If you’ve noticed more people going rural, even in urban areas, you’re not alone. Overline VC has noticed as well, resulting in the Atlanta-based VC leading a $2.9 million seed funding round for AgTech startup Grubbly Farms.
With roots also in Atlanta, Grubbly Farms identifies as a market leader in providing sustainable insect-based feed for backyard chickens — the keeping of which has become much more popular in the last several years, accelerating during the onset of the COVID-19 pandemic and its effects on an emergence of homesteading.
“We are thrilled to partner with the Grubbly Farms team to drive more sustainable, environmentally-friendly food products for backyard chickens, says Michael Cohn, Overline’s managing partner. “We are big fans of the team and their mission, and we have been impressed by the loyal customer base that the company has built. We see tremendous opportunity for Grubbly Farms to continue to grow within its current market, as well as into adjacent pet market segments.”
Additional investors in the seed round include Oval Park Capital, Create-X and Techstars, whose New York City accelerator Grubbly Farms completed in New York City in 2016, the year the company launched.
Grubbly Farms CEO and co-founder Sean Warner, who was born and raised in the Atlanta area. He and his cousin Patrick Pittaluga grew up in Norcross, then attended Georgia Tech, which is where the two came up with the idea.
Warner says he read an article about the insect industry and became fascinated by the idea of using insects to recycle food waste and to replace fish-based proteins, a practice which is considered unsustainable. He saw the idea as interesting — particularly the part where breeding was one of industry’s biggest hindrances.
So, rather than wait to see who else would jump in, Warner and Pittaluga did what any young entrepreneurial dudes with bootstrapping minds and limited resources would do: they began breeding flies in their college laundry room. Gross? Kinda. But also enterprising, because it gave them an early jump on in-house manufacturing and breeding, which they were able to focus on before product management and branding, knowing the industry’s needs.
“It was definitely an interesting take on the industry,” Warner admits. “It wasn’t the ‘sexy’ startup, until people realized it has a massive impact on our supply chain, which will need improvement in order to keep up with demand.”
Also notable: Georgia isn’t just a known agricultural state; it’s considered “the poultry capital of the world.” Being headquartered in Atlanta, a city known for a metropolitan-meets-the-country vibe, not only is Grubbly Farms in a place where this sort of idea is becoming more popular, but also incorporating a larger range of investment as the scene evolves.
“More investors want to diversify,” Warner says. “AgTech as a whole has gained a lot of traction lately. That comes down to AgTech adopting new technologies. But people realize we need to overhaul the supply chain.”
Hence that $2.9 million from Overline.
Warner says Grubbly Farms plans to use it to double the size of their team from five to 10 employees, and expects to double that again to 20 staff members in the next 18 months or so.
“I think this round is a game-changer for us,” he says. “Having the extra capital, allowing us to increase the product line and grow the team, it syncs up perfectly with how the backyard chicken industry is exploding. And it syncs with insect producers. They’ve been in R&D for the past few years and only recently scaled into commercial facilities. It’s a perfect time and at the cusp of proving out the capabilities. From there I think we’ll only see further expanse.”
Long-term, Grubbly Farms wants its own insect production facility in Greater Atlanta, which Warner says will also help recycle some of the city’s food waste. Georgia’s Environmental Protection Division says food residuals constitute up 12 percent, which is higher than 800,000 tons, of waste sent annually to the state’s landfills. 48 percent of that figure comes from the Atlanta area.
To date, Grubbly Farms says it has helped recycle almost 4 million pounds of food waste, since every pound of harvested grubs equals 10 recycled pounds of food waste. That means it avoids the landfill, and doesn’t release methane. That’s good business.
“If you look at most large metropolitan cities, there’s generally going to be a large processing facility on the outskirts of the city, where food manufacturing is done,” Warner says. “That’s who you’d work to partner with.”
He’s also hoping to partner with local breweries to collect their spent brewing grains. Insects eat through it, and it converts to high-quality fertilizer. Or of course it could just sit around, developing a very foul stench in front of your brewery (not a great customer experience, from someone who’s experienced it), and eventually rotting and having to be thrown out.
Warner is correct in stating that turning insects into backyard chicken feed may not be sexy (or perhaps “SaaSy”), but it’s coming, and there’s a big need for AgTech to support and fix the supply chain, particularly when it comes to food. Sure, it’s niche. But some are saying as many as 8 percent of Americans have backyard chickens, and Warner says there are plenty of other reasons to be optimistic about Grubbly Farms’ potential, particularly after the pandemic.
“A lot of companies were selling out of gardening equipment and chicken hatcheries were selling out of baby chicks,” Warner recalls from the days when coronavirus began to seriously impact the country in the spring season.
“People are looking to be more self-sufficient, whether growing a garden patch or having a chicken coop. And chicks are cute but they’re also functional, as they produce eggs. I think that was one of the appeals.”
Visit Grubbly Farms website here.