© Ocean's Balance
Founded in 2016, Ocean’s Balance aggregates seaweed from Maine, New Brunswick and Central America, operates the largest seaweed processing hub in New England, and is currently working with up to eight major human and pet food multinationals, including Purina and Mars.
It’s an impressive trajectory for Lench, who – having run a fund that made impact investments in often obscure countries – was attracted by the ecological, social impact, and business opportunities the fledgling seaweed sector seemed to offer in his home state of Maine.
“At that time I didn't really know all the different areas where it was going to apply, but I had a sense it was going to be a great business opportunity and could also do a lot from an environmental impact perspective,” he reflects.
Ocean's Balance initially set up its own farms, with an ambition to develop speciality consumer seaweed food products.
“When we got started, there wasn't a lot of infrastructure for seaweed in the US, so we started a nursery, our own farms, and a processing facility” Lench recalls.
However, as Maine’s seaweed supply chain began to expand, Lench decided to concentrate more on processing, establishing a sizeable tailor-made drying facility, with the capacity to dry around 1,000 lb of seaweed per hour. It was custom-built by Bennet’s, a South African firm with considerable experience in the field.
“Customisation is key – these are not off-the-shelf machines and different seaweed species are more easy to dry than others, so make sure the dryer is specifically designed for the species that you need to dry. Go with experts in the field that have long history working with seaweed: Bennet’s spent months working with us on all our specific needs. It’s also extremely important that a dehydrator is very automated – ours only requires two people to run,” Lench explains.
The company also dries seaweed for third parties © Ocean's Balance
Meanwhile, in order to ensure that the dryer would be operational as much as possible, Ocean’s Balance worked on building close links with third parties who could provide them with a steady stream of raw materials.
“We've become more of a seaweed functional ingredients company over time, but we’re still very close to the supply chain, as one of the key areas in this industry is being able to source seaweed at scale. Either you grow it yourselves or you work with third party growers to avoid a lot of middlemen in between as well as to control quality and costs,” he notes.
Key suppliers include indigenous farmers in Panama, who were trained up over a period of eight years by one of Lench’s colleagues.
“What's interesting is it creates more value for the farmer, because for large volume seaweed industries like carrageenan there are normally middlemen involved who purchase the seaweed in a pretty raw format at very low cost. It takes us a little longer to train people how to farm for what we're needing but it saves us money and we're able to pay more to those farmers as well,” Lench points out.
The company is also currently in discussions with farmers in East Africa and Asia, in order to diversify their sources of tropical seaweed, on top of their more local species.
“It’s pretty varied – we're probably the number two dulse provider in North America. Then we also do sugar kelp, alaria, Irish moss, digitata, bladderwrack and sea lettuce,” says Lench.
These are a mix of farmed and wild harvested, with the latter proving a bridge for a period of time as farming of additional species evolves.
“Buying a seaweed harvesting company in New Brunswick was a little bit opportunistic, but it worked out well because now we have much higher volumes of seaweed and we can better control the quality and consistency,” says Lench.
“Our goal is to move as quickly as we can to 100 percent farmed. But farming has to be at a level where we can actually make some money on it. Farming for some species is still more of a science project than a commercial endeavour, but we are working with marine science labs such as Woods Hole Oceanographic Institution and others to accelerate the development,” he adds.
© Ocean's Balance
Poised for growth
Lench believes that the combination of having a processing hub, a growing network of suppliers, and some unique in-demand ingredients means that Ocean’s Balance is now well placed to raise their game.
“Our current production is about 1 million pounds [c.450 tonnes] per annum on a wet basis. And we’re experiencing high growth, especially in ingredients business, which has grown by 2.5x this year, and we’re expecting it to grow by 3.5x next year,” he says.
It’s a trajectory that’s been achieved in part by learning from early mistakes – including ill-fated ventures into novel products.
“It's taken us a few years to figure out the right product fit for the market. When we first got in, we were probably pushing products that we thought people would need or want, but with more customer feedback we could start developing products around their needs. And now 92 percent of our revenue is coming from repeat customers,” Lench reflects.
“We've rolled out a product line in the hydrocolloids sector that fills a specific need for different types of food manufacturers, including pet food companies. Getting away from some of the hydrocolloids that consumers are less comfortable with, due to the chemical extraction process and some unfavourable health studies. Clean label is a big trend in the human and pet food industries,” he adds.
It’s a tactic that seems to be paying off.
“One of the big trends we've seen is engagement with larger corporates, larger multinationals – we now have seven or eight companies with $50 billion revenue and above that we're working with. So we're definitely moving up the food chain, with bigger volumes per client. But we also deal with a lot of small-to-mid-sized manufacturers, and some botanical-type companies who sell other things. We're also exporting about 30 percent of our product right now into different markets. And that's quite interesting because some of the volumes they're looking at are pretty large,” Lench explains.
Ocean's Balance took its time to perfect its product line for customer needs and preferences © Ocean's Balance
A call for investment
While the startup has managed to grow fairly organically, Lench believes that now’s the time to step up their funding drive.
“We previously raised some external capital from Katapult in Norway and a family office in Boston, but – now we’ve found the right product fit – our big challenge is having enough people. There's certain equipment that we need to buy as well, so we're planning to do an investment round,” he explains.
Lench believes that Ocean’s Balance now has the right pieces in place to hit critical mass.
“One of our big milestones has been achieving solid margins in all of our products. Another was acquiring a harvesting company called Aqua Veggies. Another was setting up a processing unit – we're not at full capacity yet, which we've also opened it up to other seaweed companies and farmers, but we feel that there's enough momentum going that it was a good investment to make,” he reflects.
And, despite a number of high profile seaweed startups folding, Lench feels that those left are beginning to benefit from hard-won insights and a growing interest from big business.
“I think you have to be targeted and you have to be in a market where it's not going to take you 10 years to figure out how to make money. Where I find a lot of optimism is bigger companies figuring out themselves where seaweed fits in. And, most of the time, it's not about broadcasting that there's even seaweed in that product, it's a more subtle reason that they're putting it in – such as for functional needs or helping to achieve their carbon reduction goals. And I think we're still at the tip of the iceberg of trying to figure out all those functional needs. But the more you learn in terms of gut health and antimicrobial properties and other benefits of seaweed, that's where I think we're seeing the food companies and pet food companies reacting,” he explains.
Looking ahead, from an Ocean’s Balance perspective, he aims to build up the company’s existing channels, before seriously considering diversifying.
“Right now we have a bunch of products that there's demand for and so we're highly focused on just increasing the volumes and working on our supply chain. Further on, we'll probably go into other specialised products and we may go into doing extraction, but that's a big investment step. And we'd rather take that step after we already have a great client base established.” he concludes.
