Fried’s presentation focused on investment trends in aquaculture and began by noting that there has been a rapid increase in the amount of capital invested in the sector over the past 5-7 years, which occurred alongside a rapid increase in the number of firms. come into space.
However, she was quick to note that the industry would need much more to meet the growing demand for farmed seafood.
“It’s incredibly exciting, but if you look at the Towards a blue revolution report that Nature Conservancy and Encourage Capital published in 2019, they estimated that – to meet the demand for aquaculture – we would need annually, conservatively, $12 billion to $25 billion [invested] only in aquaculture facilities. This doesn’t even include the upstream and downstream part of the supply chain,” she noted.
“We’re not even close to the amount of capital we need to really build this industry,” she added.
Scope of collaboration
Created in 2020, OSAIC is a group of 35 investors – largely family funds – seeking to invest more capital in blue foods and blue technology.
“The idea is that by working together on dealflow, sharing due diligence information, and co-investing, we can reduce some of the friction of investing in this space,” Fried explained.
Their goal was to catalyze $250 million into space in three years and, according to Fried, in two years they invested over $200 million,
Despite the diversity of investors in the space, Fried noted that existing investors are overlooking a number of key areas, with a preponderance of “small to medium-sized funds that are currently raising funds and are in the capital space.” -risk”.
According to Fried, the spike in investment, which took place in 2015, is because “that’s when Aqua-Spark, the world’s first sustainable aquaculture fund, began investing capital and that others have arrived at his side”.
However, despite their growing number, she notes the lack of diversity in the funds that have emerged.
“Of the 22 space funds, 12 of them were launched this year or last year, in venture capital. While that’s really exciting, does that mean we’re really building an industry robust and a strong supply chain for aquaculture?” she asked.
According to Fried’s analysis, hardware and software are attracting the most investment, in part due to interest in ancillary technologies from less specialized investors in areas such as food and technology. eating. Animal feed and fish health are also proving popular, as they have “large total addressable markets”, often beyond aquaculture.
In the meantime, there has been a significant amount of investment in equipment, which Fried attributes to the rise of alternative production systems, such as RAS.
Regarding the consortium’s more than $200 million in investments in space since 2020, Fried said, “Alternative foods, particularly insects and single-cell proteins, are clear winners, with agriculture coming in second… auxiliary technologies come third. in terms of dollars invested.
Broader Investment Trends
Fried then offered insight into other trends she’s seen since joining OSAIC in 2020.
“The first is that there’s a growing interest in shrimp – shrimp is a huge market, especially in the US, and growing. And there is a lot of room to innovate and drive sustainability, so there is interest from investors, as well as the pipeline, in agricultural technology and agricultural health,” she pointed out.
“The second is about algae, when I started this role in 2020 I had maybe one or two investors who were interested in algae, now every one of them, whatever their strategy, is looking at algae “, she added.
“The next is agricultural management technologies – a mix of software and hardware solutions – a large number of sensors that seek to improve the efficiency of agriculture. I will say I see more pipeline in this space than actually closed deals, but this is an area where I see a lot of activity,” she continued.
The second most important area is land-based production – both for salmon and, increasingly, for other species.
Concerns for the future
Although Fried has seen many positive developments over the past two years, she still wonders if there are enough quality startups out there.
“Will there be enough high-quality venture capital opportunities in this space for all of these funds to have a differentiated pipeline and be able to get the venture capital returns they need? For them to succeed and have a fund two, a fund three, to develop this space?” she asked.
And she also worries that there aren’t enough investors to help breakthrough companies grow.
“Do we have the investors who are going to come in and write the bigger checks once these companies grow? Do we have investors who will come to invest in real assets? Invest in infrastructure, come up with private equity and invest? Invest debt in this space? she asked.
“What I see is that we don’t, which is problematic because that means we could be building a very unbalanced supply chain, which is not robust. And those areas that are maybe less sexy – around processing, around cold storage, aren’t getting the capital that they need, so when we scale up production, we have this “missing link” part of the supply chain that is underinvested, she warned.
Despite these concerns, Fried hinted at the number of investors who are “waiting in the wings” who could really make an impact if they join in.
“We are on the verge of a potential cascade of capital flowing into this space. And to be able to develop a very robust and sustainable aquaculture sector,” she concluded.