Ankur Capital
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Ankur Capital

Thanks for all the fish!

By Team Ankur

As a fund investing in transformative tech that marries profit with planet good, we are excited by the future of aquaculture.

Man has been farming aquatic organisms for thousands of years. Romans farmed oysters around 500 BCE, the Chinese practised freshwater aquaculture some 1000 years earlier, mussel farming was developed in the 13th century, and artificial breeding was discovered in Germany in the 18th century. However, aquaculture has never been more relevant, when over just the last 50 years, the world population has doubled, as has the average consumption of seafood. Not only is it relevant, it is also the most sustainable source of protein. Aquaculture is one of the fastest growing and most sustainable forms of food production today.

The fact that we have woken up to its importance is evidenced by the brave innovations emerging from all four stages of the aquaculture production chain, from hatcheries and feed mills, from farms to processors. Investors like Amy Novoratz who back founders in this space today, draw a sharp contrast to 10 years back, when LPs couldn’t imagine a fish farm, to now, when they see 3 good investments every week!

An example of disruption at the hatchery level is a company called eFishery from Indonesia, the world’s largest archipelagic nation. It began as an IoT startup solving for smart feeding and overtime, and then integrated deeply with fish and shrimp farmers to also offer access to feed, financing and markets. eFishery works with thousands of fragmented farmers across Indonesia, and acts like a very large co-operative sans being one!

India’s equally unorganised market offered an opportunity to Utham Gowda, who started Captain Fresh in 2019 to aggregate supply and demand for freshwater fish, which forms 95% of India’s total fish consumption.

We believe that the latent demand for fish in India is mammoth, and as people move up the GDP curve, their consumption of fish will also increase sharply. Solutions like Utham’s, who target supply and demand matching, at scale, at the source, enforce structured behaviours in the industry. For the next level of evolution, we look forward to certification and accountability standards being imposed by regulators and markets to drive change. These interventions will enable traceability and trust without incremental costs. Global landscapes have also played out similarly. That said, price sensitivity remains a constant across geographies and markets.

Since fish eat fish, feed is another vital piece of the aquaculture puzzle. There are multiple innovative and sustainable fish feed methods in the market today, with algae, bacterial and insect protein leading the way. String Bio has come up with one such (bacterial) solution, by leveraging microbiology and chemistry in a fermentation process. It significantly improves the FCR and therefore, ROI, to farmers. While they are based in India, their solution is modular and can be used to produce enormous quantities at source, anywhere. Despite having a world-class, sustainable product, String Bio and other innovators struggle with systemic industry issues, such as poor adoption of new technologies, fragmentation ( 90% of farmers are small holders), and a lack of transparency; stemming from these are financing and market linkage problems.

We believe that marketplaces can help redesign small farm agriculture pretty quickly. Also, consolidation is a simplistic but compelling answer to generate substantial outcomes. It will lead to faster collaboration between different players in the value chain, and facilitate the coming together of yield and ecosystem. Digitisation by the likes of Utham and eFishery are a great step in the right direction. When customers evolve, qualities such as traceability will be demanded of those that supply.

As a fund investing in transformative tech that marries profit with planet good, we are excited by the future of aquaculture. Tremendous potential exists for forward-thinking companies looking at disease prevention, data mining, feed and genetics for answers to complex problems. Changing water quality and rising temperatures make animals more susceptible to disease, and while we have made big strides in land-based agriculture, we are lagging behind here. Aquaculture is perhaps one of the only areas where the power of data is highly underutilised, and from feed to labour practices, opportunities abound. In the feed space, it’s not so much about innovations, but bringing them to market at the right price. Genetics is an unexplored territory in this realm, and if fish is the future source of proteins, the impact of introducing superior genes is game-changing!

Given that Nature is so sensitive, what’s even more promising is that we can all benefit from each other’s successes.

If you are passionate about sustainable fish farming, and are innovating for the aquaculture supply chain, please reach out to us at info@ankurcapital.com

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