Who’s Funding Ocean Conservation Tech?

TL;DR: Seaspiracy shocked you, but there are companies out there building awesome stuff to help the ocean. However, it’s still really hard for their work to be funded. Open your chequebooks (or crypto wallets) and help us help the ocean!

Who is this article for? It should be helpful for:

• Early-stage (ocean) conservation tech for-profit startups looking for funding.
• Investors/funders keen to understand how the space has changed with time.
• Those interested in what it’s taken to keep SafetyNet Technologies (an ocean conservation technology company) working on our mission.

What’s in this article?

• SafetyNet Technologies’ early funding story (from 12 years ago until now)
• How the funding scene has changed
• Appendix: Lists of investors and awesome entrepreneurs in this space.

Oceans of Capital, but not for the Ocean

SafetyNet Technologies (SNTech) designs and scales Precision Fishing solutions that enable sustainable fishing practices in the fishing industry. It’s crazy to think that we started 12 years ago. At that time, funding for early stage conservation technologies felt non-existent, let alone the niche sector of ocean conservation. The ocean is out of sight and out of mind for most people, which is why films like Seaspiracy (with its pros and cons), can be so shocking when they highlight issues around industries like fishing. While ocean technologies still aren’t funded sufficiently ($500m out of $502bn impact investments in 2019), more investors — particularly in the impact space — have started to take an interest. New funds are appearing more regularly which at least consider ocean-facing investments, if not entirely focused on them (though those exist now too — see below). The increasing recognition of the value of oceanic natural capital, and products and services designed to sustainably unlock that value, has led to the first generation of ocean-focused, profit-with-purpose entrepreneurs.

Early mavens in this space include David Lang (OpenROV, Sofar, Experiment), Dave Solomon (Pelagic Data Systems), Becky Ingham (Hookpod) and Cesar Jung-Harada (Protei). These are the folks that created successes and inspired me to keep going with SNTech, as they told their stories through platforms such as TED and Kickstarter, leveraging public, non-governmental support to further their visions. It’s no surprise that the first “investment” SafetyNet received was through an Indiegogo crowdfunding campaign, albeit non-dilutive, offering rewards rather than equity. Previous success from Boyan Slaat (The Ocean Cleanup) led us to believe our campaign would similarly capture the public’s imagination. Although we worked extremely hard, in the end we raised only £30k of the £50k we’d intended to achieve.

Keep On Swimming

While SNTech got off the ground through 7 years’ unpaid work, prizes, private philanthropy and bootstrapping — all critical funding routes for a startup — it is public and private investments that have more recently accelerated our growth and sped us towards SNTech’s vision of Precision Fishing: “a world where humans and the ocean thrive together”. R&D funded by the EU’s Horizon 2020 programme and the European Maritime and Fisheries Fund led to the creation of Pisces — our first market-ready product — which de-risked future, private investments. Nobody else would have touched us at that time, including UK national funding agencies, who have since funded our work. This was mainly due to the fact that there was no appetite for ocean investments, and the likelihood of an extremely high risk-premium through low valuation and investor-friendly terms would have been unappealing to us. In 2017, having proven the science behind our product with a number of different species and fisheries, we felt it was the right time to accelerate development and so began approaching investors.

Fish Don’t Have Thumbs

A fundraising rule of thumb is “6 months to money”. Having seen an increase in impact-focused tech investments, with rounds raised by ventures like Biocarbon Engineering (now Dendra Systems) and Fishtek Marine, we thought we had a good shot at attracting capital. We initially intended to raise a £1.5m Seed round, but closed at £1.1m due to success in grant-funding, and it took two years to close. This was for a number of reasons:

• Reason #1: There simply weren’t that many interested investors out there. We had access to a pretty amazing range of platforms during our hunt for funding; including two main stage presentations at the Economist World Ocean Summit, an article in the Economist magazine, two main stage presentations at the Our Ocean Summit, booth space on the EU stand at all these events, a pitch slot at the Sustainable Ocean Alliance Demo Day Gala, intimate pitch events with High Net Worth Individuals at SF’s Battery Club, Jason Calcanis and Marc Benioff, a pitch slot and booth at the EU Blue Invest Day, among many others. If ever we were going to be in a room with people who cared about the ocean and had money to give, those were the times! However, we also fell squarely into a Mariana Trench of death for startups: Between small amounts of competition funding (ranging from £500 to £100k) and grant funding (£100k-£1m) to prototype and begin to validate our value proposition, and the vast amounts of funding supplied by national governments and large family offices (£10m-£50b) through blue bonds and Fisheries Improvement Projects. We needed seed capital where there simply wasn’t any available.

