- The collapse of Goterra, a leading Australian waste-to-protein insect company, has intensified doubts about the commercial scalability of insect protein production models that rely on organic waste as feedstock.
- Structural challenges, particularly the variability and contamination risks in organic waste feedstocks, undermine the consistency, quality, and scalability of insect protein outputs.
- Goterra’s failure is part of a broader trend, marking the fifth major collapse in the insect protein sector within a year, raising concerns among investors, policymakers, and the public about the viability of the business model.
The insect protein sector is facing a pivotal moment as the collapse of Australian waste-to-protein player Goterra intensifies scrutiny of business fundamentals.
Goterra’s unravelling came into focus at the start of June when it entered voluntary administration after struggling to secure fresh capital.
The company’s collapse is significant, as it challenges one of the insect protein sector’s most promising commercial models.
It had been a leading proponent of the waste-to-protein approach, which aims to improve economics by using low-cost organic waste as feedstock while generating revenue through gate fees.
This has renewed questions around whether models built on organic waste streams can deliver consistent revenues, scalable output, and reliable product quality.
Dr Dustin Crummett, founder and executive director of the Insect Institute, told AgNavigator that the fallout will not be an isolated case.
“I think more companies will fail, and this will lead to a continued souring of sentiment among investors, policymakers, and the public,” he said. “It will be incumbent on the industry to try to offset this by providing real economic success stories.”
Unresolved challenges
The industry is grappling with structural constraints, chief among these being the variability of feedstock in waste-based systems.
“If you are feeding them materials with relatively low and inconsistent nutritional values, you can have higher mortality rates, longer growing times, and ultimately a low-quality and inconsistent product. Using organic waste also comes with serious concerns surrounding contamination, such as the presence of not just metals and plastics, but PFAS and microplastics,” said Crummett.
He pointed out that some companies have made efforts to stabilise output by supplementing with higher-quality feedstocks, but this presents another dilemma. “Feeding higher-quality feedstocks to insects which are then used as feed inefficiently adds a level to the food chain, adding expense and undermining claimed sustainability benefits. This tension between cost, quality, and sustainability remains a central barrier to scaling insect protein production,” said Crummett.
“I am sceptical that it will be possible to produce high-quality insect feed that is cost-competitive with mass-market animal feed anytime in the foreseeable future, especially if we are talking about production in the Global North.”
A pivot to premium?
Rather than attempting to compete directly with commodity inputs such as fishmeal or soy, the industry is increasingly shifting towards higher-margin, niche applications.
This includes positioning insect protein as a premium feed additive with functional benefits, such as improved animal health or performance. However, the evidence supporting these claims is still limited.
“For that to work, the industry will need to produce evidence that the claimed functional benefits are significant enough to justify the cost and difficulty of inclusion, something which is not really clear at present,” said Crummett.
He added that the approach is also likely to constrain the growth of the industry.
“It risks making insect farming a fairly niche concern with relatively little growth potential and little significance for the food system or the environment, rather than the transformative solution many have hoped for, or something capable of providing the booming returns investors may want.”
Goterra’s heavy losses
Once Australia’s most-funded player in the space, Goterra entered voluntary administration on 3 June 2026 after generating just AUD1.2m (USD847,050) in FY2025 revenue against AUD14m (USD9.9m) in expenses, alongside approximately AUD5.3m (USD3.7m) in government and other grant funding.
“The company cites a difficult capital environment and says it ran out of runway despite having a solid business model… From the outside, it is reasonable to ask why they still needed more runway from investors, given how long the company has been in business and how much support they have received. Usually, you would want a startup to be profitable by this point,” said Crummett.
Founded in 2014 by Olympia Yarger, Goterra had raised USD25.2m in funding, according to PitchBook. Investors included Grok Ventures, Tenacious Ventures, Rampersand, Investible and Giant Leap.
Its customer base included Melbourne Airport, Woolworths, the City of Sydney and Lendlease’s Barangaroo precinct.
The collapse marks the fifth high-profile failure in the insect protein sector in the past year, following the liquidations or bankruptcies of Ÿnsect in France, Aspire Food Group in Canada, Enorm Biofactory in Denmark and Agroloop in Hungary.
