Aquaculture start-ups have become a very attractive proposition for financial investors, according Elisabeth Øvstebø, managing partner of Link Venture Capital.
Øvstebø told the Aquaculture Innovation Europe conference in London that her Nordic-based venture capital firm has been “hunting high and low” for the right early-stage aquaculture investments, and that she has already evaluated 1,000 companies and is monitoring another 100 at any one time. In this regard, Link receives invaluable support from an international network of scouts, as well as strategic partners and co-investors.
“What we are seeing is that the green shift is blue,” she said. “In many ways, for us, the sustainable future is going to come from aquaculture.”
With Link’s strong interest in technology and management, current investments include: Blue Lice, a start-up that has built a component that attracts sea lice at the larvae stage; JET Seafood, an online B2B marketplace for Norwegian salmon and other seafood products; and Fishency Innovation, a hardware and software company that’s developed technology for detecting early stage sea lice infestations in cages.
To-date, the average deal size has been around NOK 10 million (USD 1.1 million, EUR 1 million).
“What’s amazing is none of the investments are for more than two years. These young technology companies are moving so fast,” said Øvstebø.
Link isn’t alone in its pursuit of aquaculture investments.
“We want to invest in aquaculture, now and in the future. And I think we will see a lot more of that," Øvstebø said. “I’ve worked with companies in energy and there are transitions. I see that there’s a big transition now coming into aquaculture. I think that solar energy sector converged a year ago. In recent years, the investment has multiplied by 11, and I also think this is coming into aquaculture. This is why we are now seeing a lot of bankers leaving asset management for ventures. This is because the margins are gone. But the margins in venture are now gigantic and they are also going to be huge in aquaculture.”
Øvstebø explained that Link is essentially looking for opportunities to grow fast, but like any capital venture fund, it would only be there for a period of any company’s lifecycle.
“We are not there for life. There will be a divorce, but hopefully a friendly one,” she said. “We are a fund, we have five plus two years and then we have to exit, so we need fast-growing companies. We also need technology, but we need technology that customers need and want, and technology that’s created in partnership with customers. We would never invest in a technology which is just technology in itself. And then the [investee] team is always going to be the most important element."
Customers, and market forces, are the driver behind Link's decisions, she added.
“We work deep strategy. We are very market-focused. If there are no customer needs, [we say] don’t build it; don’t do it. Pivot or kill your darling. And that is very often what I get to do," Øvstebø said. "I have to say, ‘Don’t do it. It’s not the time. The market’s not there, it hasn’t developed yet.’”
Øvstebø, who has also been selected to be the investment manager for a large international fish fund due to come onstream next year, also told delegates that to support the aquaculture industry’s transition, she would like to see greater risk-taking.
“I want to see big companies buy faster and collaborate more in early-stage growth companies. Start-ups need to prove their business case faster. And to the investors – get more deals done early," she said. “I’m asking everybody to take more risks. I think big risks equal big rewards."
