- Fishing provides food and jobs, but fish stocks are being depleted and ecosystems harmed.
- Venture capitalists poured $238 million into the sector last year, but founders need much more.
Daniel Watson's company, SafetyNet Technologies, has nearly run out of money six times.
When he founded the London-based business — which works on ways to make fishing more sustainable — in 2011, funding for ocean conservation seemed nonexistent.
SafetyNet survived off a patchwork of grants, prizes, crowdfunding, and bootstrapping before raising a £1.1 million, or about $1.3 million, venture-capital round in 2020 that took two years to close, due in part to a lack of investor appetite.
Some 3 billion people rely on the ocean for food, while 58.5 million people across the world are employed in the fishing industry or related jobs. But overfishing has left some fish stocks depleted, while destructive fishing practices like dredging have harmed ecosystems.
This adds to the threats already faced by the ocean, including the effects of the climate crisis, loss of biodiversity, and pollution.
To address these challenges, the European Union and other global leaders are pushing for science-based fishing practices to ensure that fish populations can be maintained.
They also want to see reduced bycatch, known in the fishing industry as unwanted fish or other marine animals that are unintentionally caught and killed, and improved data collection to make the industry more sustainable. For fisheries, more data ultimately means they can be more precise, efficient, and cost-effective.
Startups like Watson's, which works at the intersection of ocean conservation and fishing in what is known as precision fishing, position themselves as part of the solution.
SafetyNet's products include Pisces, a device that repels unwanted fish species to avoid bycatch, which won the James Dyson Award in 2012; the CatchCam, an underwater camera system; and Enki, an underwater sensor.
Fishing tech is often overlooked by venture capitalists who have preferred startups operating in aquaculture, which refers to the farming of fish, shellfish, and algae rather than the capture of wild stocks.
Venture capitalists pumped a record $550 million into the aquaculture sector last year, more than double the $238 million that went to traditional fishing sectors, according to PitchBook.
"Fishing has to be competitive in the ocean funding space alongside all these things like aquaculture, algae, seaweed, plastic removal, carbon removal," Watson said.
Still, "traditional fishing is a really important part of human nutrition and it's not going away," said Ed Phillips, an investor at Future Planet Capital who heads the firm's ocean fund.
Phillips, who invests in traditional and aquaculture markets, is keen on companies that bring technology and data to the ocean, such as those mapping more efficient fishing routes.
"In the traditional fishing market, your customers are traditionally relatively small and they don't necessarily have huge amounts of capital to deploy new technologies, but we've seen entrepreneurs create very good businesses often bootstrapped to serve those customers," he said.
Building hardware for the harsh ocean
Investors often prefer software over hardware, given the latter is typically cost-intensive, has long lead times, and is hard to scale because of the physical parts that need to be tested and iterated.
Ocean tech has the additional challenge of "dealing with this chemically rich liquid that basically eats everything that goes into it," Watson said of the ocean. Depending on how deep the technology goes, it must also be able to withstand the ocean's atmospheric pressure.
Case in point: It took six years for Kortney Opshaug, a former associate director at NASA, to bring her data-collecting buoy to market. The device tracks the location and movement of lost and discarded fishing gear, which makes up 10% of global marine-plastic pollution.
While the vessels Opshaug has sailed aboard aren't short of technology — they "look like the cockpit of a 747," she said — the marine environment is harsh.
"People think of buoys that float very gently on the surface," Opshaug said.
"No, it's out in the Bering Sea, it's getting dragged under to 1,000 feet. It's in hurricanes, it's getting slammed against the deck. Making something that's really robust but that also operates the way that a fisherman wants it to, it's not that straightforward."
Blue Ocean Gear's buoys have additional sensors to contribute to climate research, which benefits the fisherman because they get more accurate predictions from where they actually fish, Opshaug said.
Investors are still interested into ocean-tech startups despite the high cost of developing, testing, and selling equipment. In August, Ava Ocean nabbed 10 million euros, or about $10.8 million, for precision seabed harvesting from the seafood-focused fund Ocean 14 Capital.
The startup's tech can move fisheries away from destructive dredging practices and subsequently open up waters where fishing has been restricted as a result harmful practices, Maren Hjorth Bauer, a "blue economy" investor who sits on Ava Ocean's board, said.
There are plenty of opportunities on land, too. Hjorth Bauer wants to see more circularity in fishing, and she's excited about companies taking advantage of its waste streams, such as the Icelandic company Kerecis, which uses cod skin to treat wounds and was recently acquired for $1.3 billion.
The Cornwall-based company Fishy Filaments has developed a way to recycle plastic from fishing nets into new products, but it's still in the early stages. The technology can be applied to other plastics like food packaging, but the company's founder and CEO, Ian Falconer, sees a bigger opportunity in fishing despite its challenges.
"It's sufficiently high value and sufficiently global for us to get into, but it's not already locked out by long-term contracts," he said. "So I'm not going in and competing with multibillion-dollar industries straightaway. I'm competing with a number of other SMEs that are regional rather than global."
Fishing for funding
But Falconer is competing with buzzy tech sectors in the pursuit of venture capital. Currently, fund analysts are focused on software, AI, and "relatively quick turnaround" technologies, said Falconer, who started his business in 2016.
"Sometimes we need to remind people that change only happens in the physical world. Carbon dioxide is a physical manifestation of physical actions," he added.
The major funding gap comes from a dearth of strategic investors, Watson said. Strategic or corporate investors play large roles in other capital-intensive industries, providing patient capital, industry knowledge, and contacts.
"The fishing sector has the potential to do a lot of good, continue to do a lot of good and better, actually," he said. "Management's changing, regulation's changing, but the strategics just haven't pulled the fingers out to actually help people help them."
Family offices could offer some relief, said Hjorth Bauer, while private equity is also an option for later-stage companies with hardware and other physical assets.
Without cash flowing in, fishing tech could face a brain drain. Watson said his peers are devoted to solving their piece of the puzzle but a lack of funding means talent is forced to go elsewhere. "That's a tragedy in my perspective," he said.
There is hope that the tide is changing. People are now understanding the link between climate, biodiversity, and the ocean, Hjorth Bauer said.