ImpactAlpha - Everybody, it seems, wants their seafood sustainable. That growing demand is spurring investor interest in aquaculture, seafood supply chains and technology solutions that address the shortage of affordable, tasty protein that does not deplete already-stressed fisheries.
One indicator of increasing interest is the growth of the Fish 2.0 business competition, which launched its 2015 contest this week with 15 sponsors and $180,000 in prizes. The first cycle of the competition, in 2013, attracted 160 companies and helped investors identify dozens of investable startups; this year's competition has an additional track for growing companies that have generated revenues for more than three years.
Among the backers of the competition is Pentair plc, a $7 billion Manchester, U.K.-based provider of fish-farming systems and other industrial equipment. "We believe sustainable aquaculture will play a big role in the future of food production globally," Todd Gleason, Pentair's senior vice president for growth, said in a statement.
Other sponsors include the Calvert Foundation, RSF Social Finance, Coastal Enterprises Inc., the impact investing network Toniic and the Packard and Moore foundations.
A poll by National Public Radio in 2013 found that 80 percent of Americans who regularly eat fish say it is "important" or "very important" that the seafood they buy is caught using "sustainable" methods, defined as methods that ensure the species remains plentiful for future generations and does minimal harm to other animals in the sea.
Lisa Kleissner, a leading impact investor and member of Toniic, said her KL Felicitas Foundation expects to make its first seafood investment this year. She said most of the increasing -- though still small -- investor interest in sustainable seafood is coming from non-impact investors, however. For mainstream investors, she said, sustainability "provides a diversification strategy and lens into an industry that has been traditionally quite opaque."
Kleissner said Fish 2.0, along with Aqua-Spark, a new sustainable aquaculture fund based in the Netherlands, are helping to build an ecosystem of investors and entrepreneurs and to define the opportunities in the $390 billion global market. "Their work is uncovering best industry practices and enterprises across asset classes." Aqua-Spark is also a sponsor of the Fish 2.0 competition.
Undercurrent News, a seafood industry publication, this month predicted increased merger and acquisition activity as large foreign processors, mid-sized US players and private equity funds take advantage of low interest rates to buy up suppliers, processors and distributors.
Monica Jain, the organizer of the Fish 2.0 competition, said a growing number of seafood entrepreneurs have plans to grow their businesses and reach new markets but often struggle to identify the right investors. By bringing the entrepreneurs together, helping them hone their plans and presenting them to investors, she hopes to catalyze investments ranging from $100,000 to more than $10 million.
"Investors see rising demand for sustainable seafood products and an industry that is ripe for innovation," Jain said. "In 2013, we were showing people that there were great business opportunities in sustainable seafood. Now we're showing people the breadth and depth of the sector."
Established companies and early stage enterprises can apply through the Fish 2.0 website at http://www.fish20.org. Three dozen finalists will present their ventures to investors at Stanford University this fall.
Disclosure: The David and Lucile Packard Foundation is a sponsor of ImpactAlpha.