding through a third-party investor and hard questions she's had to ask

herself and answer recently. If you enjoyed this episode or

past episodes, I'd love for you to leave a rating and a review at

ratethispodcast.com/vfp.

Okay, let's get to it and jump into this conversation with Virginia.

So Virginia Emery, founder of Beta Hatch, thank you for joining us on the

Vertical Farming Podcast. Yeah, thank you for having me. I was doing a

little bit of homework and I listened to your interview with the folks at

Modern Acre. So I wanted to start and have you

tell the listeners and me and explain what a bug banquet is.

Well, so it's interesting. I've been to quite a few of these bug

banquets. Generally, it's a celebration of insect-based

cuisine. So I've had several different chefs prepare

amazing meals. The most recent one that I got to enjoy was

in Copenhagen at the annual meeting of the

International Platform for Insects as Food and Feed, an international

sort of trade organization. And yeah, the bug banquet

usually incorporates a multitude of species of insects in

different ways, different preparations. So I've had I've had salad topped

with black ants. I've had polenta made

with cricket powder. I've had mealworms

on top of soup. I've had all kinds of

different interesting, both savory and sweet

preparations of insects. And I find it very exciting when we can get a

diversity, you know, different types of insects that are not as common,

different wasps and different non-insects as well,

arachnids. So I know that the Explorers

Club had a really big banquet a few years ago. They had fried

tarantulas as one of the dishes. So there's

a lot of different exciting preparations of insects that we don't enjoy as

much here in North America. There are some traditional North American dishes, of course, but

around the world, there's a history of eating insects. So it's just a celebration of

that cuisine. Has your palate expanded to the point where you can actually notice

the difference between the different types of insects? Oh yeah, absolutely.

And it doesn't require, you know, a palate expansion. It's just the nature of

a lot of these bugs. Ants are a good example where the defensive

chemicals that they use to defend their nests imbue different

flavors. So you can have ants that taste like blue cheese or that have a

lemony flavor. It just depends on the kinds of protective chemicals that they

use. When did this interest start for you in insects

specifically? Well, I've been a biologist my whole life. So

as a little kid, I just loved being outside. Being in nature, I'm sure I

collected my fair share of crawling insects and

worms and different things living in the dirt. But my real

passion started in college where I think just realizing how

sophisticated and complex the insect realm is, is when I really

fell in love. So it's been several decades now

of just being interested in insects and my whole career I've worked with insects.

So it's been a real passion and I think will be a

theme of my life for sure. Were science and biology early

subjects that were the most interesting to you growing up? I think

so, yeah. I always had a set of great teachers. I had a really

fantastic high school biology teacher. My father is a scientist as well.

He's a geophysicist, but I was never very interested in rocks.

I needed something that was a little bit more alive. So

biology, you know, we're living things, and I have a lot

of friends who are doctors, medical doctors, and certainly the human body and human

beings are very interesting, but there are millions of other species on the planet And

so that's where I have always been really fascinated by

nature and the living things in it. When did the interest in

business start? Because you're now the founder of your own business. And I'm wondering, as

you move out of academia and being a biologist,

when that started to come into being. Yeah, I think it was probably in

grad school. My partner, who I met in San Francisco when I was

doing my PhD work at UC Berkeley, he's a very

entrepreneurial person and kind of started sparking some of that interest. I

definitely started to feel like a lot of the work I was doing in academia

wasn't very helpful, wasn't very applicable to making real

change in the world. You know, you could really get deep into some really

basic questions of biology and create new knowledge, which is the

incredible privilege of working in academia, but the actual

impact that would have on the planet was potentially

negligible. You could be doing amazing world-class research and

it would never be something the public would hear about. It would never be something

that would become commercial. So I started really thinking about how could I use my

skills to actually do something that would have a more lasting and

meaningful impact. And certainly, I think, especially here in the US, starting a

business is a great way to create the future that you want to see.

And so I started exploring some opportunities while in grad school, and my

early work was in some smaller businesses and just trying to

get a feeling for what it takes to start something

new, start a new enterprise. And I started BetaHatch in

2015. Prior to BetaHatch, did you ever have a 9-to-5 job?

I did, yes. I did not like it very much. I

think a lot of founders have a personality that sort of lends

itself to independence. And that's something that

I think is true of me as well. I just, I really wanted to be

more creative and really own what I was working on in a

different way. So, I think that really spurred me to start my own business. You

mentioned something that I thought was interesting, this interest in changing the world.

Where did that come from, that drive, and who

inspired that? Well, I had a great friend in high

school who unfortunately passed away, but he was in

this firefighting program with me. And he was extremely

passionate about firefighting. He knew from an early age that's what he wanted to do.

