In the face of climate change, VCs have become more attuned to the importance — and potential profits — of climate tech solutions working to reduce the impact humans have on the planet. But while sustainable energy, carbon capture and agriculture are popular sectors within this space, there’s one overlooked area that holds untapped value: the ocean.
“Solutions on land are very visible,” says Hakan Karan, associate at bioeconomy-focused VC European Circular Bioeconomy Fund (ECBF). “It's easier to see what is out there, but the ocean is also an important aspect of this equation because actually the majority of the world's oxygen is produced by phytoplankton in the oceans.”
On top of oxygen, food from the ocean provides around 20% of animal protein intake for over 3bn people, according to the UN Food and Agricultural Organization (FAO).
That’s where blue bioeconomy startups come in: founders are working on ways to help the planet through focusing on the biological elements of the ocean, particularly when it comes to making the fishing industry more sustainable.
But is there a business case for building a company under the sea?
Salmon fishing in Norway
While the UK, Germany and France often take the podium for Europe’s most developed startup hubs, the blue bioeconomy sector is making the biggest waves elsewhere across the continent.
If you’re small in land, you can be big in the ocean
“If you’re small in land, you can be big in the ocean,” says Karan, adding its countries with a more prominent coastal presence that draw in startups working on blue bioeconomy ideas.
Norway is one of these hotspots and is the world’s largest producer of Atlantic salmon, which is the most profitable aquaculture sector globally — a valuable asset for founders in this space to have proximity to.
But the prolific fishing industry in Norway isn’t as streamlined as it could be, says Sven Kolstø, founder of Norway-based OptoScale, which offers an AI-powered fish farm monitoring product.
“Salmon farming and farmers face a lot of uncertainty,” he says. “There are huge decisions being made every day, decisions that influence the financials, the fish welfare, the environment — and these decisions are taken with a high degree of uncertainty.”
OptoScale is looking to automate that uncertainty by placing a hardware product in the cages of fish farms which feeds back information about the weight of fish, presence of lice and tracks growth — tasks that farmers currently have to complete manually.
“It’s a real paradigm shift: today, the most dedicated farmers maybe do the measurements of 200 fish each month - we do at least 20,000 a day,” Kolstø says.
OptoScale isn’t alone. Bergen-based Manolin is also focusing on making the fishing industry more efficient, with a data analysis platform that brings all data points from a fish farm together in one place.
For ECBF, solutions like OptoScale and Manolin which take digital infrastructure beyond applications on land, pose a whole new landscape of possibility.
“We have not made an investment yet in this area, although we have made investments in digital agriculture, so we wish to replicate our success in the oceans as well,” says Karan.
Feeding the fish
The industry also faces a dilemma with the feedstock that fish need to survive: over 90% of the emissions within aquaculture come from the production of fish feed.
Fish feed is one of the most critical topics in terms of sustainability.
“Feeding is the most expensive part of production, and has the largest CO2 production,” says Kolstø.
Protix, a Netherlands-based company which is part of ECBF’s portfolio, is developing an insect farming solution that can be produced at scale and has a smaller carbon footprint than alternatives.
“In 2040, the world will have to feed 9bn people. All of them will need protein to be healthy – but the way protein is produced today lays a heavy burden on the world’s limited resources,” says CEO and cofounder Kees Aarts.
Using Protix’s insect protein as feedstock for fish farms reduces the climate impact of the fishing industry and tackles the problem of a declining natural pool of resources.
“Fish feed is one of the most critical topics in terms of sustainability,” says Stéphane Roussel, partner at ECBF. “We’re depleting the ocean of fishes at the bottom of the food chain, that are caught and transformed into feed for aquaculture projects. The thesis is really around being more sustainable, from a biodiversity and carbon emissions standpoint, compared to other protein sources.”
Wading into the future
But as exciting as the budding blue bioeconomy space is becoming, Roussel says that there are still hurdles to overcome before the industry can establish itself in Europe.
The blue bioeconomy should be more present in nations’ climate goals
Firstly, there needs to be more funding available for early-stage blue bioeconomy ventures, says Karan. But he adds that there are reasons why some investors will be cautious: “the ocean is not very forgiving”.
For example, the harshness of ocean conditions of the ocean causes concern about the practical risks surrounding these products, says Roussel.
“When you think about digital aquaculture hardware and software, then there is often a piece that goes under the ocean. So, there is a technology barrier concerning the durability of the equipment,” he says.
There’s also a question of understanding. Landlocked countries in central Europe are not exposed to the issues or problems that those living and working in coastal regions will be aware of, says Karan, and therefore it can be hard to find investors who understand the value of the solution outside of coastal regions.
A big part of overcoming that barrier lies in governmental support, says Karan: “The blue bioeconomy should be more present in nations’ climate goals.”
It’s the support that Kolstø says has been offered in Norway, where the sector collaborates with the government to provide farmers with camera tech to substitute the mandated manual counting of lice every week, as long as the company could prove they are equally as precise.
Given the relatively early stages of the ecosystem, collaborative ecosystems are key for adoption, says Roussel — of which, he adds, Norway is a good example. “Technology will be adopted much faster than in other ecosystems where it's more competitive,” he says.
And the youth of the sector is exactly why investors should get on board, says cofounder of Manolin, John Costantino.
“When it comes to resource management, food security and all of these hot topics and issues that people are constantly referring to and talking about, the ocean is the epicentre of that - that's where I think you can make the most impact.”
ECBF will be visiting blue bioeconomy hotspot Norway to meet later-stage startups it may invest in, as well as interested co-investors (including other VCs and private equity investors). For more information email ECBF using the address here.
