VC investment into aquaculture startups broke records last year, according to new data from PitchBook that highlights $1 billion invested in the sector in 2023.
However, there are signs that 2024 numbers for both deal value and deal count will decline, in keeping with the broader VC market slowdown. According to PitchBook, aquaculture investment hovers at $0.2 billion as of September 2024 — a low not seen since 2019.
Aquaculture is the broad term to describe farming of “fish, crustaceans, mollusks, and aquatic plants,” in PitchBook’s definition. The report lists a variety of systems employed, including offshore aquaculture (e.g., pens or cages in oceans), closed-loop systems, aquaponics (a la Upward Farms), and simple pond systems. Aquatic plants and algae represent another category, and the second-highest VC-funded segment after closed-loop systems.
“The VC landscape now includes nearly 200 startups that are pioneering sustainable farming systems and deploying cutting edge technologies to enhance efficiency, automation, and animal welfare in existing operations,” notes the report.
The VC dollars are in Europe
Northern Europe uses complex, capital-intensive systems for aquaculture production, which in the region is led by major corporations including SalMar and Mowi. These larger-scale operations that require more infrastructure “create more opportunities for startups offering supporting technology,” notes PitchBook. Thus, the region also attracts the bulk of agtech VC money.
“Greater utilization of third-party aquaculture technology and more exit opportunities for smaller farms have positioned Europe as the leading VC market in aquaculture,” according to the report.
Top-producing countries in the region are Iceland and Norway. However, just one European country, Norway, is among the top 10 aquaculture producers globally.
Asia has the most aquaculture production
Despite the majority of aquaculture production being in Asia, the region is not a hotbed for VC money.
This is largely because farming systems are usually less tech-dependent (e.g., freshwater ponds) and therefore limit opportunities for agtech startups and VC dollars in turn.
China accounts for 55% of aquaculture production (minus aquatic plants and algae) globally, followed by India, Indonesia, Vietnam, and Bangladesh.
Plant aquaculture: a promising subsegment
The aforementioned plant aquaculture category represents a big opportunity, according to PitchBook: “Startups are leveraging these organisms for diverse applications, from alternative proteins in animal feed and plant-based meat to sustainable agriculture inputs and industrial products such as bioplastics and biofuels.”
Startups in this category raised a record $114 million across 12 deals last year, “underscoring the subsegment’s promise in addressing sustainability challenges and creating innovative solutions across multiple industries.”
Top-funded companies from the last year include Sea6 Energy (with $32.3 million raised to date), which uses algae for biostimulants, animal feed, and biofuels; Brevel ($26.9 million), working on algae for human consumption, and AlgaeCytes ($21.6 million), which is making Omega-3 supplements.
Feed & supplements: ‘a heavy incumbent presence’
Aquaculture for feed and feed supplements is flagged as another opportunity, as sourcing fish feed from wild fisheries adds to ocean depletion.
“This challenge has spurred innovation in sustainable feed solutions, with startups developing alternatives to wild-caught feed from insects and plants,” says PitchBook.
And unlike alternative proteins for humans, “the aquaculture feed market offers a more receptive environment for alternative proteins, with farmers showing willingness to adopt these sustainable solutions.”
Food & feed supplements as a category has raised $1.1 billion since 2020, “outpacing all other aquaculture categories.”
But it hasn’t all been smooth sailing. Ÿnsect, a high-profile company in the space, recently filed a safeguard plan with a commercial court in France in order to stay in business while it raises more funds.
“This situation reflects broader concerns in the alt-protein landscape, with investors growing cautious of capital-intensive projects with extended profitability timelines,” notes the report. However, it also adds that, “despite these challenges and a heavy incumbent presence, the growing demand for aquaculture feed continues to present opportunities for innovative startups in this dynamic space.”
Other high-profile companies in this category include Innovafeed, which just secured a USDA grant, and MiAlgae, which raised $18.5 million earlier in 2024.
More on both aquaculture and Asia’s startup investment landscape can be found in AgFunder’s new Asia-Pacific AgriFoodTech Investment 2024 report.
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Author Jennifer Marston