And he would frequently say that if you

find a job you love, you'll never work a day in your life. And I

think that is something that has stuck with me since then, that if

you can identify what your passion is and you can use that

to fuel your career, that means that work is

not work in a sense of something you're not

enjoying or something that's burdensome, but rather something that you feel

passionate about. And I think that's something that I wish for all people,

is that they can find something that they feel passionate about and pursue it. As

you started delving into the world of insect

farming and the world of indoor agriculture,

what were you doing to educate yourself about the industry, and where were you

looking to learn more? There are some great organizations

associated with the UN, so the UN Food and Agriculture Organization

published a report, very widely read, one of their most published and read

reports on the use of insects in food and

feed, of edible insects. And that was published in, I believe,

2013. That sort of sparked a revolution, I think, in

the industry and started to really put a lot of fuel behind what

we're doing. I think before that, there's a huge, long

history of edible insects, millennia of

eating insects and several decades of

producing and thinking about insects for food, but not at

the kind of scale that we're talking about now. I think there's really been in

the last few years a huge increase in the volume of production.

I think also a real diversification of how we're thinking

about applications of insects and their potential.

The industry's evolved from something that's been really steeped in

tradition and collection from nature.

And it's, I think, evolved now into thinking about

this as really part of the food system in a way that we're actually intentionally

producing insects and growing them for food and for

animal feed. So can you provide a bit of context in

terms of the business model for Business Hatch and specifically

how you're looking at insects as opposed to

a source for human consumption where you went with Beta Hatch?

Yeah, so Beta Hatch is very focused on producing insects for

animal feed. When we think about the food system, we

all, many of us like to enjoy meat and we don't really think

about what it is that our meat is eating. And what most people don't

realize is a third of all the crops that we grow are going to

feed animals. And so there's a huge industry around animal feed,

$400 billion globally that most people don't think about that

has huge ripple effect into other parts of the

food supply. I think a lot of people have this sort of ick factor, you

know, that bugs are gross, they shouldn't be in our food. But when

you think about what it is that animals are eating in the wild,

they're eating insects, and we don't have to convince fish or

chickens that bugs are delicious. So we are focused on producing

insects as a feed ingredient for those animals. It's a high-protein,

high-fat feed ingredient. So it's replacing some of the most

expensive ingredients in the diet, and it's providing some of that

essential nutrition that can sometimes limit growth and productivity.

Insects also have these other incredible functions as prebiotics,

so they can enhance digestive health of those animals. They can

replace antibiotics because a lot of insects produce antimicrobial

peptides. There's all of these different

micronutrients that they can provide the animals that we're feeding. And so

there's huge value for insects as part of that animal food

production system. And it's not just about producing meat, it's also about

creating healthful and hypoallergenic diets for companion animals, for

dogs and cats, for exotic animals that zoos. There's a lot of

other applications of insects in the feed system as well.

Yeah, I always thought it was interesting when you would see eggs that says

vegetarian-fed chickens. I was like, wait a minute, because you

normally would— if you see a chicken outside of a chicken coop, they're just pecking

away, like eating up the grubs and the worms. Yeah, yeah, that's

actually one of our customers that we've spoken with here in Washington

said that they removed that from their packaging because they had enough customers calling and

saying, aren't chickens supposed to eat bugs? That would make them

Technically, you know, this plant-based diet is not natural for them.

And so I think that intuitively we know that this is something that we need

in our food system. I think people forget when you look at chickens, they're basically

like baby dinosaurs. Yes, they are. Like in

terms of some of like their characteristics. And if you look at Jurassic Park and

you're like, oh, that's just a huge chicken. Yeah, yeah, pretty much.

Yep. And they love to eat bugs. Yeah. What were some of the

surprises as you started working through this business model and things that you

had to learn on the fly? As you started to grow this? So yeah,

I've, I've been producing insects for 5 years

with Beta Hatch. We've grown in scale, but it's still a

very small business in the scale of the market. A lot of the customers

that we're trying to work with just can't write contracts with us because we don't

have the volume of production that they need. And I think that the scale

of the need for these alternative proteins is probably the

single, I don't wanna say most surprising thing, but the, the most

challenging thing for the industry. It's a very supply-limited industry right now where the

demand far exceeds what the supply is globally. This

isn't just for our company, but for the entire industry. So I think

that there's a bit of a chicken-egg problem, or rather a

beetle-egg problem. I have to work on replacing

that phrase to be more appropriate for us. So the beetle-egg problem

is that a lot of the customers want a very large volume

to make commitments to purchase, but we need to get their

commitments and their interests in order to secure the funding and the other

elements of, you know, just building that business to get to the scale that is

meaningful for them. So the customer wants the volume to already exist. We

need the customer's commitment in order to scale to that volume.

So we're working with a lot of smaller producers and

customers and doing rollouts with large companies on niche

products as the industry is scaling. And I'm very excited that in the

next few years, I think we're going to start seeing much broader adoption of insects

as part of these feed formulations that are used for our animals.

What's the percentage of interest and demand, US versus

global? That's a great question. I think a lot of it has to do

more with awareness of insects right now. So the industry's grown more

quickly in Asia and in Europe than it has in the United

States. Beta Hatch is one of the largest producers

of mealworms in the industry, but we're still extremely small.

