Before the first flower bloomed, before the first forest rose to meet the sky, there were insects…

I founded Chapul in 2012 around the conviction that insects are not a footnote to life on Earth. They are its operating system.

Insects have an important role to play in building a more resilient food system, and I had a vision for helping lead that movement.

At first, that meant asking Americans to rethink insects as food. Chapul became an early pioneer of insect protein in the United States, building a nationally recognized cricket protein brand and helping introduce an entirely new category to the mainstream.

But that was only the beginning.

Over the last decade, Chapul evolved alongside the insect-agriculture industry itself. We moved from consumer products into research, breeding, feedstock development, commercial trials, facility engineering, and ultimately the design and operation of Black Soldier Fly farms.

Along the way, we also learned where the economics of insect agriculture can break. The first generation of the industry often pursued very large protein facilities before fully proving the operating economics and markets around them.

Chapul has developed a proprietary Black Soldier Fly production system that uses carefully selected organic material to create two saleable products: larvae for animal feed and frass for biological fertilizer. Instead of depending on the economics of a single protein product, we are designing the business to monetize both outputs of the biological conversion.

We have spent years proving and refining that system at commercial demonstration scale. Our team has conducted more than 200 trials, produced more than 250 million larvae across hundreds of generations, and processed more than 100,000 pounds of organic material. At the same time, we have developed the market around the system, with customer letters of intent covering more than 150% of planned production capacity across our two product lines.

It is now time to level up our scale, and we have decided to invite our community to own the opportunity with us.

This round will be deployed at our first commercial site in McMinnville, Oregon, where we already own the site and commercial building and have completed detailed design and costing for a phased buildout. In addition to expanding our operating capacity and targeting EBITDA-positive commercial operations, McMinnville will generate the operating proof points needed for the next stages of expansion.

And the opportunity is bigger than one farm. McMinnville is the commercial blueprint for a repeatable project-development model. Building around regional feedstocks and customers, we will apply Chapul’s biology and operating expertise. Importantly, future facilities will be financed increasingly at the project level rather than relying on new venture investment.

For me, this moment is the culmination of what we have been building toward since 2012. Our mission has remained remarkably consistent. What has changed is our understanding of where insects can create the greatest commercial value, and how to build the business around that opportunity.

This round is about enabling our community to own that opportunity with us.

– Pat Crowley, Founder & CEO

Chapul Farms designs, builds, and operates commercial insect farms.

Our farms use Black Soldier Fly Larvae, or BSFL, as a biological conversion technology.

The larvae consume carefully selected food and agricultural sidestreams and rapidly convert that organic material into two valuable product families:

1. Animal feed
2. Biological fertilizer

Our advantage lies in the operating system we have developed. We have proprietary know-how for selecting and preparing feedstocks. For breeding, rearing and harvesting larvae. We know how temperature, moisture and other environmental conditions are managed, how facilities should be designed, and ultimately how finished products are processed to customer specifications.

Over years of trial and operation, Chapul has developed IP that will translate into reliable, repeatable, scalable growth.

It is well documented that the insect-agriculture sector has attracted hundreds of millions of dollars of investment. This prior work has also produced important lessons.

Several large competitors attempted to scale protein production rapidly through highly capital-intensive facilities before fully proving operating economics and market pricing.

The category has experienced restructurings, shutdowns and consolidation as companies confronted the realities of energy, labor, feedstock, regulatory complexity and customer willingness to pay.

Recurring themes of the industry’s failure modes include protein-first economics, excessive CapEx before revenue and underestimated operating complexity.

Chapul is taking a different approach.

1. Multiple revenue streams: We are designing the economics around larvae and frass rather than depending exclusively on protein.
2. Premium markets first: We are targeting markets where product attributes and supply matter rather than assuming sustainability alone will command a commodity premium.
3. Stage the scale-up: We are expanding through deliberately sized phases rather than jumping directly from pilot operations into a mega-facility.
4. Build around regional economics: Our model is designed around regional feedstocks, local project development and the realities of transporting organic material.
5. Reduce major operating costs: Automation, relatively low-cost renewable energy, feedstock economics and efficient facility integration.

