Syndicat CREO: Investors “sitting behind the scenes” waiting for aquaculture to break through

According to Maggie Fried, Ocean Manager and Aquaculture Investor Consortium at CREO Syndicate.

Syndicate CREO is a global consortium of 35 single-family offices and funds collaborating to catalyze more than $250 million (€248.7 million) in investment in European and North American decarbonization initiatives, including aquaculture and the blue power sector.

Speaking at the Blue Food Innovation Summit in April 2022 in London, UK, Fried said his group was guided by the Nature Conservancy’s Towards a blue revolution report on impact investing in sustainable aquaculture.

“We are on the verge of a cascade of capital entering the space that will help us develop a robust and sustainable aquaculture sector,” she said.

The report identifies the sector as “both an environmental and a financial opportunity” and highlights current forecasts which suggest producers will need $150 billion to $300 billion (€149 billion to $298 billion). euros) in capital expenditure over the next ten years just to provide the infrastructure needed to meet consumer demand.

“It’s a conservative amount of $12 billion to $25 billion. [EUR 11.9 billion to EUR 24.8 billion] per year, plus the need for upstream and downstream investment, and we’re not even close to the amount of capital we really need to build this industry,” Fried said.

Fried said there is a diverse pool of investment funds available, including through accelerators, venture capital funds, corporates, family offices, infrastructure finance initiatives, private equity and capital. institutional.

“Aqua-Spark led the way with the first sustainable aquaculture fund, but since then many small to mid-sized venture capital funds have been established, and these will play an increasingly crucial role in catalyze funds into space,” Fried said. . “In 2022, the total of all investment funds in the sector is estimated to be around $3.15 billion. [EUR 3.13 billion]. Of the 22 funds available, 15 are venture capital funds, 12 of which were created in the last two years. [Venture capital] the funds are currently worth $1.05 billion [EUR 1.04 billion].”

Investors are flocking to biotechnology and companies creating the hardware and software solutions needed to ensure production efficiency, as well as aquatic food and fish health companies and manufacturers of specialized equipment needed for production. seafood, such as recirculating aquaculture systems (RAS), Fried said.

“These subsectors have large addressable markets that can generate the required returns, as a solution or product developed for salmon, for example, can potentially be transferred to shrimp and then applied to chickens and pigs,” he said. she declared.

Currently, the CREO Syndicate invests around 60% of its portfolio in alternative aquaculture feed companies, with insect meal producers and single-cell protein feed producers accounting for the largest share. About 20% of the syndicate’s portfolio is directly related to aquaculture businesses, while 10% focuses on ancillary technologies, with algae products, consumer products, and health and genetic products making up the rest.

Regarding the pipeline and the future, Fried spoke of growing interest in shrimp, particularly in the United States, where she said there was “room to foster sustainability, technology and health”.

“Many investors are turning to algae and although the checks are smaller, there is a lot of money waiting to go into this sector,” she said. “Software solutions to improve farming are showing a lot of activity, as well as RAS farming, continuous flow systems and opportunities outside of salmon. We’re also starting to see investor and movement interest in deal flow, product processing and technology to improve supply chain transparency.”

Despite growing activity in blue food investments, Fried expressed concern about the development of an unbalanced supply chain that will see seafood production while the upstream and downstream sectors are left behind. Sectors such as animal feed, new production and processing methods, packaging, markets, supply chain logistics and consumer demand require greater attention from investors, he said. she declared.

“Will there be enough high-quality venture capital opportunities for funds to have a differentiated pipeline, succeed in achieving the returns they seek, and build second- and third-round funds capable of issue bigger checks?Who will finance the real assets, the infrastructure, the debt?, she asked.

Fried spoke of regular conversations with family offices that don’t have the mandate to invest directly in this sector or the expertise to do so, but want help getting involved.

“Other investors are also sitting behind the scenes, but they are waiting to see the success of the current funds. This is a period of interest for this developing sector,” she said.

Photo courtesy of CREO Syndicate