Global demand for fish has risen at twice the rate of the world’s population, in fact, we’re now eating twice as much fish as we did 50 years ago, with per capita intake increasing from 21 pounds to just under 42 pounds annually. I’m told the output needed to fulfill the future demand is expected to double to 230 million tons by 2050, meaning the market increase could be valued at upwards of several hundred billion dollars. Co-founders of the Netherland based sustainable aquaculture fund Aqua-Spark, Mike Veling and Amy Novogratz are guiding investors to get a piece of that pie, and currently have 190 investors across 29 countries. It’s worth mentioning, as of June, Aqua-Spark’s holdings in 19 portfolio companies were valued at $180 million, and in 2019, it posted a net internal rate of return of an impressive +21.5%, especially given the fact, that’s net of the 1% annual fee and 20% of gains that go to a for-profit management company. According to cofounder Amy Novogratz this year’s internal rate of return will still climb above +20%.
Fishing in the wild has always been the primary resource for fish, but the majority of wild fisheries are now pushed beyond their limits, with nearly 85% of global fish stocks either being exploited or even depleted, leaving scientists to predict that it will turn oceans into deserts in less than 35 years. Interestingly, the trend towards fish farming has already started with the number of fish now harvested from farms having nearly tripled, with aquaculture now fulfilling almost half the world’s demand. As an industry, fish farming has yet to overcome many of the technological challenges of scaling to meet this demand, meaning it is a decade or more behind all other production animals with respect to innovation and thus presents as one of the more attractive opportunities for agtech investors and startups alike.
I found some of Veling’s comments regarding how the sector has evolved quite similar to what we are seeing in our traditional row-crop and livestock space. To this day, Veling is still surprised by how little branding there is in the fish space, as the original value of how a fish was farmed and its provenance often gets lost in the supply chain. I’m told, eight out of 10 retailers in the US will say that the fish comes ‘from our distributor’ and have no idea where it actually originated from or how it was caught, meaning it’s just another commodity to some extent.
Aqua-Spark believes its investments in aquaculture have a unique and powerful potential to create a triple impact, simultaneously generating positive financial, environmental, and social returns. I should note that Aqua-Spark has yet to sell a single holding, and expects companies in its portfolio to pay all employees a living wage as well as to prioritize transparency for scientific results. With a mission to influence how the two-thirds of the sector that doesn’t exist today is going to develop, Aqua-Spark intends to show how fishing in a healthy, affordable and sustainable manner is actually better for business, and expects to invest about 50% of the fund’s capital in the farming process itself. If you are interested in taking a deeper look into the fund, you can get more information HERE. This is certainly an area to keep an eye on for both producers and investors. I think it might be a good hedge for those invested heavily in the more traditional livestock space. Similar to when Tyson was an early investor in the fake meat business. If you think the world is moving more towards clean energy, climate change, and healthier foods perhaps a “fish-hedge” makes sense in an ag portfolio? Certainly something to think about… (Source Forbs, thefishsite, aqua-spark)