We're the largest producer in North America of mealworms for commercial

animal feed, and again, still at a fairly small scale, but that

demand is Huge. And I think it partly has to do

with the structure of the feed industry. A lot of aquaculture feed, for

example, is produced in Europe by nature of just where the

fishing industry exists. And I think that we're going to start

seeing some shifts in that industry as insect protein

production opens up new geographies, because we basically can

decouple, for example, fish food production from

the ocean. So we can be producing that now on land in insect

farming facilities. And so we have an opportunity to really

establish new business, especially here in the US. The US is a net

exporter of feed because we produce a lot of soy, but we're a net

importer of aquaculture and seafood and aquafeed

products. So there's some interesting

geographical components to the food system that, again,

most people are not realizing when they go to the grocery store and get their

food. And so I think I'm very excited to see the opportunities that insect farming

can open up. in helping to create more domestic

production and more robust supply chains. Who was the inspiration for

you in terms of other businesses doing what you're doing, either at a smaller or

larger scale as you were getting started? Yeah, we definitely looked

to other livestock production, other animal production systems. There's

some really successful models for working with contracted

farmers. I think there's a lot of flaws in some of those contracts

where the farmer is not given a great share of

the profits from that production. So we're really trying to think about how can we

create a really good revenue-generating opportunity, job creation opportunity

for farmers by enabling them to, instead of

producing poultry or pigs, produce

insects. So I think that there's some interesting opportunities, not just for

established farmers, but starting to think about models that can be applied in

urban environments. So if you have a warehouse and it's just sitting idle and

empty, you could convert that into a bug farming factory. and

start producing sustainable alternative proteins. I think

that there's a lot of really interesting business model

innovation that is going to be required for us to solve a lot of the

challenges in the supply chain with food. How much of what you're doing

lends itself to exactly what you're describing, like educating

new entrepreneurs who want to get into this field? And,

you know, similar to the container farm market where you show people and then,

you know, what the folks like Freight Farmer and Square Roots are doing, giving people

like an out-of-the-box solution for this is how how you can hit the ground running

with a business model that's been proven and has a bit of a track record.

How much of what you're doing lends itself to that and is something that you're

interested in? Yeah, I think that Freight Farms and some of these other

container-based companies have a really interesting business model. We're

looking at a much larger scale, still small in the scheme

of production, but— and I shouldn't say small, it's a medium commercial

scale, but this is definitely a much more significant

commitment than buying a container farm. Our scale of

operation that we're targeting is around 30,000 square feet. So it's a

large facility that can produce several tons of product every day.

So it's a, it's a very much a manufacturing operation,

but there are plenty of entrepreneurs, plenty of different

farmers that have the capacity to

run such an operation very well. So we're excited to, again, talk to

existing farmers who are looking to convert some production that they have, but also new

producers that might have a facility or some interest in this

kind of area, but may not have that experience. I think we're

definitely trying to think about how we can expand our supply chain

as quickly as possible. And we think this more distributed approach is a

way that we can be successful there. Can you talk a little bit about the

supply chain? Because I'm just curious what that looks like, what, like where the

process starts and how, you know, maybe even a bit of a day

in the life of when you, when you, when you think of like the whole

supply chain, like where the actual process starts, maybe even as an

idea and where you start to look and And then how it ends up in

the hands of the farmers. Yeah, so we produce the mealworm.

It's a type of beetle. It's a dry-adapted insect, so it

has been living with us for millennia in our stored grains. So their

main feed is a dry feedstock. So that really

simplifies our process. We basically put the feed into a tray, we

put the insects in there with them. Starting off, they start as eggs and

will hatch into little larvae, and so those will go into a tray. And those

trays get stacked into set on a pallet. So that's the

basic growing unit. And then those pallets will go into controlled growing

environments. And over the course of several weeks, they'll

basically convert all of that feed into their biomass and

frass. Frass is your word of the day. Frass is insect

manure. So bug poop. We have a saying at Beta Hatch that frass happens.

And that frass is a fantastic organic fertilizer. And

actually what we're starting to explore now is even using that frass as a feed

ingredient as well. So they'll convert this feedstock, which is usually

a very low-value, high-fiber, not very digestible,

into these really dense little bug

bodies that are protein-rich and lipid-rich.

And so it's a conversion of nutrients is what this

process is. They're basically bioconversion units. And

at the end of the growing cycle, we take them out of those grow rooms

and we separate the mealworms from their frass, and

we remove the water usually from the mealworms to make for

easier transport and to prepare that product for the feed

customer. And we are an ingredient supplier, so we produce this raw

ingredient and we work with feed formulators to combine that

into a formulated diet. Because even though we do actually have a lot

of evidence that, for example, salmonids can survive,

and not just survive but thrive, on a 100% mealworm diet, we

do know that a lot of producers like to blend that ingredient with

other nutrients, either for cost reasons or feed conversions or

efficiencies. So it is, as a sole ingredient,

extremely high performing, and in some cases isn't a

complete nutrition for the animal. But we do know that most of our customers

are blending it with other ingredients as a formulated feed. So that's sort of the

production process. Our supply chain and how that works is that

we're looking again to this distributed model where a rancher

that is growing our insects would buy the eggs and the feed

from us. They would do this process, grow the product up, and

then we would buy back all of the frass and feed from them to be

able to sell through our channels. So in this way, we

remove all of the need for that customer. So our rancher

doesn't need to think about sales and marketing. They just need to worry

about operating and running the farm. And that gives them some

guaranteed revenue for their work.

