Is ocean conservation the next climate tech? 7 investors explain why they’re all in it

For an ecosystem which covers the majority of the planet, the oceans have been basically ignored by startups and investors.

Of course, a lot of money is spent on ocean industries, but most marine investment today is either in extractive industries like fishing or oil and gas, or in activities like shipping, which are not extractive, but do not exactly benefit marine ecosystems. .

But in recent years there has been a sea change in outlook. Founders and investors began to look for opportunities to conserve and even enhance ocean resources rather than exploit them.

“The ocean has enormous potential to deliver more food, more efficiently, with less environmental impact and even in a regenerative way,” said Propeller partner Reece Pacheco.

And because the oceans take up so much of the planet and space is relatively unexplored, there are plenty of opportunities for investors to find niches rich in financial and environmental benefits.

“Our systems are at a point where it’s more productive to work with nature than against it,” said Sanjeev Krishnan, chief investment officer at S2G Ventures. “While energy and agriculture are further along the J-curve, the ocean sector is more nascent, but presents an investment opportunity that impacts nearly every sector of the global economy.”

In this way, ocean conservation technology mirrors climate technology, which has developed so rapidly that some have called it “recession-resistant.” Of course, some wonder if a sector is truly recession proof and that applies to ocean conservation technology as well.

That doesn’t mean investors aren’t optimistic, though. “I’m not sure if I would call the ocean economy recession-proof, but the investment opportunities are real from a venture capital perspective,” said Tim Agnew, general partner of Bold Ocean Ventures.

Even some of the most intractable and high-profile problems facing the world’s oceans, such as plastic pollution, are causing investors to take the plunge.

“People have been looking to solve these problems in the wrong way,” said Daniela Fernandez, managing partner of Seabird Ventures. “Cost-effectiveness and scalability depend on the approach and business model implemented to solve the plastic pollution crisis. We need to think beyond community beach cleanups – there are actually extremely investable approaches to solving the plastic problem.

Investors like Fernandez are looking with fresh eyes at both new issues like plastic pollution and old ones like aquaculture and fisheries management. In the process, they are betting that innovative approaches to solving these problems will not just create returns, but create disruptions and innovations that ripple through adjacent industries.

“Part of our thesis is that ocean conservation technologies can solve big problems for large ocean industries and adjacent industries,” said Kate Danaher, managing director of S2G Ventures.

But, she added, there is still room to grow. “We need to make the case to even more climate-focused and generalist investors.”

To get a better idea of ​​how startups and investors are looking at ocean conservation technologies and the opportunities they offer, we spoke with:

• Tim Agnew, General Partner, Bold Ocean Ventures
• Peter Bryant, Program Manager (Oceans), Builders Initiative
• Kate Danaher, Managing Director (Oceans and Seafood), S2G Ventures
• Daniela V. Fernandez, Founder and CEO, Sustainable Ocean Alliance (Seabird Ventures)
• Rita Sousa, Partner, Faber Ventures
• Christian Lim, Managing Director, SWEN Blue Ocean Partners
• Reece Pacheco, Partner, Propeller

Tim Agnew, General Partner, Bold Ocean Ventures

What is your investment thesis for ocean conservation technology in 2023? What kind of growth do you expect in the sector?

Our investment thesis focuses on innovations that modernize the seafood supply chain, increase production in a sustainable way, and address the impacts of climate change. We believe this investment opportunity is in its infancy and will be a major theme over the next decade as it becomes clearer how much impact the ocean can have. on the climate crisis and feed a growing and more urbanized population.

Ocean-related businesses are in the early stages of adopting new technologies to increase efficiency and productivity.

Is there a meaningful distinction between technology used by startups focused on coastal regions and technology designed for the open ocean?

The answer is yes and no. Shipping and ocean wind are obviously very different animals from kelp aquaculture and climate resilience, but both are migrating to more technological solutions including digital technologies, artificial intelligence, harvesting and data analysis.

Many problems facing the oceans, like plastic pollution, don’t seem to have much profit potential. Is this a fair assessment or have we looked at these issues in the wrong way?

We just looked at a company that has a thriving business of collecting plastic bottles from beaches, separating plastic types, and selling to companies that care about being able to offer recycled bottles or other products.

Considerable research is being done on the transition from plastic packaging to biodegradable packaging. There is a lot of potential for profitable businesses, although the process of cleaning up the oceans will take time and money.

What technology are you most excited about and has the most potential to create new markets?

Seafood traceability solutions; traps without ropes; microalgae and algae are an extremely untapped resource with multiple market opportunities; collection and analysis of ocean and meteorological data.

The ocean today represents only 15% of the world’s proteins and 2% of its calories. What is the potential of the oceans to provide more, and what should that look like?

The oceans will provide more food with a much lower carbon footprint than terrestrial animal protein. Shifting demand from beef to seafood could have a major impact on GHG reduction. Seafood aquaculture, both offshore and offshore, is growing much faster than wild seafood and will become a major source of high quality protein.

What are some of the key issues facing an ocean-based food system?

Social license concerns about aquaculture, species sustainability and the need to broaden consumer tastes to reduce pressure on overfishing.

From aquaculture to kelp farming, there are a range of options for getting more food from the oceans. Which do you think is the most promising?

RAS and closed system aquaculture.

Peter Bryant, Program Director (Oceans), Builders Initiative, and Kate Danaher, Managing Director (Oceans and Seafood), S2G Ventures

What is your investment thesis for ocean conservation technology in 2023? What kind of growth do you expect in the sector?

Peter Bryant: We invest in technologies and business models that improve the conservation, regeneration and resilience of ecosystems, optimize the production and use of ocean resources and provide consumers with sustainable, traceable and safe food.

Kate Danaher: Part of our thesis is that ocean conservation technologies can solve big problems for large ocean and adjacent industries. Innovations that create deflationary solutions such as saving fuel, reducing water consumption, or creating diverse revenue streams across multiple sectors will be best positioned to weather this economic winter, raise capital and earn revenue. land in the market.

As these types of innovations begin to show business results and have a positive environmental impact, we anticipate that investment in the sector will continue to increase, spurring more funds focused on oceans and the environment. increased interest from broader climate funds.

What role have impact investors played in ocean conservation? Investor networks?

Bryant: Within ocean conservation, there are technologies and entire sub-sectors that are still in development and need patient capital for R&D, to achieve product-market fit and, in some cases, create new markets. Patient capital allows commercially viable companies to reduce their risk and provide them with the runway they need to achieve important milestones in order to attract more traditional capital.

Impact investors have also catalyzed the growth of the ocean investment landscape by providing early capital to ocean funds. Prior to 2018, there were only a handful of ocean-focused funds; however, in the past 18 months, more than 18 ocean-focused funds have been launched.

This is exciting not only because it will lead to hundreds of millions of new dollars invested in the oceans, but also because it demonstrates that venture capitalists and growth capital investors have seen the potential of the oceans and are ready create ocean-focused funds. . Impact investors who are ready to invest early in these funds play a pivotal role in attracting the capital needed to grow the ocean investment landscape.