Fishery tech hooks investors as virus outbreak boosts food security concerns

Photo by Gregor Moser on Unsplash

Fisheries and aquaculture sectors are catching the fancy of investors and policymakers with the COVID-19 viral outbreak disrupting supply chains and triggering food security concerns globally.

Barramundi Asia CEO Andreas von Scholten told DealStreetAsia recently said he’s seeing heightened interest in the company.

“We have not had this level of government interactions and requests as we have in the last and this is not just in Singapore. It’s in Australia. I’m getting letters from the ministers. It’s in Brunei. It’s really across the board,” he said. “It’s probably been a wake-up  call to many governments.”

Barramundi Asia farms a genetically enhanced barramundi, a type of Asian sea bass; it has net-based farms in Singapore and Australia and announced a third site in Brunei last year. Von Scholten said the Brunei sovereign wealth fund has invested in the company. The Brunei Investment Agency did not immediately return DealStreetAsia’s emailed request for comment sent via the Ministry of Finance and Economy.

In 2019, Biz Brunei reported the total investment in Barramundi Asia’s offshore fish farm in Brunei would be $300 million, starting with an $18 million first phase investment to build the initial offshore cages and breeding costs.

Even before the COVID outbreak, sustainability concerns have driven interest in aquaculture.

According to Michael Dean, a founding partner at agtech and food tech investor Agfunder, “One of the good things that is going to come out of COVID is a new understanding of the problems that we’re facing in the supply of fresh food and a real impetus for governments and investors to get behind that market and really help drive the investment in and adoption of technology to rationalize the supply chain.”

About a third of global wild fish stocks are considered overexploited – or being caught at a rate faster than they can reproduce, although the decline in sustainable fish populations has slowed due to increased aquaculture, according to data from Our World In Data. Globally, fish and seafood production has quadrupled over the past 50 years, around double the pace of the population increase, the data show.

Our World In Data is a non-profit based at the Oxford Martin Programme on Global Development at the University of Oxford; it is also supported by start-up incubator Y Combinator.

World fish consumption as food is expected to reach 21.3 kg per capita by 2028, up from 20.3 kg in 2016-18, according to data from the OECD/FAO in a 2019 paper. The growth in demand is expected to mainly come from developing countries, especially Asia, with those regions projected to consumer 71 percent of total food fish in 2028, the OECD/FAO said.

In the wake of the COVID-19 supply chain disruptions, Singapore’s government said it would accelerate its “30 by 30” policy –- or its plan for the land-starved city-state to produce 30 per cent of its own food by 2030, up from around 10 per cent currently.

Singapore Food Agency (SFA) data shows the city-state’s total consumption of fish increased to 87,304 tonnes in 2018, from 81,448 tonnes in 2009, but the per capita consumption fell to 21 kilograms in 2018, from 24 kilograms in 2009.

Von Scholten said the company talks with Singapore agencies nearly daily as the city-state’s land scarcity means the sea is a key way to resolve food security.

“We are working on a project now where we’ve been asked to speed up and accelerate our production. We are in discussions now to commit to producing between 200 and 300 additional terms in the next 18 months. This is a project that we’re discussing now with the government,” he said.

He added that would entail harvesting the fish at a younger age and lower weight of around 600 to 800 grams in 12 to 18 months, rather than waiting around two years, when they reach around 4 kg.

Aquaculture part of Singapore’s food security plan

Even before the viral outbreak, policymakers were pointing to growing global populations, bringing a higher demand for protein, just as climate change was set to hurt food production.

Barramundi Asia’s von Scholten said the expansion to Brunei was in part due to diversifying geographic risks. It had also begun planning as long as a year ago for its merger with Allegro Aqua, a startup from Temasek Life Sciences Laboratory, to add the capability to produce its own fry, rather than rely on continuing to import them, von Stolten said.

Singapore’s Minister for the Environment and Water Resources Masagos Zulkifli told a parliamentary committee in March the country was looking to aquaculture as part of its food security plan.

“We are supporting different modes of fish farming. Where water quality is good, farms can carry out deep-sea farming. Where it isn’t, farms can adopt closed-containment technologies,” Zulkifli said according to the text of the speech, in which he specifically mentioned Barramundi Asia.

In a February speech, Zulkifli also highlighted the city-state’s interest in Aquaculture Centre of Excellence (ACE), which raises fish in a closed containment system, called an Eco-Ark, using solar power, with wind used for cooling.

The first Eco-Ark holds four large tanks, set a half meter over sea level to use less energy to bring in seawater for the tanks, Leow Ban Tat, the founder and CEO of ACE, told DealStreetAsia recently.

Leow said he used his background in the oil and gas sector, where he previously worked for Keppel Corp., to develop a system of cascading tanks for adding oxygen to the water and filtering out waste, including microplastics from the intake and excrement from the outtake, to ensure discharged water is clean.

While the Eco-Ark is currently set up in coastal water, it can be used in deeper water, with the technology available for harsh weather conditions and to stay stable in waves, similar to oil and gas platforms, Leow said.

Because of the cleanliness of the water, the fish – a grouper hybrid – don’t require vaccines or antibiotics, he said. Another species of fish is also being prepared to be raised in the Eco-Ark, he said, but declined to name it.

Like Barramundi Asia, Leow said that while his fry is purchased from Australia currently, the company expects to have its own hatchery by year-end.

“COVID-19 tells us that in order for Singapore to be sustainable, and achieve its food security, we need to have everything here,” he said.

The contract to build two more Eco-Arks is expected to be awarded to a Singapore-listed company, with delivery planned for early next year, he said.

Although ACE’s production has only recently begun, with the consumer website only newly launched, Leow said the virus outbreak had spurred a food agency in China had offered to buy a full tank of fish already growing, but the sale was declined to support Singapore during the outbreak period.

“We’ve received a lot of interest for both buying my fish and for adopting our technology,” with enquiries coming from Norway, Korea, Malaysia, Indonesia, India and Pennsylvania in the U.S., Leow said.

Leow said the company is looking for a like-minded Series A investor, and it has some interested investors but the virus may slow the closing a deal. The virus appears to have spurred interest from one company, with a potential deal after the outbreak eases, he added.

Meanwhile, Barramundi Asia is targeting completing a fundraising round by the end of this year, with multiple parties interested, he said but declined to name potential investors or the amount targeted. The firm is likely to begin preparing for an IPO in 18 months at the earliest, Von Scholten said.

The company has had “many different rounds” of funding, starting from a shareholder group in Sweden as well as the founding shareholders, he said. Louis Dreyfuss and Temasek Life Sciences also own stakes in the company, although Von Scholten declined to reveal their stake sizes.

Startups target different aspects of aquaculture

Israel-based AquiNovo, a portfolio company of Singapore-listed Trendlines Group, has developed a proprietary non-hormonal, non-genetically modified feed additive which helps fish grow larger by inhibiting reproduction.

“One of the key challenges is how you produce more fish in a sustainable manner using the same resources,” Nissim Chen, the company’s CEO, told DealStreetAsia recently.

The product can improve the feed conversion ratio – or the feed requirement to body weight gain – by as much as 5 percent and can boost weight by as much as 10 percent, Chen said.

AquiNovo hopes to launch a product for tilapia by the end of next year, after some additional studies are completed, he said.

The company raised around $1 million from private investors not long ago, and is planning to raise additional funds this year, with a larger raise expected in two years’ time, Chen said.

In 2017, AquiNovo raised $1.5 million from animal health and nutrition player Neovia, which was later acquired by agricultural giant Archer Daniels Midland.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.