It gives them a lot more certainty around the process because we're helping control the

inputs and we control that process. And so this is the model that we're

looking to expand and create hundreds, if not thousands,

of insect farms around the world. And so I think that's a model,

again, that's still in early development, but we're very excited to see that grow over

the next few years. Is any of that technology or any of those systems

proprietary? Well, Well, most of the work that we do

in technology development is around the lifecycle of

the beetle. So getting the eggs, that's where a lot of our technology lives.

So Beta Hatch owns and operates the egg production facility, and that's where

most of our technology lives. Certainly, there's some proprietary elements about what

we do. We have a custom tray that's been optimized for

production. There's a huge amount of data and research that's gone

into the development of our process. But naturally, working with a

rancher, there's a little exposure there to our

technology. So we have to be thinking about that as we think about which part

of the process we have outside party to do versus we do ourselves. So

fortunately, you know, just feeding up the insects and helping them

grow is a fairly straightforward process. And we've

tried as much as possible to use off-the-shelf technology so that we

can really accelerate how quickly we can scale these operations and we can

maximize the flexibility in our equipment supply chain. for

how we get these facilities up and running. Have you

looked at, or what is the impact in terms of the

advancement in robotics for this industry? I've had a fascinating

discussion with David Farquhar of Intelligent Growth Solutions, and he was

explaining how the different variables of humidity,

temperature, and even the soil composition, how they can all

be mixed and matched together to create different environments, LED

lights and all this sort of stuff. So I'm wondering if some of that is

making its way into some of the work that you're doing as well. Yeah,

absolutely. There is a lot of refinements

that is still to be done in how we produce, and a lot of it

has to do with controlling that climate really well. One of the things though that

I think is really important for anyone in the industry to remember is that

automation needs to be cost justified. And I think there's a lot of hype

around some of the automation and there's a lot of reinventing the wheel,

which is just sort of unnecessary. So we're actually taking a lot of inspiration from

the indoor farming industry for plants and using a lot of those

technologies for what we do. So there are some unique things about

insects, absolutely, but we're really trying to focus on

what are those unique needs and not necessarily reinvent where we don't need to.

Fortunately, the industry is developing enough now that there are

producers of custom equipment and that have some solutions that

are immediately applicable to us. But the insect sector generally

is still developing and a few years behind where the plant-producing

sector is. So we're really blazing a trail in a lot

of different parts of that production. And certainly that big data

approach to how you really optimize production is something that

we're using and we have been using from day one. As a team of really

skilled technologists, we've been developing a huge

infrastructure to be able to handle and manage a lot of that data because

you have this opportunity to really learn about and refine that

production. I mean, this is the exciting thing about developing a new crop. I mean,

we've been growing lettuce for a very long time, and you see that the gains

that can be made in our production system— think about a crop

that has never really been produced at massive scale. The gains that we

make sometimes on a daily basis, one day to the next, we can have

huge doublings of productivity in some cases just by simple

changes in our process. So we have had a a

really great track record of some big leaps and jumps in the

productivity based on the innovations that we've been applying to the process

and biology and the technology and equipment that we're using. Do you

sometimes stumble across those sometimes? Are you like— Oh yeah. You're trying to figure out

all the different knobs you're turning and then one of them results in like a,

you know, a doubling of your output. Yeah, sometimes. And then you

scramble to figure out like what changed there. Yeah, sometimes there's an accident

that happens and it turns out to actually be a great natural

experiment. There's a lot— sometimes that's on the negative side

as well. So like, for example, lately we've been really trying to

understand metabolic heat and how that plays into the air handling systems.

So this is something that's unique to insects that's different from plants, is that

they will produce heat as they're growing. Mm-hmm. And if they

overheat, that can be really detrimental to their growth. And so one of the

things we've found recently in setting up some of these

experiments We are actually realizing that even a small

exposure to some of those conditions can have

effects weeks later. So just really understanding, sometimes

you set up an experiment to test one thing, and if you're not properly

tracking all of these variables, you don't know what the impact is

of that modification. So we're finding, we're learning that

things that otherwise seem like they shouldn't have too much of an impact

can have strong ripple effects, and that goes both in the positive and the negative

direction. So lots of breakthroughs for sure in

just doubling the density that we can grow them at, or some of these things

that have happened in the last year which are allowing us to

exceed a lot of those technology targets and milestones that we've set for

ourselves pretty quickly. Interesting. Changing gears

slightly, how have you grown as a business owner since you

started Beta Hatch? Yeah. I mean, the company started just off with

me growing bugs in my backyard in 2015. We grew into a

converted office space, and then we built out our first warehouse project. And now we're

building a pretty large flagship facility in Cashmere, Washington.

