Beats | October 24, 2013

Seafood Startups Stress Sustainability

ImpactAlpha
The team at

ImpactAlpha

The $390 billion global seafood industry suffers from staggering levels of waste and opaque supply chains — presenting ample opportunities for entrepreneurs with more sustainable and efficient approaches.

Many of those solutions will be on display next month at the finals of the Fish 2.0 business competition at Stanford University November 12 and 13. The top winners will split $75,000 in prizes. More important is the prospect of loans and equity investments from “impact investors” for whom the 20 finalists and semi-finalists represent a rich pipeline of potential deals.

Many of the Fish 2.0 entrants aim to cut waste, shorten supply chains and increase transparency, giving retailers and consumers more confidence in the freshness, quality, species, and sustainability of the products they buy. Some are highly local, others potentially global.

As the Fish 2.0 finals approach, Impact IQ will be profiling some of the entrants to highlight the kind of entrepreneurial and investment opportunities emerging in “sustainable seafood.” (Note: we have no knowledge of, nor any influence on, which businesses might emerge as contest winners!)

A CSA of the Sea

Local Catch LLC, has taken a page from the successful playbook of community supported agriculture, or CSA, to create one of the nation’s largest community supported fisheries, or CSF. Instead of a weekly veggie box, the more than 400 members in the Monterey Bay area of California who buy a $20 per week “share” (enough for two to three people) get a weekly supply of fresh, sustainable seafood from local fishermen.

“We give fishermen a higher price for their fish, and the consumer gets a higher value product, often at a better price point,” says co-founder Alan Lovewell, an art major-turned-fisheries expert who launched Local Catch last year. “We’re trying to get people to trust seafood again and redefine how they think of seafood. Our markets are flooded with low-quality seafood, so people don’t even know how good it can be” when it’s truly fresh.

The win-win of lower prices for consumers and higher income for fishermen is possible because the more direct link means reduced waste in the system — estimated at as much as 30 percent of the industry’s total catch — and lowers the risk and expense of a highly perishable product.

The growing popularity of local food generally and CSA’s in particular (there are more than 33,000 nationally) makes Lovewell bullish on the opportunities for CSFs. Local Catch was recently awarded a 2-year, $100,000 expansion grant from the National Fish and Wildlife Foundation. The company is seeking financing to grow in their existing service area and expand to neighboring markets.

“It’s a good business to be in because the number one thing that consumers are thinking about when purchasing seafood is freshness,” he says. “And there are more opportunities to provide fresh seafood when it’s coming locally rather than globally.”

Data Storehouse

BackTracker, a software startup based in Weymouth, Mass., is seeking to bridge the gap between the increasing demand for transparency and traceability in the seafood supply chain, and the reluctance of many industry players to share proprietary and competitive data.

“Retail companies have made commitments about providing sustainable seafood, but they can’t verify whether they are meeting these promises right now,” says co-owner Mike Carroll, a licensed sea captain who has developed seafood compliance and sustainable sourcing systems for Vertex Companies, an environmental consulting firm in Boston.

“As a consumer, when you buy or order seafood, you expect that you should know what species it is, where it was caught, and what kind of gear was used.”

BackTracker gathers data from the landing tickets that track nearly every fish caught in the U.S. The tickets list the gear that was used, the area the fish were caught, and the permits owned by the boat, all of which can be correlated to sustainability factors. By cross-referencing this information, Carroll says, BackTracker can link, say, a 200-pound tuna back to the specific permit and vessel used to catch the fish.

The software can also help fishing companies analyze their own data to assess when and where they caught the most fish and how to optimize their use of government quotas, set prices and reduce operating costs.

Consumer pressure for increased transparency — including the proposed Safety And Fraud Enforcement for Seafood Act introduced earlier this year by then Rep., now Sen. Edward Markey of Massachusetts — may drive demand for such software. BackTracker’s solution adds encryption to keep fishermen’s catch data confidential while still making it possible to audit and cross-reference government records.

“We make it easy and safe for companies to use catch and landings information for traceability purposes without their intellectual property being compromised,” says co-founder Mark Soboil. “We generate reports that companies can use to monitor their performance and efficiency in the industry.”