• Reason #2: We were a team of first-time impact entrepreneurs; comprising engineers, human-centred designers and business strategists. We had a mission, but we also had no clue as to how to woo investors, with the added complication that it was only a very small pool of people that had the interest and the capital to finance our ask. In many cases, we were educating the investor market about the opportunities of ocean impact investment at the same time as we were asking them to commit funds to our enterprise. This is true of a lot of new ventures/industries, but in many of those cases there are people external to the venture working hard to generate FOMO (Fear Of Missing Out), from which investment-seeking startups can benefit.
• Reason #3: The structures of the wonderful group of investors that chose to invest in SNTech (Althelia Sustainable Ocean Fund (now Mirova Natural Capital), Mustard Seed & Conservation International Ventures) were complicated by the provenance of their funds. Mustard Seed was the most straightforward as, while they are primarily focused on social impact, they operate via straightforward ASA’s (Advanced Subscription Agreement — like a SAFE). The nuance behind ASOF and CIV funds, and trying to make it possible for them to receive equal terms to MS, meant a lot of legal wrangling which took a huge amount of time and effort, not helped by the fact that we were the smallest investment ASOF had ever made, and CIV were more used to offering debt than the convertible notes we settled on.
• Reason #4: The personal points of view of ocean investors can radically change a company’s ability to receive funding from them. Many High-Net-Worths (no pun intended), such as tech founders, love the ocean, but may disagree with fishing. There are now some radically different camps concerning what’s acceptable when it comes to funding ocean tech.
• Reason #5: A lot of impact money is not impact money. As a mission-driven company working in the fishing sector, which is adopting sustainable practices very slowly, we were seeking very patient capital. Often, the self-proclaimed impact-focused funds we spoke with weren’t able to make this commitment, or were seeking unreasonable returns more aligned with non-impact investing.

All of these reasons built barriers to closing a successful round that may not have been faced by non-impact focused ventures and the investors they tend to attract. It’s testament to our Seed investors that they worked with us to get the deal over the line. We nearly ran out of cash 5 times, having to juggle cashflow priorities to satisfy external relationships. Just before the Seed funds arrived in our bank account, the directors went without pay for two months in order to keep the SNTech ship afloat. We were privileged to be able to do this, due to savings and other jobs, but this isn’t always the case. The irony is we didn’t want to tell our investors as we thought we would lose our leverage with them while closing the round, which meant there was no reason for them to work to close it sooner, adding pressure to our already stressed director team.

Things in our favour:

• We are based in a wealthy country (UK) with access to European investors. (eg, harder for others trying to raise in different geographies).
• We’d received loads of media coverage due to award wins (James Dyson Award, Index Design for a Better Life, World Economic Forum).
• We’d already bootstrapped for 7 years, so knew how to make money last.

We stuck at it, closed the round, the funds arrived, and the progress we’ve achieved with them has been fin-nomenal (SNTech blog, SNTech Twitter). SNTech has also been transformed through the non-financial support of strong Investor and Advisory boards and a team that’s eager to take guidance when someone is willing to share it. This has been particularly important during an incredibly tough year for the fishing sector and the businesses that support it, including ours. You can read more from our COO Nadia Laabs about how we conserved our funding during the pandemic here. Needless to say, it was a huge team effort.

The New Wave

SNTech is now in the midst of working on our next fundraise to support Pisces’ sales growth and some super exciting R&D projects we have in our pipeline (more on that in another post). At the time of writing, the VC and startup scenes are reportedly flooded with more capital than ever before (as evidenced by friends who recently closed seed rounds in 2 months, and a hedge fund manager who laughed out loud during a public conversation, saying SNTech’s goal of closing a round in 8 months was “definitely not what [she] would consider speedy”). So while the ocean investment scene has grown, some things have stayed the same regarding access to capital.

During our fundraising process, SNTech has been researching who’s investing into healthy oceans at the moment. We want as many viable ocean health enterprises to succeed as possible, and believe we have a role to play in giving a leg-up to ocean entrepreneurs who want to make a positive impact on the world. Trust me when I say I know your job is hard enough already. Building SNTech has so far taken 12 years, and it feels like we’re just hitting the upswing. For that reason, I’m sharing the fruits of our research.