So we've grown from sort of just myself in my backyard to a team of

14 and a 30,000-square-foot flagship

facility that's got a huge amount of automation. And we're actually

building out a lot of new custom equipment to enable the

process at a massive scale. So incredible growth.

Myself as a business owner, you know, it's been an interesting transition going from

academia into entrepreneurship. I've had to really think about

and learn how to communicate differently because it's a very different style

of communication in business. I've learned

everything from, you know, obviously all the nuts and bolts of growing bugs, but

the nuts and bolts of Your accounting and customer

management and PR and

HR. Yeah. All kinds of things. So as

an entrepreneur, that's one of the most exciting things I think about having a

business is there's always something new to learn. And that's something that we

really value at our company is we really work to hire lifelong

learners. That's something that we try to emphasize as much as possible in our

hiring and in the culture of the business. Yeah, it was some of the most

interesting learnings for me because I moved out of my corporate world. I was

in financial companies in the marketing department for almost 18 years.

And so moving to becoming an entrepreneur, I always like to give the

example of it's like Narnia when you go into the, you know, step into out

of the wardrobe and you're just like in this world of like digital marketing and

online marketing and you have to quickly learn and realize the things that you're not

good at. Like for me, it is accounting and like I'm like, avoid

like the plague, like reconciling my books and stuff like that. So I'm always

interested to hear how people who are not naturally born entrepreneurs,

because I wasn't, you know, the people that had, you know, there's the stories of

the people that had the lemonade stand when they were like 5 years old. And

there's a lot of things that they don't teach you in school and that you

have to learn on your own. So I'm always interested in how new entrepreneurs manage

that. Yeah. And I think this is something that we should really think

about having as more of a part of the education system.

You know, I think that there's a real problem of creating

opportunities for people in the country in an

equitable way. And one of the ways that we can work to

level that playing field is helping young people gain skills in

entrepreneurship and in science. I think that having a real

comfort with numbers is something that is really needed for a

lot of different jobs. And I think that that's an area that I was

never I was into math, but not as into math as

I think I could have been if I had realized just how many different

ways you can apply it. I think you need to find a way to make

it meaningful for people and to tie it back to something they care

about. And so that's why I think entrepreneurship's a great way

to teach how to be looking at these

skills in a different way. If you're really passionate and excited

about your business, you're going to learn how to do the accounting even if you

hate it, right? So I think that both at the sort of

primary level, but also as we train, I have a real passion

for science education. And I think as we look to train the next generation of

scientists, we need to be training them in how to communicate, how to think

about the commercial applications of what they're doing,

how to think about business as a career opportunity. So

I think there's a lot of opportunity if we can be thinking about

getting entrepreneurship and business skills into the

education system. For people that have known you a long time, family and friends, are

they surprised where you've ended up or not? No, not really.

It's interesting. I am an oldest child, so

I lend myself naturally to this sort

of negative word of bossiness. There's, you know, these negative

implications for being bossy when you're a woman especially, but I

have always been bossy in my whole life. You know,

this is— these are just leadership traits. That instead of encouraging it as, hey,

you are a leader, people say you're bossy. And that is

something that I never really took issue with, which is

fortunate. I had some really supportive parents and teachers

who never made me feel like that was something I needed to get rid of.

But it is something, at least professionally, I've run into some issues

around that bossiness, that instead of cultivating those

leadership skills, it can sometimes be framed in a negative way. So, you

know, I really try to, when I'm thinking about mentoring

younger people, encouraging those personality traits that

have some real value. And I think that those leadership traits of

being someone who has a vision and makes that happen, who tries to take

charge, who is trying to be a

builder and a creator, those are things that I've always had as part

of my personality. And so, I think Even though it wasn't necessarily a

logical progression from that science and academic focus that I had,

I don't think anyone's too surprised. I've always tried to— I've always

pursued my interests with a real drive, and I think that

naturally being an entrepreneur fits really well with that. We're having a

discussion in June of 2020, so top of mind for everyone in this

country is the topic of diversity. And I'm

wondering, you as a female business owner, what you've seen and what the

state of the agtech industry is for female owners, and if

you've you've thought about that and, you know, how your position is obviously a shining

example for women and minorities who might look to enter this

market. Yeah, it's interesting. We're definitely at

some very pivotal times in the development of our country

here. We have some real systematic issues around how

women and people of color are not

given the same kinds of opportunities you know, cis-hetero white men.

