Restoring nature in oceans and coastal areas, providing a livelihood for those depending on the sea and delivering healthy proteins to the world: welcome to the 'seafood transition'. The Blue Revolution Fund aims to accelerate this transition by investing in innovative companies that make it possible. "You won't achieve this with just stories about poor whales and turtles."
Restoring nature in oceans and coastal areas, providing a livelihood for those depending on the sea and delivering healthy proteins to the world: welcome to the ‘seafood transition’. The Blue Revolution Fund aims to accelerate this transition by investing in innovative companies that make it possible. “You won’t achieve this with just stories about poor whales and turtles.”
This spring, the ASN Biodiversity Fund invested in the Blue Revolution Fund, an investment arm from Hatch Blue, a knowledge-based firm specialized in aquaculture and the blue economy globally. The goal is to make the farming of fish, shellfish, and seaweed – protein-rich foods that the oceans offer us – so sustainable that it doesn’t involve any exploitation of nature. Instead, nature should be restored and strengthened.
Sustainable Transition in Seafood
"Everything we do is meant to steer the sector in the right direction," says co-founder and managing partner of the Blue Revolution Fund, Georg Baunach. "Companies in aquaculture face major environ-
mental and social challenges, while fish has the potential to be a fantastic source of protein for the growing world population. That's why a sustainable transition is needed in the world of seafood."
Baunach’s fund focuses on entrepreneurs who
use innovative technology (aqua-tech) and new
business models to spark a blue revolution. These don’t necessarily have to be the early-stage startups that many other venture capital funds invest in, but they are always companies still led by their founders. “What all our portfolio companies have in common is that they are at the beginning of a period of rapid growth.”
Georg Baunach
Co-founder and Managing Partner
of the Blue Revolution Fund
Alternative to Antibiotics
In April, his fund led an investment round in the Singaporean startup Peptobiotics. This company is developing an alternative to the antibiotics used by shrimp farmers against diseases, which have numerous negative effects on the environment.
The so-called antimicrobial peptides, which the human body also produces as natural disease fighters, work just as well as antibiotics but do not cause bacterial resistance. Peptobiotics aims to eliminate the use of antibiotics in the fish industry as soon as possible.
Selecting companies with the greatest potential requires a lot of knowledge and expertise in sustainable aquaculture, says the German. Baunach and his colleagues have gathered this knowledge and experience over the years at Hatch Blue, the company through which they have been driving the seafood transition from Ireland in various ways.
Innovation Programs in Dublin, Cape Town, and Singapore
The Blue Revolution Fund was established through Hatch Blue, which already had a consultancy arm
helping aquaculture companies become more sustainable. Hatch Blue also maintains a news site
about the sustainable fish industry and organizes innovation programs in various locations, such as
Dublin in Ireland and Bergen in Norway, as well as in Singapore, Mexico, and Cape Town. Many
aquaculture startups emerge from these programs. This was also the reason to set up an initial
investment fund that invested small amounts in startups participating in the innovation programs.
Like any other startup, young companies working to make the fish sector more sustainable also need
follow-up investments. “We want to invest in the sustainable farms of the next generation, which
bring about systemic changes in an industry that currently often harms nature and sometimes animal welfare, using new technology and environmentally friendly approaches. That is capital-intensive,
which we couldn’t support with our smaller fund.”
Knowledge of Sustainable seafood production
This led Baunach to establish a larger fund that invests larger amounts ranging from three hundred
thousand to five million euros, also in companies outside the accelerators and innovation programs.
“The average investor has too little knowledge of sustainable fisheries and fish farming. It is a
specialized business that only a few funds understand, including ours.”
In March, the Blue Revolution Fund announced it had raised 75 million euros, with initial backers including the Irish government, wealthy individuals and foundations, the European Investment Fund (EIF), and impact investors like ASN Impact Investors.
What makes the Blue
Revolution Fund extra special
is that it established its
sustainable goals and the
impact the selected
companies must achieve
before it even started.
Learning from ASN Impact Investors
"We are incredibly pleased that a party like ASN Impact Investors has joined. A fund that focuses exclusively on biodiversity is especially welcome. For us, strengthening biodiversity and natural ecosystems is more important than any other metrics. We can always learn from the way ASN Impact Investors measures and accounts for its impact."
Raising money as an impact investor is quite a challenge, Baunach has found. "On one hand, you attract idealistic parties, but to realize our large ambitions, we also need institutional investors who see that we have a smart and future-proof strategy."
Relatively Low Risks and High Growth Potential
And the debate continues, Baunach notes: can you achieve the same returns with sustainable investing as with 'grey' money? "In the venture capital world, everyone focuses on rapid growth, high risks, and high returns. But in our sector, you have to accept a longer-term and a slightly different risk-return ratio. The companies we invest in do not scale as quickly as software companies. It involves installations, locations where farming takes place, or the production of sustainable fish feed. But thanks to our knowledge and network, we can select companies with relatively low risks and high growth potential."
Nanobubbles Keep the Seabed Clean
One example is ChucaoTec from Chile. This company provides oxygen to salmon and shrimp farms with its installations. The revolutionary aspect lies in the size of the air bubbles: they are 2500 times smaller than a grain of rice. The nanobubbles remain on the seabed, where they help food residues and fish excrement decompose naturally.
What makes the Blue Conservation Fund extra special is that it established its sustainable goals and the impact the selected companies must achieve before it even started. "We call it our impact bible; it's a good guide for selecting the right investments: what impact metrics does a company contribute to, and to what extent? And is it measurable, so we can account for it to our investors?"
“Thanks to our knowledge and network, we can select companies with relatively low risks and high growth potential”
Six Impact Metrics
The fund identified six different metrics, with the number of hectares of protected habitat in the water and along the coasts being the most important. Baunach believes they can particularly improve the nature in coastal areas where fish farms switch from conventional to more sustainable methods. "Many techniques are being developed to ensure that with sustainable feed, better monitoring, and natural means to keep fish healthy, existing companies can minimize their impact."
Other metrics the fund focuses on include the amount of nitrogen removed from coastal waters, the number of new jobs created in the area, the tons of CO₂ stored in nature, and the amount of sustainable seafood produced by the portfolio companies.
Also Focusing on Social Impact
"Limiting ourselves to what we can measure is always a problem when investing in biodiversity: there must be a solid scientific basis for the methods you use to map the number of species. If more hectares of forest grow in a particular area, that is easy to register. But how do you quantify the impact of a new type of fish pond in open sea?"
The Blue Revolution Fund also focuses on social impact. “We create meaningful jobs through our investments. And where our aquaculture companies operate, water quality improves. This also improves the livelihoods of the local population."
Extern impact committee
To keep its ambitious biodiversity goals sharp, the Blue Revolution Fund has been working with The Nature Conservancy, the global conservation organization, since its inception. The Blue Revolution Fund has an external impact committee that oversees the achievement of its goals.
Baunach himself trained as a molecular biologist and was active in developing biofuels and other clean energy in Africa before deciding to make the fish industry more sustainable. "Personally, I love being on the water, preferably even in it. As a little boy in Cologne, I already had four aquariums in my room, and I loved fish—I always threw them back immediately after catching them."
About seven years after the start, Hatch Blue has grown into a mini-conglomerate that gives global nudges to the seafood transition. This makes him happy. "We are on the right track. Perfection doesn't exist, but we have a strong team of people who really know what it's all about, and our mission stands firm. You know, it's also a cool club, which makes our work fun."
More information?
Reach out to Nick Brugman, Head Third Party Distribution via:
nick.brugman@asnimpactinvestors.com