The panel consisted of venture capitalists Gerard Chia and Christian Rangen – from New Protein Capital and X2 Labs respectively – and Neil Wendover, from Cargill Digital Insights, the feed giant’s recently established investment division.
“Aquaculture is an impact investment, it’s an easy sell, and we tend to see more private funds, family funds and philanthropic investors - who prioritise both financial and social return,” noted Gerard Chia.
But he also warned that there are still a number of “misconceptions” surrounding the industry including concerns over the sustainability of the sector and the perception that it’s growing slowly – although in fact in many countries the rate of growth is well over the 5-7% annual growth seen in aquaculture globally.
“I try to tell this to every start-up – that raising money is hard as hell… and within the aquaculture space it’s even harder,” said Rangen, a fact he attributed in part to the paucity of VC companies in the space.
“For some reason this industry doesn’t have that landscape developed yet but we need a number of these companies,” he reflected.
Nevertheless, he added that a number of other VC firms were beginning to look into the opportunities offered by aquaculture.
“We found a lot of interest around the aquaculture space…and expect to invest in between three to eight aquaculture companies within the next four months,” said Rangen.
However, he added, that he was looking for companies in particular fields.
“We made a very strong choice not to go into biology, because a lot of people know that field better than we do, but we really like what’s happening in the aqua-tech space, the digital space, engineering and construction, offshore farms and if you take a 20-30-year perspective there’s going to be a lot of structural innovation on the heavy technology side and that’s the space that we like,” he explained.
New Protein Capital have invested in a number of aquaculture ventures in the last few years, including in Ynsect and now invest in three main areas, explained Chia. The first is related to protein production, the second to do with food and health and third is anything related to food waste, food safety and food traceability.
This led initial negotiations with 92 companies and, four years later, they have 530 companies “in the pipeline”.
“We’re not here to mentor you, we’re not here to hold your hand, but we can provide connections, we can provide the best way to create value for your company,” said Chia.
Meanwhile Wendover explained the Cargill perspective on investments, emphasising the growth and the strategic outlook of one of the world’s largest family-run businesses.
“We’re cash-rich and have a lot of capital, but aren’t very good at providing quick capital, so what we tend to do is look 5, 10, 15 years out. We don’t have this quarterly obsession and we’re not very good at making short-term tactical investments so we like to look at strategic capabilities that will complement our business and complement our vision for the future,” he explained.
“I think companies should come to us not necessarily looking for quick cash – if you want to do that you need to go to a VC, we work closely with some of these VCs and are creating relationships there, but if you feel like your vision aligns with Cargill… this would give you a growth aspect because we have a large geographic footprint… and it’s a long term play,” he added.
The panel were then asked what they look for in start-ups.
“We probably have space for about 10 portfolio companies at the most so we have to be very careful about who we target for selection. For us the biggest thing is whether the start-up is addressing an unmet need,” said Gerard.
Crowdfunding?
Whether it was worth looking to crowdfund a new venture was also discussed, following a question from Leiv Midthassel, CEO of Mithal AS, who voiced his frustration at trying to raise funds from VCs for Remora, his automated net-cleaning device .
“Crowdfunding: don’t do it, it’s a waste of time. You have more important things to do. A successful crowdfunding campaign is 18-months planning plus execution, you’re clueless if you don’t have a team to do it. Unless you have three people you can dedicate to it full time don’t do it,” Rangen asserted.
Asked to round off the discussion with their recommendations for start-ups seeking investment each member of the panel offered their advice.
“For us it would be patience and perseverance. The shrimp company that we looked at we met a year-and-a-half ago we just didn’t think that the proof of concept was good enough for us. But we reopened negotiations again 7 months later and we’re now reinvesting so it’s really about patience and perseverance,” said Chia.
“I think it’s a golden age for aquaculture investments because there’s so much growth across the entire landscape, but the advice I would give for anyone looking for money is don’t ask for money, ask for networks – most investments happen through existing social networks, people that you’re introduced to,” Rangen concluded.