And so I think that there's— the entire country has been grappling with

this for a long time, but it's all kind of coming to a head now

where we're recognizing that these are not just

questions of economic opportunity, but even of public

health especially. And we're also in the middle of this pandemic, and

it's disproportionately impacting, you know, both from a

direct health impact impact standpoint, but also from a career

standpoint, childcare is disproportionately falling

on women who are having to take steps back in their careers

because of the situation that we're in. So I think

that as an agtech entrepreneur, as someone who's very

fortunate to have a lot of privilege and

opportunity in my life, I think I definitely count myself very

lucky. But at the same time, I do get a little

frustrated seeing the lack of financing for

women-led and minority-led businesses. There's a huge problem in

venture capital where there's a very

large gap in funding. And I think that there's

some excellent data on this. The organization AgFunder

published a report on female-based companies and how much

funding that they've received. And agtech does better than, for example,

software. So the traditional Silicon Valley businesses some of the worst

when it comes to looking at that ratio and proportion of funding, but we're still

lagging. And there are some investors who've really taken the lead on this. S2G

is an example of an investor in the space that has really tried to

not just invest in businesses that are led by

women and more diverse teams, but also in the

structure of their fund and in the venture partners that are

involved in making decisions about those investments. They have a lot of

diversity. So I think that there are some great examples. In the sector,

but it is definitely very discouraging

when there's not that representation in the makeup of

those decision makers, especially at investment firms. So I think, you

know, a lot of this, these trends that we're seeing hopefully start to

translate into more action. And I think it's the responsibility of

anyone who's working in an organization that's not very diverse

to really think about why that is. Because I think a lot of us are

realizing the biases that we have that we are not

even aware of. And, you know, waking up to how

that impacts what we do or how we communicate or how we make decisions is

something that can be really powerful. And this is something I don't, I

don't love talking about because it's sort of irrelevant to my business.

You know, the fact that I'm a woman entrepreneur doesn't make me more or less

able to to grow insects. In some ways, I would argue it actually

makes me a much better entrepreneur. There's data showing that women-led businesses

are less risky and have a better return. So there's— I

would argue that actually it's a better investment. But in any case, you know, I

do think that it, by nature of being a woman entrepreneur, you kind of

have to speak to it at some point. And, you know, I've been very

fortunate to have a lot of support in the growth of my business, which is

great. But I think the agtech sector is just like any other

startup industry where there's a bias towards a certain

group of people to the detriment of others. And I think that's something that, you

know, we can all work to improve. And I think,

you know, there's data on how we look at different ventures in

different ways. You know, I get so many risk-based questions, for example,

whereas male entrepreneurs tend to get opportunity-based questions. And

so, by nature, you end up framing A woman-led business in a

negative context when you take it that way. So, even though I'm proving I have

plans A through Z, and I've thought through all of these risks, which

you think would be a positive conversation to have, it can frame the

conversation for an investor who's trying to see the big opportunity and the

growth in a way that can sometimes create some hesitancy.

So, almost just by identifying what those risks are, they

sort of bias themselves to thinking those things will come to pass. And so, Just

having investors train themselves in how to recognize those

unconscious biases, that's something that I think that the industry could really benefit

from. Because growing indoor farming is a risky business inherently.

There's all kinds of things that can go wrong. There's all kinds of things that

will go wrong. It's, I think, being a

woman-led business, we actually are better able to manage

those uncertainties because I've almost been conditioned to

think about and problem solve just by nature of the kinds of

questions that I get. So, again, I think it's actually probably a better

investment to be thinking about how people with a more diverse

perspective are solving these problems in a different way. I'm Latino, so the

topic of diversity is always kind of top of mind for me and just something

to be constantly aware of. And I think given the current climate we're in, I

think people are forced to start having some uncomfortable

conversations about where they are, inherent biases, and and just

educating ourselves into, you know, how things that we've taught or were not

taught in school have affected our decisions and, you know, how we

view other minorities and women, you know, just historically.

So I think it's an important discussion to have regardless of what

industry we're talking about. And the fact that it's happening, I think, is a really

good thing. Yeah, well, and I think this is something, you know, you have an

indoor farming podcast and interest, and I think it's really

interesting that traditional food production most of the food that is being

produced in this country is produced by people of color, that we have a

huge agricultural workforce that is not

white. And I think that it's very interesting that the

indoor farming sector is largely white. That being said, the

labor, even at a lot of the operations, are still— you know, we

see a lot of people of color in the direct production of our food,

but not necessarily in the leadership of our businesses that are producing that food.

So, you know, we've been trying to create a culture where we can create

avenues of opportunity for people to advance into

other roles in the business as much as possible. We're trying to really think about

and require Spanish speaking as just a

mandatory requirement for operations leadership at our business, because we

know that that's very important for communicating with your

workforce, and we want to be creating opportunity for people from,

again, a diversity of backgrounds to excel in our business. And so I

think the sector, the indoor farming sector, does trend very

white and male, and I think that's something that there's a lot of ways that

we can address that. And I think that I'm very excited to see what happens

in the next few months and years as the country sort of starts to address

some of these systematic issues. Yeah, I've always remembered growing

up in New York City how there would be these programs that would take inner-city

youth and take them to like the rural farms and just show them, like, because

they would, you know, if not for those programs, they would never have the opportunity

to just see that that exists and just, you know, see farm animals in real

life. And I'm wondering if some of that— there's also an opportunity for some of

that in the indoor agtech. You know, while you won't be petting cows and pigs,

there may be— I mean, I would venture to guess that there's a lot of

inner-city youth that will never have the ability to see what it's like to grow

insects or, you know, or grow plants indoors, and that can be just as

fascinating. And also give them an awareness that

there's other careers to look at and other

opportunities to aspire to that they may not be aware of. Yeah, I mean,

there's a real rural-urban divide in our food production system,

right? Like, most of the eaters in our country live in urban environments,

but most of the food production is rural. And so the real promise

of indoor farming is that we can bring food production to where the people are.

