2030 Finance | September 16, 2019

Investments in sustainable aquaculture point to a greener ‘blue economy’

Anthony Bellafiore
Guest Author

Anthony Bellafiore

ImpactAlpha, Sept. 16 – Aquaculture has emerged as a vital alternative to wild-caught fish, a major source of the world’s protein, as ocean fisheries are strained by overfishing and climate change.

Investors are increasingly interested in the sector, as the range of ocean challenges – plastic pollution, coral bleaching, acidification, rising water temperatures, and overfishing – commands greater public awareness.

Today, farm-raised fish accounts for half of all fish consumed globally, and this figure is expected to rise to 75% by 2030. The sector has reeled in $385 million in venture dollars since the beginning of 2017, according to Pitchbook.

Yet unsustainable practices are undermining aquaculture’s potential. As the industry gears up for scale, impact investors have a critical role to play in ensuring this fast-growing corner of the blue economy does so sustainably—and helps achieve U.N. Sustainable Development Goals.

Aquaculture is more efficient and uses less water than land-based farming, but it poses a litany of other challenges. The largest is the ever-growing demand for fishmeal, derived from wild fish, which contributes to the depletion of wild fish stocks. Historically, it can take up to three tons of forage fish to produce one ton of salmon. Roughly a third of the global fish catch ends up as fishmeal or fish oil.

In addition to amplifying the strain on the global fish population, aquaculture can cause a number of other negative environmental effects, ranging from concentrated solid waste that can lead to anaerobic conditions on the ocean floor, to farm-raised aquaculture escapees competing with native species for food and disrupting wild gene pools. Moreover, the overuse of antibiotics to keep the penned-in fish healthy has potentially contributed to the proliferation of antimicrobial resistance and “super-bacteria” immune to antibiotics in humans.

Circulate Capital brings corporate customers to sustainable-oceans investing

Steering the sector

A wide variety of aquaculture startups are taking aim at some of the industry’s most pressing challenges, from finding ways to more sustainably feed carnivorous fish, to developing better aquaculture containment systems and more efficiently managing water and fish health.

Investors such as Aqua-Spark, SOSV, Alimentos Ventures, and Kleiner Perkins, all of which have been active in the space, have an opportunity to flex their impact muscle. Such capital is crucial for the $243 billion industry. As a recent Nature Conservancy report notes, “impact investors can steer the future of the industry by directing investments toward the most sustainable forms of aquaculture.”


A good place for these investors to start is in the area of sustainably feeding farm-raised fish. According to the U.N.’s Food and Agriculture Organization, if the aquaculture sector is to maintain its current average growth rate of 8 to 10% per year to 2025, the supply of nutrient and feed inputs will need to grow at a comparable rate. To ensure this doesn’t mean we’ll have to catch even more fish, startups such as KnipBio and NovoNutrients – the latter of which raised a seed round in August – are developing ways of using microbes to naturally convert gases like ethanol, methanol, and CO2 into single-cell proteins that can be mixed with other ingredients to replace fishmeal.

Approaching the problem from a different angle are startups including Hexafly, Entocycle, Grubbly Farms, nextProtien, and InnovaFeed, which are each creating fishmeal alternatives that use insect biomass to replace the protein normally derived from other fish. Collectively, these five firms have raised roughly $84 million dollars, according to Pitchbook.

Aqua-Spark backs aquaculture startups BioFishency and Molofeed

Healthy fish. Other innovations in the industry are focused on ensuring clean water and healthy breeding environments in aquaculture. The aquaculture industry loses an estimated $10 billion worth of fish per year to disease, a number that has prompted many startups to target a reduction in the amount of parasites and bacteria found in these systems. Some firms, like BlueLice and Stingray Marine Solutions, are aiming at common parasites such as sea lice with high-tech solutions that employ traps and lasers, respectively, to target, then kill or trap the lice without the need for antibiotics. Irish startup MicroSynbiotix, which completed a second seed round in May, has developed novel oral vaccines for aquaculture using transgenic microalgae, also in an effort to reduce the need for antibiotics and combat large stock losses due to viral outbreaks. All told, these three startups have raised approximately $7 million between them.

Infrastructure. startups are developing more sustainable breeding pens for farm-raised fish. Innovasea, for one, is developing sturdier, submersible, open-ocean containment nets that allow for natural currents, more oxygen-rich water, and decreased fish stress, while simultaneously reducing costs for farmers. Innovasea’s stronger pens also reduce the likelihood of fish escape, protecting native gene pools from contamination.

Circulate Capital brings corporate customers to sustainable-oceans investing

For indoor aquaculture, ventures such as Sustainable Aquaculture Systems, which closed a $1.78M Angel round in July 2018, are improving water circulation, filtration, and waste treatment in indoor tanks, breeding healthier environments for fish to grow while also providing a cost-effective, indoor solution that makes for an attractive alternative to more ecologically damaging outdoor ones. Innovasea and Sustainable Aquaculture Systems have collectively raised nearly $17 million dollars.

Beyond Fish

Some startups that are thinking outside the pen. Rather than making traditional aquaculture operations more sustainable, firms such as Good Catch and Ocean Hugger Foods are taking a page from successful alt-protein providers like Impossible Foods and Beyond Meat and creating seafood alternatives derived from plants. Meanwhile, operations like BlueNalu and Finless Foods, which have collectively raised $28 million since 2017, are going a step further by using stem cells to grow cultured fish meat. At scale, these companies could dramatically reduce the need for both fishing and aquaculture, providing more sustainable solutions for marine protein consumption in the process.

The entirety of the Blue Economy is set to drastically increase in value over the coming decades, outperforming the growth of the global economy as early as 2030. It is imperative we invest in ways of making aquaculture, and many of the industries within the Blue Economy more sustainable today, so that they proliferate into a greener future tomorrow.

Anthony Bellafiore is a VC Associate at LaunchCapital and the COO of GoingVC. He holds no financial interests in any of the companies mentioned in this post.