For all its growth, the seafood industry, aquaculture in particular, has for the most part stayed off the radar of major private equity agriculture investors, venture capitalists and high net-worth funds.
Up until now, there has been a small, stable group of investors banking on the sector. A steady flow of private equity houses come and go (and then do it all again), some high net worth individuals have stepped in, foundations have backed some small-scale sustainability-focused projects, and funds such as Bonafide, Cuna del Mar, Hatch and Aqua-Spark have gained some traction as industry-focused funds or incubators.
Most of the above, however, have advisors or management that have a history in the sector in one way or another. And despite that deep knowledge, few have the access to the kind of capital that can push the seafood industry into new territory.
The good news is, there’s a lot of capital out there. Last year alone, nearly $300 billion was invested by venture capitalists across over 32,900 deals. And while the world’s economy was being brought to its needs over the past six months, the stock market has remained relatively bullish, private equity funds continue to make major deals, and risk-taking investors have continued taking risks.
While most of these investment firms’ names aren't well known, a little digging usually turns up big backers behind the cleverly named funds. Some are a little more recognizable: Google Ventures. Tyson Ventures. Rabo Ventures. Yamaha Ventures. Chevron Ventures. BP Ventures. With competition high to innovate, diversify and display sustainability credentials, these groups are looking high and low for new opportunities, and they’re willing to roll the dice in a lot of different sectors.
So far, the investments have been small and focused on alternative proteins, biotech and software. But consider those trial balloons – these groups are getting increasingly serious.
Seed2Growth, a new $100 million (€84.4 million) venture fund targeting the seafood and oceans space, whose primary investor is Lukas Walton, grandson of Walmart founder Sam Walton, is one of several early-stage investors tapping the seafood and ocean technology space for expansion (including Christy Walton, who finances Cuna del Mar).
Changing times, changing minds
Newly named Seed2Growth managing director of oceans and seafood Larsen Mettler, the former CFO of Silver Bay Seafoods, said his group is looking to bring a "Silicon Valley mindset" to the seafood industry.
“We’ve seen a lot of funds dabble, but they’ve shied away from making an investment largely because they haven’t understood the space,” Mettler said.
As Mettler knows, the space isn’t easily understood. One of the great joys of working in (or writing about) the seafood industry is watching the cyclical rise and fall of investors certain that they’ve discovered the key to making money on aquaculture or fisheries.
The “investors” who have made the most money in this industry, though, “invested” decades of their lives, oftentimes starting with dead fish at their feet (or at the foot of their crib).
That said, today’s seafood magnates are aging, and the next generations are increasingly disinterested in carrying on the family legacy. Consumers and buyers are more demanding, and real market power comes from resource control, and your ability to harvest or farm it efficiently. That’s knowledge that can be built up in house – it comes from whiz kids who develop applications and algorithms that didn’t know what a salmon farm was just a few years ago, but can quickly disrupt the sector.
Bryton Shang, founder and CEO at aquaculture tech company Aquabyte, which specializes in using AI software in salmon aquaculture to estimate biomass and sea lice counts, is a perfect example of this new crew.
Shang doesn’t just have the Silicon Valley mindset – it’s where he cut his teeth working on several tech startups.
Aquaculture wasn’t anywhere on his radar when he started his journey, but an acquaintance piqued his interest. A trip to AquaNor in 2017 convinced him his software had a market.
Aquabyte just netted a $10 million Series A investment from Canadian investor ArcTern Ventures, one of several rounds of funding Shang has been able to raise.
But it hasn’t been easy.
“[Seafood is] out-of-mind for traditional VC investors,” Shang said. “They don’t see fish farms, they don’t know about it, or how to do diligence on it."
When Shang was raising the seed capital for Aquabyte, his investors had to see it to believe it.
“I had to go to a fish farm, live stream it, set up video chats with farmers and show investors that this was actually real,” Shang said. “Once they see it, then the lightbulb goes off.”
The digital flood that has upended other ag sectors hasn’t swamped seafood yet, but it’s coming, and bringing a rising tide of tech – and money.