And that we can make the transportation structure around our

food, hopefully shorten those transportation and infrastructure

lines. We can make the supply chain shorter. And I think that that's

really the big opportunity with the kind of

innovation that's happening in our sector is that it helps to bring

food to where the people are and hopefully reengage people in the

production of their food. So you can grow insects on your countertop.

And you could grow lettuce on your countertop, but it's certainly a little bit

more difficult. We actually are. We have— my

girlfriend's big on plants, and we've gotten this big planter with some leafy

greens. Nice. Yeah, and I think we're seeing that's another

interesting trend that's happening with more people staying home is

they're re-engaging with food production, with gardening,

with thinking about how to harness the power of the sun. To

produce their food. And I think that our mission

with insects as part of the animal food system is

to, you know, instead of using things like fish meal

where we take all the smallest fish out of the ocean somewhere near Chile

and then ship that over to a feed manufacturer in Norway and then

send that back over here to a fish farm in Washington, we

can be producing that feed from organic waste

products right there next door to where the consumers

of that product are. So shortening all of those supply chains and removing

the reliance on these outdoor

systems that are vulnerable to climate change and disruption. Climate

change is going to be the major disruptor of our generation,

of the species, and sort of direction of the planet. And I think

that food production is really vulnerable right now to some of the

impacts there. And so indoor production is a way to help mitigate against

some of those risks, but we're definitely not seeing the kind of growth in the

sector that we need to, given the kinds of trends that I think are going

to be happening in more traditional production.

Yeah, exciting, exciting times ahead, definitely. So speaking of

looking forward, you recently received funding from Wilbur Ellis. I

think it was about $3 million. So can you tell me about the the

need to look for that funding and what the plans are and how you're looking

to grow with that additional support? Yeah, so Wilbur Ellis is one of our

investors and Nova Memphis is the other co-lead on that round. They're a

rural investor that is excited about creating

opportunity in rural environments and creating

jobs and helping to stimulate rural economies. So

very much what we do is in that realm. We're really excited to have that

partnership with Wilbur Ellis, Cavallo Ventures, which is their venture arm, because they

are a really valuable player in the supply chain.

They're a distributor of specialty feed and fertilizer products. And so, they

see and understand and talk to farmers across the supply

chain, across sectors and markets. And so, it really allows us

to find the best fit for what we do and for our

products in that market. We've pursued investment

for growing our business. This is very much a venture-scale

opportunity. I think a lot of investors don't recognize how

large the market is, how large the opportunity is, how rapidly we can

grow and innovate, and how much technology there is. You know, this is very much

a technology-rich industry and process. It is not easy to grow

bugs, and it is not easy to grow them at the scales that we are

doing. So I think that people really underestimate how much

technology is required. I mean, we've got 6 PhDs on our team,

and that's essential for us to be successful because there's a huge amount of

biotechnology. It's a whole new crop we're developing. There's a huge amount of engineering

technology. to be able to do this at scale. I think

one of the challenges in the investment world is that

there's this expectation of a sort of software-type

growth in a business. But when you have a physical product, when

you're a farmer, you're growing something, you

have some natural constraints. And so that's something that we've really tried to

find ways to break those constraints as much as possible. That's one of the reasons

we have this operating model that we do, which has

decoupled the production of the eggs at the

hatchery from the production of the product. We're able to have

a lot more flexibility and control over how we scale. And we've also

been really thinking carefully about how can we reduce the CapEx, because I think

this is one of the challenges for the whole sector of indoor production is that

it's expensive. And there's a lot of, you have to build a

factory to scale your business. And so there's a lot of challenges around

making that equipment, making all that infrastructure

affordable. And that cost of capital is not often

accounted for in the cost of production. And so this is why we've really

emphasized a capital-efficient approach to how we're producing. We

could produce from a standpoint of a greenfield operation with a

new building every time we want to build something up, but there's a lot of

underutilized infrastructure in this country. So we've taken a bit more of a

brownfield approach to how we're thinking about production. And we also are really

thinking about automation in a smart way. I think, again, there's a lot

of— it's very sexy to pursue robotics and automation,

but it's not always cost justified. So really looking at, okay, what's the

return on that piece of equipment going to be? And maybe this could create a

good job for someone instead of, you know, paying a lot of money for

that robot. So I think that those are all

elements of what we do and how we're thinking about the business. that

are making us a much more de-risked and more valuable

investment because, you know, we're being really intelligent and smart about that

growth. I, I think that for the industry to be successful and for

companies to be successful, you need to have a plan beyond just

subsidizing your growth with venture capital. I mean, we're seeing the collapse

of a lot of those businesses that had these

sky-high unicorn valuations, and they've just been propped up

by venture capital for that entire growth. So

what we're trying to do is really get to a profitable business as

quickly as we can so that we can continue to scale and grow and,

you know, be actually a real business that is making money and not

just pursuing investment round after round after

round without actually getting to that point of being successful commercially.

