Hatch

Hatch Weekly: The future is creepy-crawly: bugs as investments.

Banking on bugs to save the world

Bugs are big business. Just ask the number of start-ups using insect larvae to make protein-rich ingredients for animal feed. That’s only one part of this budding industry that investors are banking on to help feed a growing human population in an environmentally friendly way.

Pass the crickets, please

Insect farming could be the solution to a range of environmental issues we are facing, including deforestation, land degradation and overfishing. Not only are bugs great at turning organic material into digestible proteins, but breeding the critters requires less water and land than what is used to produce current alternatives such as soybeans. They may be great for the planet, but are they great for us? International chefs like Rene Redzepi of Noma think so and are working to prove it. Rene launched the Insect Project through Noma’s sister institution, Nordic Food Lab, to understand why the Western World doesn’t eat insects, despite them being such a great source of protein. The conclusion? Westerners are still too disgusted by them to say yes to bugs on the menu. However, with their increased popularity as the protein of the future, consumption of them may be inevitable. The likes of Pepsi’s (PEP) CEO, Indra Nooyi, also believe in the future of bugs as their affordability, and high protein levels start to influence consumer preferences.

Disrupting the traditional agriculture industry, one worm at a time

Is the lens now shifting from plant-based "meat" to bug-based "meat"? Or will they flourish together? A report from Barclays and Meticulous Research says the global industry for edible insects is likely to grow from $1 billion to $8 billion in sales by 2030, so looks like Beyond Meat (BYND) might have a little competition. Leading the charge with the world's largest insect farms is Protix, with other producers like Enviroflight, Ynsect and AgriProtein building facilities to turn billions of bugs into food. Bugs as food might not sound super appetising, but believers say it makes sense from a biological point of view: insects have always been part of an animal’s diet, especially chicken and fish. Interested in checking out what bugs can do for your portfolio? Consider looking at Hatch listed companies like Intrexon (XON) and Darling Ingredients (DAR) who are leading the charge when it comes to finding sustainable ways to feed our planet.

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Tech unicorn says “Nay” to selling shares

Thousands of Airbnb employees pushed Airbnb to go public and now that it's been delayed, they're not thrilled about waiting until 2020 to cash out. Interviews with current and former employees and investors confirm Airbnb gave out two tranches of employee equity that will start expiring in November 2020 and mid-2021, making them worthless if not trading publicly by then.

The paradox of the start-up dream

Airbnb is a privately held company, which means its shares can’t be readily cashed in. Employees who own shares in the company are becoming increasingly frustrated waiting for their payday, delaying career changes, starting families, and generally moving on with their lives. CEO Brian Chesky has tried to ease the tension by offering sabbaticals to longtime employees, extending Airbnb's parental leave policy and increasing retirement benefits. In addition, the company also created a program to give low-interest loans of hundreds of thousands of dollars to employees and gave out higher bonuses and raises in performance reviews this past spring. Talk about perks! Regardless of the ruffled feathers, Brian Chesky remains firm in his stance that he’s all about workplace culture, and people love working for Airbnb.

A case of golden handcuffs

Airbnb, known for a drink-the-Koolaid culture among its staff, has grown faster than expected with more than 7 million listings in cities around the world. Employees are excited about the windfall they should eventually receive from their shares, even if it’s a bit late in the game. In 2011, after topping a $1 billion valuation, Airbnb prohibited its workers from selling shares but allowed its three founders to cash out a total of $21 million. Some staff spent their life savings on shares, with the hopes of being able to cash them out with a glorious IPO. In 2016, longtime employees were allowed to sell portions of their stock, leaving others with no choice but to sell their shares on a shadow market for private share sales. These Airbnb shares have traded as high as $166, which indicates a company valuation of $52 billion. Let’s see what happens in 2020.

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