4 Investors Discuss the Next Big Wave for Alternative Seafood Startups • TechCrunch


Although investment in food While the technology has stagnated with the rest of the venture capital world, the industry has recently made some strides that are moving the sector and government into alignment.

In fact, some investors They feel that 2023 will be the year that alternative seafood companies and products make significant strides.

In the first half of 2022, more than $178 million was invested in alternative seafood, and the market value is set to reach $1.6 billion over the next 10 years. One of the sector’s biggest investments was Wildtype, which raised $100 million in Series B for its “sushi-grade” farmed salmon.

If this recovery takes place over the past six months, funding for the sector will meet or exceed the $306 million in all of 2021, despite a slowdown last year.

“Investment is steadily growing, and we expect this to continue,” said Christian Lim, managing partner of Blue Ocean at Swin Capital Partners. “We see the alternative seafood industry achieving key technical and economic breakthroughs faster than the alternative meat space, indicating the potential for continued acceleration,” he said.

Many companies say they’re in it for the sake of sustainability, and from the FDA to Upside Foods’ initial blessing of processed chicken, the focus is on bringing these alternative foods closer to the scale and value of traditional meat.

“The processed seafood industry is more than just looking for a technology solution – the technology exists and continues to improve with each iteration,” said Kate Danaher, managing director of S2G Ventures. “Now we need to think about brand building, labeling, consumer education, increasing production volume and developing and improving supply chains and resources to support a scalable industry.”

Every startup’s journey is very different, but one pattern we’ve seen work is an iterative approach to go-to-market strategy, product development, and regulatory oversight. Friederike Grosse-Holz, Director, Blue Horizon

And like other plant-based, cultured and organic food companies, alternative seafood companies must find the best way to get people to not only try their products, but ask for seconds.

In the year As we head into 2023, investors hope the regulation will help alternative seafood make further strides and gain traction. Read how proactive investors think about alternative seafood, where to see growth, what to keep an eye on, and more.

We talked to:


Kate Danaher, Managing Director of Oceans and Seafood, S2G Ventures

What does the alternative seafood industry need to have its first unicorn? Do you think 2023 is the year for this? Which companies do you think are going to make it this big?

I don’t expect the first alternative seafood unicorn to be in 2023. The first goal we should all focus on is to demonstrate repeatable production at an affordable price.

Protein companies have made great progress in product development, but the biggest hurdle is getting a consistent quality product to market.

So far, we’ve seen big dollars pouring in to support the first wave, including seafood. In order to achieve the level of valuation that eventually leads to a unicorn, companies must demonstrate a quality product with reasonable margins within the right business model.

There has been some progress in the US to legalize the process to produce an alternative protein. How can founders work with regulators and investors to bring multi-concept projects to fruition?

Many constituencies, such as industry groups, consumer groups, and regulators, must be “won over” to reduce potential headwinds when a protein goes to market.

Startups can support industry growth, commercialization and adoption by building bridges with industry groups to demonstrate that farmed seafood can complement wild and farmed seafood.

They also need to demonstrate transparency in the production process to win over consumer groups and join associations such as AMPS or the Good Food Institute, which are doing important regulatory work on behalf of the industry.

Mass production of alternative proteins such as beef, chicken and pork is still years away. How can the alternative seafood industry achieve this so quickly?

I am confident that alternative protein products will be available for purchase in the US within the next 12 months, both processed seafood and other animal proteins. But in the future that product will be a good, premium and limited product. Once production capacity constraints are resolved and costs come down, I expect these products to become as widely available as their animal protein counterparts.

While the FDA has sole jurisdiction over alternative proteins, while the USDA and FDA have jurisdiction over animal protein, one area where seafood is rapidly being marketed is related to regulation.

In addition, seafood has a higher price point and the muscle structure is lighter compared to other animal proteins, which makes it easier to produce wild/farmed species.

Many alternative seafood startups aim to address the climate crisis, but this industry has unique challenges such as cost and consumer appeal. What will be the key to helping companies produce sustainable products at scale?

For processed seafood, the technology exists and continues to improve with each iteration. Now we need to think about brand building, labeling, consumer education, increasing production volume and developing and improving supply chains and resources to support a scalable industry.

If these products are more affordable and meet the needs of consumers, they can have an impact at scale – with less wild fishing for animals, providing humans with seafood that is free of toxins or microplastics, and with less waste for the environment.

Also, consumer education will be key. In part, this includes driving awareness around the true cost of food above what we pay at the grocery store. Consumers are becoming more aware of external factors and factoring that into their purchasing decisions, but there is much more work to be done in this regard.

What does the future look like for investment in this space? Which areas are indicative of future growth?

The good news is that cellular seafood products have reached a point where they are ready to go to market from a control, taste and performance perspective.

Cellular seafood companies are making remarkable progress in reducing costs and reaching the point where they are ready for growth capital to scale the business. I expect to see more innovation and investment in the development of consumer experience and 3D structures.

What will it take to attract more institutional investment for later-stage funding to help the market stage?

I fully expect cellular seafood companies to be in the sold position going forward, because there is demand from a large early adopter consumer segment. The next wave of investments will be in companies that build infrastructure and associated resources to move parts of the supply chain.

We have strong indications that FDA approval is forthcoming and that ticks a big box for institutional and late-stage investors. Once that’s behind us, who’s in the market will be showing traction and making a compelling business case for producing a product at value.

Friederike Grosse-Holz, Director, Blue Horizon

What does the alternative seafood industry need to have its first unicorn? Do you think 2023 is the year for this? Which companies do you think are going to make it this big?

It takes a clean label and a healthy nutritional composition that complements seafood, including protein and omega-3 fatty acids.



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