We are proving a more capital-efficient and economically durable way to build insect agriculture at scale.

Chapul sits at the intersection of three structural challenges in the food system.

1. Food and agricultural businesses generate enormous quantities of organic material that can be difficult to monetize effectively.
2. At the same time, animal nutrition companies are looking for dependable, differentiated feed ingredients, but face supply and resource constraints from conventional sources.
3. Agricultural enterprises increasingly need biological soil inputs that can improve soil health while reducing dependence on internationally sourced conventional synthetic fertilizer systems.

Chapul Farms provides an unusually elegant connection between these needs, tapping into substantial addressable market opportunities.

The global animal-feed market is approximately $400 billion, while the global fertilizer market is approximately $190 billion. Aquaculture alone represents a roughly $100 billion feed market.

1. Larvae: A New Animal-Feed Input

Black Soldier Fly Larvae contain protein, fats and other nutrients that make them useful across poultry, pet food, aquaculture and other animal-feed applications.

Chapul’s initial commercial strategy has intentionally emphasized markets such as backyard poultry and pet nutrition, where customers can value attributes such as nutrition, domestic supply, natural feeding behavior, product quality and organic certification rather than forcing the company immediately into the most commoditized protein markets.

Over time, BSFL can also be processed into additional formats including meal and oil, expanding the addressable applications of the same underlying biological output.

2. Frass: A Soil Health Solution

The second output is frass: the nutrient-rich material produced through insect digestion.

Frass can be sold as a biological fertilizer and soil amendment, providing nutrients and organic matter while supporting soil structure, moisture retention and microbial activity.

Economically, Frass is increasingly important to Chapul.

We project frass becoming at least as meaningful as larvae revenue at scale. More importantly, its unit economics are a breakthrough differentiator. The opportunity is best illustrated with wet frass. Compared with heavily processed feed ingredients, wet frass requires less downstream processing while serving customers actively looking for reliable biological fertilizer supply.

Net-net, instead of building an insect-protein company with a residual waste stream, Chapul is building a system designed to monetize both sides of the biological conversion.

One of the biggest risks in any infrastructure business is building production before establishing either input supply or customer demand.

Chapul has deliberately developed the feedstock + production + offtake sides of the system together.

We have LOIs covering more than 150% of planned production capacity across Chapul’s two product lines, along with signed term sheets covering 100% of projected feedstock requirements.

Our commercial work includes relationships across different stages of development.

For example:

1. Chapul has worked with a national leading trout farm since 2019 around aquaculture research, product development and commercial trials with our larvae as a trout feed input..
2. Buchanan Cellers has worked with Chapul around larvae supply, product quality, domestic sourcing and organic requirements. The two largest demands from their customer base are: we want product sourced from the USA, and we want organic.
3. Fertilizer work has included product development and trials with regional customers as well as collaboration involving national fertilizer brands.

This work developing customers and suppliers alongside the technology gives us a much stronger starting position than building a large plant first and asking the market what to do with the output later.

Founded in 2012, Chapul became an early pioneer of insect protein in the United States through consumer products. That chapter created national attention including an appearance on Shark Tank, and helped educate consumers, investors and industry leaders about insects as a new part of the food system.

More importantly, it began a learning curve.

By 2021, we had launched our pilot and research facility in McMinnville, and helped establish an NSF-linked insect-agriculture research center.

Today, Chapul is a developer and operator of commercial insect-agriculture facilities, with operating know-how and IP.

Our Chapul Innovation Center has:

1. conducted more than 200 trials;
2. produced more than 250 million larvae;
3. processed more than 100,000 pounds of organic material;
4. developed feedstock, breeding and operating protocols;
5. supported commercial trials and customer development;
6. validated key assumptions used in the commercial scale-up model.