This includes:

• Those with a stated mission to support only ventures related to ocean health (eg, Althelia Sustainable Ocean Fund (now Mirova Natural Capital), Katapult Ocean, Seabird Ventures, Fynd Ventures, S2G Ventures)
• Those with an interest in food supply chains that may overlap with your ocean mission (eg, Rabobank Food & Ag Fund, Astanor Ventures, Atlantic Food Labs, AgFunder)
• Those with wider social impact goals (eg, Mustard Seed, The Schmidt Family Foundation, CREO Syndicate)
• Those looking for direct, positive business impact (eg, Corporates, Seafood Companies)
• Wildcards that you might never have expected to be interested (eg, The European Space Agency, The Lloyd’s Register Foundation)
• Public funding (eg Seafood Innovation Fund, EU Green Deal, EMFF, BREP, EIT Food Fund)

Alongside funders and investors, the resources we’ve found include useful data on investment stage, particular tech focuses, etc. This should help you narrow down your search. We believe the only way to grow this sector is through radical collaboration (seriously — it’s the only way we’re going to thrive), hence sharing.

While this will hopefully make one of your jobs a little bit easier, it’s still down to you to demonstrate all the things an investor will want to see (and we’ve had to learn a ton about what this actually means). Alignment doesn’t guarantee investment — you must be able to present a viable and financially sustainable way of addressing the problem you’re trying to solve, whatever stage your venture is at.

Ocean Issues are Climate Issues & Ocean Startups need Climate Funding

There is an increasing number of enthusiastic people out there who can help you achieve your mission. Ocean conservation technologies have never been more in the spotlight than they are now (Blue Planet, ocean plastics, UN Decade of Ocean Science, Seaspiracy have all helped here) and people really care. Seriously, check out the number of tech m/billionaires that are giving money to ocean health projects, alongside members of the public — although the sector still needs more. It’s dwarfed by traditional investing, but impact investments hit a record high in 2020.

It’s important to remember that ocean impact companies are not charities and ocean entrepreneurs should not have to work themselves to the bone as impact martyrs. There are valuable ocean-related problems to be solved, and creating positive impact cannot be the only payoff for those willing to devote their energies to creating solutions that benefit society and the environment.

What we need are compelling exits, and we’ll get them. Forerunners such as Saildrone ($88.5m investment raised so far) and Pelagic Data Systems, are helping shift investor focus in the same way that climate is now causing FOMO among VCs (spoiler alert: oceans massively affect the climate, so have to fall into the same funding bucket). Hopefully this happens faster than the cleantech revolution, but there is still work to be done as climate-focused VCs don’t yet immediately see ocean technologies as falling within their remit. We’re also going to need some market consolidation — for instance the merger of OpenROV and Sofar in a $7m round led by SolarCity co-founder Peter Rive — but this takes money being brought into the ocean space. What’s obvious is that collaboration and interoperability will be required to grow the market and impact of ocean technologies.

In many cases, it takes a village. In the case of the ocean, it’s gonna take a flotilla.

For Those Seeking Funding

The Liquid Grid Ocean Investor List — The list ocean innovators have always wanted! This was published as this piece was being written, and it’s being updated as new investors are identified (137 investors — sortable by stage, type and focus — at time of writing). This is a more comprehensive list than SNTech’s, so has replaced it in this article.

1000 Ocean Startups — A coalition of 8 ocean investors (who are actually putting money into companies — 2 have invested in SNTech) and a range of ocean tech incubators and accelerators, with the aim of showcasing 1000 ocean startups (149 at time of writing).

The Climate Tech VC Investor List — Climate-leaning VC firms that will be more likely to want to hear about ocean-focused technologies.

For Those Seeking Ocean-Focused Companies

Investable Oceans — A list of current ocean-company fundraising to help create dealflow. At time of writing, SNTech’s current round is listed there. (Ocean company fundraising deals are only visible to accredited investors).

SNTech’s Solutions blog — 30 organisations working on ocean technologies (by no means comprehensive, but SNTech knows all of these companies through a range of networks).

The Climate Tech VC Sustainable Seafood Landscape — A range of companies working in the Sustainable Seafood space.

Katapult Ocean Portfolio — A whole range of awesome companies working in the ocean-tech space.

Sustainable Ocean Alliance — 3 cohorts of ocean-focused companies.

Schmidt Marine Technology Partnership — A growing number of ocean-health focused organisations, supported by Wendy & Eric Schmidt.

Awesome people working in the ocean tech space now

Live form found here.

The live version of the spreadsheet (with active URLs for “Company” and “Social Media”) can be found here.

If you know an awesome ocean entrepreneur working on helping the ocean, please add their details to the above list, here. Additions will be made to the list once checked.