How investor Aqua-Spark reduces pressure on the oceans through sustainable aquaculture

If we want to look after the planet, we must stop overfishing our oceans. The solution to reducing pressure on the oceans is aquaculture. But only if it can be done sustainably. Aqua-Spark focusses on making aquaculture more sustainable. ‘We lift the entire supply chain to a higher level.’

Even if you have not watched the documentary Seaspiracy, you probably know that fish, which tastes great and is quite healthy, is not always caught in a sustainable way. Fish stocks are threatened by overfishing, trawl nets damage the seabed and by-catch is discarded – all too often, fishing is detrimental to marine biodiversity. Yet fish is a great source of protein and an excellent alternative to meat. If you want to be sure that the fish on your plate is fully sustainable and does not harm the environment, aquaculture is the answer, say Mike Velings and Amy Novogratz, founders of the Aqua-Spark investment fund.

INVESTING FOR POSITIVE IMPACT ACROSS THE SUPPLY CHAIN

About ten years ago, Velings and Novogratz were shocked when they learned about the damage that fishing can cause. But they were also inspired by the potential of sustainable farmed fish as an alternative. They are convinced that the more fish is farmed in a sustainable way, the less the pressure is on our oceans and lakes. Since demand for fish is growing strongly worldwide, fish farming – or aquaculture – is also growing. As investors, the pair saw opportunities to work on making aquaculture more sustainable. After all, in their view, the best way of making a positive impact across the industry was to make targeted investments.

AMY NOVOGRATZ

‘The urgency of the problem is clear: the way we catch and farm fish is detrimental to biodiversity and the climate. We wanted to approach the solution in an entirely objective way: how can you strengthen the business model of sustainable players in aquaculture in such a way that, together, they grow further and can supply even more people with sustainable food?’ With Aqua-Spark, they take a broad approach, focusing on the entire supply chain behind the farming of fish and shellfish. From businesses involved in feed and fish eggs to the companies that ensure that the fish ends up on our plates.

MIKE VELINGS

DEMAND FOR FARMED FISH WILL INCREASE THREE-FOLD

As they freely admit, before Aqua-Spark could be launched in 2015, Velings and Novogratz had a lot to learn about aquaculture and the industry behind it. ‘We realised that making the industry more innovative wouldn’t be easy. Often, the companies involved were small businesses that hardly even used modern technology to manage their production, for example. Large investors didn’t express much interest either, despite the fact that demand for farmed fish is set to increase three-fold halfway through this century. That means that two-thirds of all this fish must come from companies that will be set up over the next few years. As it stands, the industry isn’t perfect, and this gives us, as investors, an excellent opportunity to add value to this young, fast-growing industry.’ So, fish has a future. It is a highly efficient source of protein: one of the farmers Aqua-Spark invests in can convert 1 kilo of feed into 1 kilo of fish. ‘We’re not telling anyone to stop fishing, but every kilo of farmed fish reduces the pressure on our oceans.’

Aqua-Spark now has a global portfolio of dozens of companies with the best technology and approach. Producers of feed and alternatives to antibiotics, forward-looking farmers, online technology and hardware. They are all exemplary businesses that show the world how things can be done differently and drive aquaculture towards a more sustainable future.

INSECTS AND SENSORS

Take the Dutch company Protix, for example, which produces fish feed based on insects. This is a perfect alternative to soya beans, maize or even fish and meat, which are used as the basis for conventional fish feed. ‘If you want to produce sustainable fish feed, you can’t overlook insects, seaweed and other alternatives. That way, you also reduce the impact that fish feed often has on land and sea.’ Another example is eFishery, an Indonesian scale-up that uses data and the Internet of Things to ensure that fish and shellfish are fed the right amount of feed at exactly the right time. On average, this saves 24% on feed, the biggest cost for farmers, who can manage shrimp ponds remotely from their smart phone. ‘When you realise that Indonesia has 4.5 million fisheries and is number 4 in the world in the field of aquaculture, you can see the potential of eFishery from Bandung, West Java.’ The company also has a positive impact on biodiversity as a result, because less feed means less use of soya beans or wild caught fish.

BIODIVERSITY AS A DRIVER FOR RETURNS

Investments like the latter, with the power and scalability of the high-tech sector, make it clear that Aqua-Spark is investing in biodiversity as a driver for significant returns. ‘We aim for the double-figure returns that our investors expect. We are not a minor player that you invest in “as a hobby”. This is set to grow into a portfolio with a market value of 2 to 5 billion euros,’ says Velings.

‘Our deals sometimes feel a bit like venture capital, when we invest in companies that are at a very early stage. But we also do private equity deals with companies that are already significant in size. The main difference from many other investors is that we’re in this for the long term. We get involved at an early stage, sometimes with only a few hundred thousand euros, but we are ready with follow-up investments and remain on board until our businesses reach maturity.’ Novogratz says, ‘We understand how difficult it is for companies to make the shift to genuinely sustainable business practices, and we want to help them with this. If you share the same vision, you will succeed. That’s why we also require our portfolio businesses to collaborate with each other if this could benefit them. A farmer can switch to sustainable feed from one of our other businesses. Meanwhile, all the businesses must offer each other their best possible terms.’

And yes, when you invest at such an early stage, not all expectations are always realised – that is just how it is with venture capitalism. Velings: ‘We invested in a US start-up whose product was already in the supermarkets. It didn’t catch on, but they’re working hard on a better business model.’ Novogratz adds, ‘We’re not letting this get us down. If, like us, you want to take the entire supply chain to a higher level, you can’t just ignore a link in the chain because it is having more trouble with the transition to more sustainable business.’

FOR MORE INFORMATION ABOUT THE ASN BIODIVERSTY FUND

Contact us via info@asnimpactinvestors.com