This experience now sits alongside a broad technical and project-development ecosystem spanning insect biology, genetics, microbiology, soil science, aquaculture, facility engineering, construction and equipment.

In short, much of the learning required to get here has already happened.

We already own the site and commercial building in McMinnville, and the full facility has been through detailed design, engineering and costing.

Importantly, Phase 1 is not a separate pilot that will later need to be reinvented: it is the first operating portion of the already designed full commercial system, built at approximately 15% of ultimate capacity. We have intentionally structured the project to retire risk so that no single implementation step requires an extreme scale jump.

This makes the technical scale-up much more manageable. Chapul is not trying to make an unproven biological process suddenly work inside a machine many times larger. Our McMinnville facility brings the full production process under one roof by combining controlled biology, automated material handling, and downstream processing. The advantage is in the integration of the best in proven technologies from insect agriculture, indoor agriculture, automation, and warehousing for one purpose built production system.

The core biology, feedstock preparation, rearing and harvesting methods have already been exercised through more than 200 trials, 250 million larvae and 100,000 pounds of processed organic material. Commercial scale adds throughput primarily through more industrial material handling, modular production capacity, automation and downstream processing around that established biological process.

The current operation processes approximately 1.5 tons of material per day. Phase 1 increases that to approximately 7 tons/day; Phase 2 to approximately 13 tons/day; and the completed McMinnville facility is designed for approximately 50 tons/day. Each stage is intended to generate operating data before the next increment of capital and capacity is added. Phase 1 also begins the transition from today's more manual operation to the automated production system designed for the full facility.

Phase 1 is designed to prove the things that can only be proven at commercial throughput: reliable customer fulfillment, real production costs, the economics of both larvae and frass, EBITDA-positive project performance, and the operating data required to finance subsequent expansion.

Phase 1 is not simply about producing more insects. It is designed to demonstrate that Chapul's integrated system can operate as a profitable commercial business at materially greater throughput.

At approximately 7 tons of input per day, Phase 1 represents roughly 2,500 tons of organic material processed on an annualized basis. Using the conversion rates we have developed through our operating work, that translates to approximately 250 tons of whole dried larvae and roughly 500 tons of frass per year.

That two-output model is central to the economic value proposition. Rather than requiring larvae protein alone to carry the facility, Chapul can generate revenue from both the animal-feed and biological-fertilizer sides of the system.

Forecasts and annualized production estimates are based on current project assumptions and are not guarantees of future performance.

Our long term strategy is to use McMinnville as the commercial proof point for a repeatable project-development model, with the next strategic locations already in development, including the financing through project-level capital rather than requiring us to fund every build with venture investment.

We are inviting our community to participate in the $6M Phase 1 capital stack with a broader mix of equity, debt and non-dilutive funding.

Phase 1 capital will be used to unlock a substantially larger commercial operation with production economics and positive EBITDA. Practically speaking, this means cash invested in equipment, construction, operating costs through ramp up, and market development.

Phase 1 flows into the long-term $40M commercial project, which is not expected to be funded primarily by repeated equity raises. The purpose of Phase 1 is to generate operating data that can make later expansion eligible for project-level debt, grants, incentives and outside ProjectCo equity.

Big picture, this $1.2M round is catalytic because it does not simply buy equipment or capabilities. It will generate the evidence that unlocks the next class of capital.

This round invests in TopCo, the parent company that sits above Chapul’s IP, project companies, real estate, and other corporate assets.

That distinction matters because building commercial facilities takes a lot of capital. Our plan is not to fund every future facility by simply raising more equity in Chapul.

As projects become proven and financeable, we expect to use a mix of project debt, grants and incentives, and outside project-level equity to fund much of their construction. Our current McMinnville financing plan already begins making that transition as the project moves through its later phases.

Why This Matters for Your Investment

If every new facility had to be financed by selling more TopCo equity, existing TopCo shareholders could be diluted each time the business expanded.