I'm sure your investors are happy to hear that as well. Yeah, it is

very interesting though, you know, Sometimes that's not a very popular statement to

say that, you know, I have no interest in raising

$300 million of venture capital. And sometimes the venture capital

model, really, they want to be investing more and more dollars into something.

But, you know, I think that what people sometimes forget is

it's not a good investment if you don't have any kind of exit strategy, if

you don't have a point at which you become profitable. So, you know, just

investing in a way that your valuation keeps going up, but you're actually not

producing something profitable. And

again, it's about reinvesting in growth. I understand that piece of

things, but reinvesting in growth in a smart way. If that growth is never

going to become cost-effective, then there's something broken

about the business model. And I think we've seen this in a lot of discussions

of, for example, Uber and some of these big giants, that there's a lot of

question around, can they actually make money with what they're doing? Yeah,

exactly. What's a hard question you've had to ask

yourself recently? Well, I think, you know, I've been, I've been talking to a lot

of people about the growth of the business. I think

I've been having to ask myself, you know, this is very much in this interview,

you're asking a lot of great questions and I feel like we're having a good

dialogue. I've been asking myself how much I want to be sharing about

my personal journey in the context of the business. But what I've come

to realize is that investors and the people that are helping

to scale this industry, they, they invest in people. And so I think that it's

important that you are authentic with people and

that you're really using that to motivate and drive what you do. I

think I've really tried to think about ways that I can

walk the talk and speaking about some of these topics we've touched

on is a way to help to make that real. So, it's

hard not to, given this time that we're in, in the

world, to not be thinking more meaningfully about what is the kind of

business and the culture that you want to be developing? And how can

you use that to power what you do and to motivate the growth of the

business? So I think those are sort of that intersection of personal and

professional. I think everyone's facing those

considerations. And it's, for me, just really highlighted that this is what

I really love and I want to be pursuing. And I have a real passion

for the work that we do. And I really do believe that insects

need to be part of the food system. That is not just a

hope, but I think really going to be a— I think it's a necessary

development for the success of our food production. Well, Virginia, I

really enjoyed our conversation. It was a bit wide-ranging and I

learned a lot and I know our listeners learned a lot as well. So thank

you for sharing and for opening up on some subjects that

may not have been directly related to what you're doing with the business. But I

think to your point, it just humanizes what you're doing as a business owner

and some of the challenges that you're facing as you look to grow and scale.

Yeah, well, thank you for having an interest. You know, I think it's, as

an insect producer in a sector that's dominated by

plants, I think it's really exciting to talk about how we

can be bringing other production

systems indoors and helping to

create a more stable food supply chain, thinking about creating— and

again, when we talk about diversity, I think we need to talk about crop diversity

as well, right? Yeah. Like, there's this huge emphasis on leafy greens, but there's

only so much salad that Americans can eat.

We need to think about other crops and how they can be part of the

food system. And insects are a new crop that hasn't really been

part of that before. So all of the breeding, all of the diet development, all

of the technology to produce them, these are things we're working on because we need

to have that diversity to, you know, polyculture has a

lot more yields than a monoculture. And so it's a really

exciting time to be involved in farming. So where's the best place for folks to

learn more about Beta Hatch and connect with you? Uh, we have a website,

betahatch.com. We are just starting to get a little more

active on some of the social media channels, but it hasn't been an emphasis

for us because we're very much a B2B model, not a consumer-facing business.

And yeah, I am available. If you go on our website, you can

shoot us an email if you want to connect. Virginia, founder of Beta Hatch,

and would love to share more about what we do with your listeners.

Thanks again for your time, Virginia. Really appreciate it. Yeah, thanks, Harry. I really

enjoyed our conversation. So thanks again to Virginia for sharing her

story. If you enjoyed this episode or past episodes, as a

reminder, please leave us a rating and review at ratethispodcast.com/vfp.

As always, special thanks to our season 1 sponsor, Intelligent Growth Solutions.

Podcast production and marketing provided by Fullcast. If your company would like

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call at fullcast.co/chat15.

Make sure you tune in next week for my engaging conversation with Andrew Carter

of Smallhold. Thanks again for joining us on this episode of the Vertical Farming

Podcast. Here's to your health. Thanks for listening.

To hear all past episodes and read the episode summaries, which

includes any links mentioned in the episode, as well as a full show

transcription, visit Visit verticalfarmingpodcast.com.

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