Speaker

Interview:

1. As a global investor in the seaweed industry, how do you envision bridging funding, collaboration, and learning between the East and West?

Sharing data about seaweed funding trends, deals and capital on offer, and a macro perspective of global seaweed production, supply and demand, among other insights into the challenges and opportunities along the value chain is an important part of our work.

In order to grow the global sustainable seaweed sector, more investment needs to be channeled into the Asia Pacific, as it produces 98% of the world’s seaweed and is the biggest market for seaweed (1). More funding would not only help Asia Pacific scale production, but more importantly, move up the value chain, with seaweed-based products and solutions such as biostimulants, bioplastics, nutraceuticals, carbon removal, and marine ecosystem benefits – as opposed to a low-value commodity (e.g., carrageenan). At the same time, seaweed could be better leveraged as a nature-based solution for improving food security and climate action, which is fundamental for us as impact investors.

Seaweed production growth in Asia has been sluggish over the last decade or so (2), particularly in Southeast Asia - set back by smallholder farming, climate change impacts, and lack of a basic marketing system with price-grade differentials, among other challenges.  Because of these issues, a number of innovative Southeast Asian startups, such as Sea6 Energy, are leveraging technology (and other innovations) to improve efficiency and resiliency, scale the value chain, and pass the higher returns to farmers. We aim to support these startups, which need broader funding and support. This is also an opportunity for investors to capitalize on this growth potential. 

For the sector to grow sustainably, collaboratively, and inclusively, stakeholders from different parts of the world with a range of backgrounds and perspectives need to be present at tables where convenings, dialogues, and learnings take place – which is what we’re doing at Seagriculture US and EU. For example, the East can benefit from learning about advanced technologies that are being deployed in the West, and the West can learn about cultivation and harvesting from the East, given its long history of seaweed production.  We hope to positively impact the seaweed industry as a whole by sharing our perspectives and experiences from the East, continuing to learn from ecosystem partners from the West, and serving as a connection point between the two regions.

2. What are some of the most promising non-food applications of seaweed you foresee in 2030?

In terms of applications for the climate, we see biofuels as a future potential application, but much further down the line. The challenge will be the feasibility and cost-effectiveness of converting seaweed into fuels like biodiesel, which could have a significant impact on emissions. Another area would be plastic replacements/alternatives, which we know many startups are already working on; and if they can get the unit economics to work, there is a large addressable market.

3. Can you discuss the latest trends in funding mechanisms from Asia in the seaweed aquaculture sector?

We are seeing blended finance models being used in Asian seaweed aquaculture companies. Last year, the Asian Development Bank provided $15 million in debt financing, along with a $3 million grant from its Climate Innovation and Development Fund (CIDF), to an ocean-based fish and seaweed co-farming aquaculture in Vietnam. CIDF is a blended finance facility with an initial $25 million philanthropic commitment from Bloomberg Philanthropies and Goldman Sachs, and the potential to attract up to $500 million in related public/private investments. The grant supported R&D for a seaweed species that showed potential in reducing methane emissions when added to cattle feed. We see blended finance as a growing and promising funding model that will continue to catalyze and support the sector’s growth.

There is also some growing interest in private-sector, debt-based funding, such as short-term and mezzanine loans, as opposed to the conventional venture capital model of equity-based financing. Debt vehicles are more applicable to the seaweed sector due to the long time horizon for returns, and lack of benchmarks in the industry (it is a relatively nascent sector with little or no exits, IPOs). 

As the sector continues to grow and show potential for scale, we are seeing an increasing number of earlier-stage seaweed companies sign offtake agreements with larger corporates that are providing funding to help validate their business model and technologies.