The ProjectCo structure is intended to reduce that need. TopCo can potentially add projects and grow the overall platform without issuing a proportional amount of new TopCo equity for every facility.

For investors in this round, that means the potential to retain more of their ownership in TopCo as the platform grows.

Investment Terms:

The investment is structured as a convertible note, meaning it is structured as debt to the company, accruing interest at 8%. It will then convert into equity in one of the following ways:

1) When Chapul raises a qualifying round of >$2M in equity, the principal invested + interest accrued will convert at the higher of:

1. 15% discount to the price of the qualifying round equity
2. If the qualifying round has a valuation of more than $25M (the cap), your price will be capped at this amount (roughly equivalent to $1.71/unit)

2) If Chapul does not raise a qualifying round by December 15, 2026, the investment will convert into equity at the cap price ($25M)

The basic idea is that as Chapul proves the economics of its projects, grows EBITDA, and develops additional facilities, the value of TopCo can increase.

This is a private investment, so there is no guaranteed exit date or return.

Our current financial model uses an 8–12x EBITDA valuation range per project as one way to think about potential value at a future liquidity event.

At full capacity, the current McMinnville project model forecasts approximately $9 million of EBITDA, with additional value potentially coming from the project pipeline and IP. These are forecasts and valuation assumptions, not guaranteed outcomes.

There are several ways investors could eventually turn that increased value into cash:

1. A sale of TopCo: A larger strategic or financial buyer could acquire the company, providing liquidity to shareholders.
2. A recapitalization or secondary sale: As Chapul grows, a larger private equity, infrastructure, or strategic investor could invest in TopCo and potentially purchase shares from existing investors at the same time.
3. Cash distributions: If TopCo ultimately generates more cash than it needs to reinvest in the business, the company could choose to distribute some of that cash to shareholders.
4. A future share buyback or other secondary opportunity: Chapul or a future investor could offer to purchase shares from existing shareholders without requiring a sale of the entire company.

Building value and creating liquidity are not the same thing. Our first job is to build a profitable portfolio of projects that makes TopCo more valuable. A sale, recapitalization, distributions, or another liquidity event would be the mechanism through which shareholders could eventually realize that value.

Chapul’s environmental outcomes follow directly from the commercial system. Impact scales because the economics scale.

At full McMinnville capacity, the project has been designed to process more than 17,000 tons of food waste and agricultural material per year, producing more than 1,700 tons of animal-feed products and more than 4,000 tons of fertilizer annually.

That means one facility can simultaneously create a productive outlet for regional organic material, produce domestic animal-feed ingredients, and produce biological fertilizers, all while reducing dependence on conventional resource-intensive feed and fertilizer inputs.

BSFL conversion has been shown to reduce greenhouse-gas impacts relative to conventional organic-waste pathways and may deliver additional animal-health and soil-health benefits.

Chapul has always been rooted in community.

Long before Black Soldier Fly infrastructure became an investable category, our community supported the idea that insects could play a larger role in our food system.

Some of you bought the original Chapul products or watched us on Shark Tank. A dedicated ecosystem of researchers, customers, farmers, investors, advocates and partners helped push the category forward. The company our community has helped create has now evolved into something much larger.

At the same time, Chapul is moving into a phase where increasingly large amounts of capital can come from project lenders, institutional investors, grants, incentives and infrastructure-oriented financing.

We believe there is value in making sure the community that helped Chapul get here has an opportunity to participate in what comes next.

We are not asking our community to fund the beginning of an experiment.

We ARE inviting our community to help fund the transition from years of learning and commercial validation into industrial scale.

We would be honored to build that next chapter with you.

The question is not whether the world will relearn to work with insects. It will, by necessity. The question is whether we will be among those who shaped that world.

Thank you for your time and consideration.

Sincerely,

Pat Crowley

Founder, CEO

Chapul Farms