“Never before have people consumed so much fish, or depended so greatly on the sector for their well-being,” reads the Food and Agriculture Organization’s most recent report onThe State of World Fisheries and Aquaculture.
Fish provides a nutritious source of protein but also employs a huge number of people; in fact employment in the sector has grown faster than the world’s population, according to FAO. And forthis reason, the creation and promotion of asustainable fisheries and aquaculture sector is essential.
But despite increasing interestin sustainable food systems and agriculture, few venture capital or private equity investment portfolios include fisheries oraquaculture businesses.
“The investors I speak to tell me they don’t see enough deals each year,” says Monica Jain, founder of Fish 2.0, a competition aimed at connecting investors with sustainable businesses in the sector. “The deals they do see come in piecemeal, but also they don’t have the knowledge to make decisions.”
On the flip side, some emerging seafood companies that Jain has come across do not have business plans and models that areinvestment ready. “There is this gap between the two”, she toldAgFunderNews.And that’s why she set up Fish 2.0, a biennialbusiness competition designed to close the gap between the two parties and group potential investments together in one place.
The competition, which launched in 2013, is now in its second iteration after attracting support from 28 sponsors, without whichthecompetition could not take place, says Jain. The competition’s core sponsors this year includethe David and Lucile Packard foundation, the Walton Family Foundation, Gordon and Betty Moore Foundation, The Freedom Fund, Tides Canada and supporting sponsors include Rabobank, Aqua Spark, the investment fund, and RSF Social Finance, an impact lending organisation.
Investors attending the event or participating as judges range from venture capital firms to impact investors to debt lenders to corporates looking for investments and partnerships. Investors made up about half of the 300-strong attendee list in 2013, according to Jain
“This year the investor list seems a bit more mainstream and including firms that are not impact first,”Kate Danaher, senior lending associate at RSF Social Finance, the US-based community development finance institution, told AgFunderNews. “It’s important to have conversations with organizations like Rabobank; they are the largest financier of fisheries in the world.”
The competition attracts a wide range of technologies across the seafood industry. This highlights the huge amount ofinnovation coming out of the sector at the moment, says Jain.
These include land-based technology for aquaculture production, innovative fish feeds using waste, mini tuna-related businesses with a Pacific and Thai fisheries focus, aquaponics growing fish and food together; seafood traceability, businesses capitalising on new management regimes and property rights around fisheries.
RSF participated in the first year of Fish 2.0 and Danaher judged some of the participants. “The first round was awesome. We have done a couple of seafood deals in the past but we don’t really have the internal expertise to understand the opportunities and the risks. So we participated to learn, be exposed to deals and listen to other funders work through deals to get a sense of what we could potentially do and where the opportunities are,” she said.
RSF looked “very hard” at some of the companies that went through the process, and issued a term sheet to at least one, although they didn’t quite work out, mainly because they weren’t mature enough for straight loan investments, according to Danaher. But she is keeping track of many of the companies to contact when they are ready for RSF lending.
“We are a huge fan of models that support the economic resilience of fisherman, especially when it reinforces positive practices; that’s huge for us,” she said. She was also impressed with companies looking to reduce fish meat wasteduring the filleting process; as much as 30 percent of fish meat can be wasted, she said.
While investment into seafood technologies and production has been low when compared to other agricultural commodities, there are some private equity companies focusing on the sector such as Paine and Partners, the US food and agri PE firm, which has made a range of seafood-related investments in the past, andAqua Spark,a Dutch private equity fund investing in bothdeveloped and emerging market aquaculture projects and technologies. Anotherprivate equity firm active in the sector is Bonafide, based out of Switzerland and Hong Kong.
Fish 2.0 has three tracks: startup companies with no revenue to-date; early stage companies with one month to three yearsof revenues; and growth scale companies with more than three years of revenues.
Jain recently shortlisted 69 semi-finalists from 170 business that applied. These semi-finalists will now bescoredonline by a group of investorjudgeswho will also provide them with feedback. This will select the next 36 who will present to the attendees of the main event in November at Stanford University. The top scorers will do five minute pitches and a Q&A session before the winners of each track are chosen.
In 2013, 60 percent of businesses that presented reported that they got investment or had improved sales, according to Jain.
There are a variety of prizes including$30,000 in cash prizesand$150,000 in professional service awards.
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