Investors Are Heading Out to Sea
They’re throwing their money into the ocean, for good reason. Here’s where it’s washing up.
Four seafood companies landed sizeable investments in the past few months. New funds are being formed. More than 100 investors are volunteering their time to help businesses in the Fish 2.0 competition leap forward. A movie star just took a seat on the board of a seafood startup.
It all makes sense. Investing in seafood is a bet on continued rising demand for a healthy, sustainable protein that a rapidly growing world population wants to eat.
And now a new generation of seafood entrepreneurs is breaking open the industry.
Well-connected industry insiders have long seen the strength in seafood (and invested accordingly), but doors have been closed to the broader investment community. Traditional businesses in the sector are family or privately owned, and public information about deals and business fundamentals has been scant. But today’s seafood innovators are seeking capital from a range of investors, and they offer ample exit options. Many will get snapped up by larger public or private food companies, and some have the potential to go public themselves.
In just the four deals below, over $75 million in capital flowed to growing seafood companies at various stages of development:
- Portland, Oregon–based Fishpeople closed a $12 million Series B round in June led by Advantage Capital Agribusiness Partners and a raft of sustainability-focused investors. The growth capital will help Fishpeople (motto: fear no fish) expand selection and distribution of its sustainably sourced seafood kits, fillets and soups.
- In March, Colorado-based Love the Wild boosted its Series A round to $3 million by adding funding from individual investors — among them actor and environmental activist Leonardo DiCaprio, who also joined the company’s advisory board. Love the Wild aims to change the way Americans view seafood through sustainably farmed fish packaged with delicious complementary sauces.
- Chile-based Geomar, an established “shore to shelf” sustainable seafood company that buys directly from artisanal fishers and sells internationally, netted $10 million in February from Pescador Holdings. Pescador is a newly formed collaboration between Encourage Capital and Zoma Capital (the family investment office of Ben and Lucy Ana Walton) billed as “the first-ever sustainable seafood investment holding company.”
- Also in June, Protix, a Netherlands-based company that makes insect-based feed for aquaculture and other markets, closed a €45 million investment led by Aqua-Spark (which is also planning an aquaculture fund just for Africa) and joined by Rabobank, BOM and private investors.
A global industry on the cusp of massive change — what’s not to like?
Four global trends are powering this surge in entrepreneurial energy and investor interest in the seafood sector.
1. Global demand for sustainable seafood is a rocket. Eaters worldwide love seafood. It’s already a $390 billion global industry, and demand is rising rapidly along with the global middle class. Seafood has been the fastest-growing animal protein sector for the past decade. People everywhere care about quality — good clean food isn’t just a Western obsession — and “sustainable” increasingly is shorthand for “better”: better tasting, better for the oceans, better for health and better for communities.
Demand for sustainably caught wild seafood has shot up, especially among large retail chains with ambitious sustainability commitments. This creates opportunities for producers to drive value in the market through sustainability branding and messaging. To increase the supply of sustainably captured seafood, some entrepreneurs are developing fishing gear that is more fuel-efficient, less destructive and more selective, allowing fishers to limit unwanted bycatch and target the species they want. Others are focusing on making good use of unavoidable by-catch and trimmings. What once was low-value byproduct, or even waste, is now hitting the shelves as fish jerkies, protein powders, pet foods and fish-skin wallets.
2. Convenience sells all over the world. So does food with a story. Prepared packaged foods with traceable sourcing, subscription business models like community supported fisheries (CSFs), and direct delivery are all changing the way people buy and eat seafood.
Amazon’s planned purchase of Whole Foods is expected to jolt seafood sales, as the omni-retailer pairs its e-commerce and delivery expertise with a grocery chain that excels at promoting convenient sustainable seafood options. This not only opens new channels for packaged seafood providers like Love the Wild and Fishpeople, it also should make it easier for shoppers to assemble the ingredients of a quick, healthy and sustainable seafood meal.
More direct, easier access to seafood has global appeal. CSFs, the seafood version of the farm box, are an $8.2 million market in the U.S. now, but have a market potential of $3 billion. And the CSF concept is taking hold around the world, particularly in countries with major fisheries that traditionally export most of their local catch. Once consumers get used to the quality, variety and freshness of boat-to-table seafood there will be no turning back.
3. Aquaculture needs all kinds of new technology. Farmed fish are essential to sustainably satisfying the world’s growing seafood appetite, but the aquaculture sector needs new feeds, seeds and efficient technologies to reach its potential.
New ventures are making progress on novel production methods, such as vertical fish farming and offshore cultivation of sea creatures and plants that deliver both environmental and local economic benefits. Fish feed startups are racing to reach commercial scale to cut costs and serve larger buyers in a market that’s crying out for good alternatives to feeds derived from wild-caught forage fish. And the aquaculture industry is shifting from treating diseases to preventing them, by improving growing environments and enhancing fish health with vaccines and immunity boosters.
4. The movement for traceability and transparency upends seafood’s economics. The need to demystify seafood’s complex supply chains is a thread that runs through all the trends above. We all want to know where our fish come from and what, exactly, we’re buying.
Some of the most exciting near-term solutions include scalable technologies that collect real-time fishing trip data, improve water monitoring, or identify seafood species and quality accurately and cheaply.
Wireless sensors, visualization and analytics software, hyperspectral imaging and microbiome sequencing all have potentially transformative ocean applications. Regulators and markets have been asking for tools like these for almost a decade, and now they’re just about ready for broad implementation.
The market for traceability and transparency products and services should reach $14.1 billion over the next two years, according to Allied Market Research — and plenty of entrepreneurs are working to capture this market potential.
Investors feel the pull of sustainable seafood’s rising tide
Investors attracted by these trends will find a healthy ecosystem of promising new seafood ventures to invest in, from a diverse set of geographies and categories (see our one-page briefing on investing in sustainable seafood).
Already I see investors lining up to learn about the industry and meet entrepreneurs, savvy founders launching companies with powerful partnerships behind them, and forward-thinking seafood business leaders getting behind the innovators and moving their own ventures into the future.
Like the investors who were first to see opportunities in the technology, clean energy and dairy industries, the rewards for those on the leading edge of seafood will be high. But the good news for our oceans and coastal populations is that this is likely only the beginning of a long wave of change in a centuries-old industry that’s more important than ever.
