Where does the fish on your plate come from?

Most likely it comes from a fish farm -- 50 percent of the fish in the global human food chain is farmed.   

According to NOAA, the National Oceanic and Atmospheric Administration, approximately 84 percent of the seafood consumed in the U.S. is imported, and about half of that total is sourced from aquaculture. In 2009, aquaculture crossed the threshold of providing more than half of all seafood consumed worldwide. 

With increases in population and consumer awareness of seafood’s health benefits, demand for fish is only going to increase. But because wild stocks are not projected to meet increased demand, future increases in fish supply are likely to come either from foreign aquaculture or increased domestic aquaculture production.  

Agriculture 2.0, a recent event covering our food and farming challenges, devoted several sessions to this crucial environmental, commercial, and social issue. Feeding the planet presents immense challenges but provides some opportunities, as well -- hence the turnout from a number of venture firms with an interest in investing and disrupting this market. I spotted VCs from firms such as Kleiner Perkins, Firelake Capital and True North Venture Partners at the event.

I spoke with Kleiner Perkins partner Amol Deshpande at last year's event.  He believes there is an investment opportunity in the agriculture space, but it is "painful and difficult to scale."

David Tze is the managing director of Aquacopia, a New York-based venture capital firm that invests in early-stage aquaculture companies with investments that include:

  • Ocean Farm Technologies: Deep-water net pens and open-ocean aquaculture systems  
  • Open Blue Sea Farms: Open-ocean, caged "free-range" fish farmers off the north coast of Panama.  Open Blue’s initial species is Cobia, a sashimi-grade, marine white fish.
  • Oberon: Fish meal replacement for aquafeed generated from waste water.
  • Futuna Blue: Domesticating the northern bluefin tuna, from egg, in Spain.

Tze spoke of the challenges facing VCs in this market: VC investors with no experience and few success stories, a lack of defensible IP and scalable business models, capital-intensity and limited management talent.

Environmental challenges from aquaculture include:

  • Nutrient and chemical wastes
  • Water use demands
  • Aquatic animal diseases
  • Invasive species
  • Potential competitive and genetic effects on wild species
  • Effects on endangered or protected species
  • Effects on protected and sensitive marine areas
  • Effects on habitat for other species


Michael Rubino of the NOAA aquaculture program staff spoke about fisheries and aquaculture in the U.S. He mentioned that doctors and nutritionists have urged the consumption of more seafood -- doubling seafood intake. That would grow U.S. seafood consumption from 6 million tons to 12 million tons. Where is that additional 6 million tons going to come from?

Marine aquaculture in the U.S. is mainly comprised of shellfish farming, but also includes farming of finfish and algae in coastal waters and hatchery production of fish and shellfish to restore fish stocks. Rubino mentioned that China is going to be a net importer of seafood starting next year and echoed the theme: "Most of our future fish is going to be from aquaculture."

Rubino gave a tour of U.S. aquaculture, which ranges from a booming oyster business in New England and the Chesapeake Bay, to large indoor growing systems in Mississippi for tilapia, cobia, and pompano, to open water aquaculture in Hawaii, to wild salmon starts in Alaska. (California has very little aquaculture because of regulatory constraints.)

Aaron Enz is a partner at Watershed Capital, a corporate financial advisory firm focused on clean technology and sustainable business. He said that the future of seafood is aquaculture -- he echoed that aquaculture is now 50 percent of a $400 billion market. He also claimed that 75 percent of fisheries are overexploited.

He cited the pain points for the status quo of aquaculture as being fishmeal and fish oil, coastal water permitting, safety concerns, and disease and antibiotics. The promise, according to Enz, is a paradigm shift in innovation with sustainable production methods that are scalable and commercially viable and that reduce stress on wild fisheries.

Here are a few more early-stage firms in the aquaculture market.

  • AgriMarine builds solid-wall containment systems designed to float in inter-tidal regions or fresh water bodies.
  • Kona Blue farms open ocean Yellow Tail in Hawaii.
  • Sweet Spring Salmon farms fresh water Coho salmon on land.
  • The Little Pearl is a caviar retailer supporting American caviar from sustainable and environmentally sustainable sources.
  • Umami farms bluefin tuna fed on whole, small pelagic fish with no chemicals, drugs or additives. The company has put resources into a propagation program, and asserts that commercially viable breeding of the northern bluefin tuna could become reality within a few years, eliminating the need for wild catch. Japan is a major customer.

Ray Hilborn, a professor of aquatic and fishery sciences at the University of Washington wrote in a recent op-ed that apocalyptic predictions about the future of fish stocks are exaggerated. The piece said, "Much of the earlier research pointed to declines in catches and concluded that therefore fish stocks must be in trouble. But there is little correlation between how many fish are caught and how many actually exist; over the past decade, for example, fish catches in the United States have dropped because regulators have lowered the allowable catch. On average, fish stocks worldwide appear to be stable, and in the United States they are rebuilding, in many cases at a rapid rate."

He concludes that, "The overall record of American fisheries management since the mid-1990s is one of improvement, not of decline."

Despite the size of the market, the big question for investors is: Are VC growth expectations and scaling requirements even feasible in the admittedly huge aquacultural or agricultural markets?  Limited partners in VC firms aren't going to lower their expectations in order to invest in farms simply because it's the right thing to do.  The hope is just as greentech became mainstream, so can green agriculture.

Here's a great talk on sustainable aquaculture.

We should consider implementing a National Marine Aquaculture policy, according to Rubino of the NOAA. He said, "We are at a proverbial crossroads -- and we need to take responsibility for our own consumption."


Below: Cobia at an offshore aquaculture facility in Puerto Rico (photo from NOAA)


Ocean Farm Technologies' Aquapod Net Pens


Umami's Bluefin Tuna farms