April 1, 2019

Aqua-Spark, a Dutch, global investment fund that backs companies along the aquaculture value chain for a healthier, more sustainable, and accessible aquaculture industry, has made an investment in Molofeed, a Norwegian developer of larval feed for finfish and shrimp based on proprietary, micro-encapsulation technology.

Founded in 2015 by aquaculture pioneers, Molofeed’s business model is based on the goal of replacing the role of live feed when farming marine fish and shrimp larvae. Because of their small size and limited digestion capabilities, larvae and young fish have highly specified feed requirements that are often sourced from live prey, such as Artemia and Rotifers. This practice up fish stock to the risk of disease, and exposing aquaculture operations to high cost of production and a significant environmental footprint.

Molofeed’s proprietary technology enables for the inclusion of pre-digested and water soluble components in a slow-release capsule that emits nutrients after feeding. As such, Mollfeed is able to replace more live prey sourcing in aquaculture feed rations compared to other products. At current particle sizes and nutrient composition, Molofeed’s product allows for early weaning, ending in a replacement rate of 50 percent, with eventual goals to replace live prey in feed rations completely.

In addition to eliminating the use of live prey, Molofeed’s technology has a suite of other beneficial possibilities including acting as a delivery system for bioactive peptides, immunostimulants, and probiotics.

“We share the same vision as Aqua-Spark — a more sustainable aquaculture industry that’s capable of meeting our global food production needs,” said Ingmar Høgøy, founder of Molofeed. “We are honored to be part of the Aqua-Spark family of companies working towards growing an improved aquaculture industry.”

Who’s Hungry?

Rising global populations and increasing wealth – particularly in emerging economies, along with diminishing wild fish numbers have put pressure on the aquaculture industry to fill the gap in supply. This pressure has also filtered down to the aquaculture feed category.

This pressure has also filtered down to the aquaculture feed category. These factors, and the recent approval by the EU and Canada clearing insect protein for use in fish feed, have driven innovators to search for and develop alternative ingredients to replace fish meal with the goal of increasing sustainability and reducing costs for the industry and its producers.

These macro trends have led investors to shift greater attention and capital to investment possibilities presented within aquaculture farming and its ancillary industries.

One company that made possibly the boldest moves to gain a foothold in the aquaculture feed industry is Cargill. Within two months in 2015 the company spent more than $1.5 billion across two deals: the first was forming a joint venture with Naturisa, Ecuador’s second largest shrimp producer and fourth largest exporter, to build a $30 million shrimp feed facility near Guayaquil, Ecuador. This was followed one month later with a deal that launched Cargill’s animal nutrition business into a global leadership position when it signed an agreement with Altor Fund III and Bain Capital Europe III to acquire global salmon feed leader, EWOS, for €1.35 billion (US$1.5 billion).

“With the need for protein expected to grow by 70 percent worldwide by 2050, farmed fish and shrimp offers one solution to meeting this demand, and Cargill intends to play a major role in this growing and important market,”  Sarena Lin, president of Cargill’s Feed & Nutrition business, said at the time.

Under the terms of the deal for EWOS, Cargill acquired seven production facilities – one each in Chile, Scotland, Canada, and Vietnam, and three in Norway – and two state-of-the-art research and development centers located in Chile and Norway. Also, through the joint partnership with Naturisa, the new mill, which was scheduled to be operational in 2017, has the capacity to produce 130,000 tons of feed per year.

That same year, Benchmark holdings agreed to acquire INVE Aquaculture Holding BV from Royal Bank of Scotland and Rabobank for $342 million.

“Aquaculture is not only a multi-billion dollar sector but one of the fastest growing in the food industry…” said Malcolm Pye, chief executive of Benchmark, in 2015. “The acquisition of INVE makes Benchmark a global leader in the aquaculture technology market overnight.”

However, possibly one of the biggest votes of confidence that aquaculture feed is a highly-desirable investment segment occurred in February 2017 when aquaculture investor, David Tze, announced the launch of the Tze Venture Search Fund for Aquaculture Technology. This new fund is dedicated to backing and growing aquaculture feed innovations in the aquafeed ingredients sub-category.

Other companies and startups developing alternative aquaculture feed protein sources include Biomar, which recently announced in December that it had agreed  to acquire 100 percent ownership of Chinese fish feed company, Haiwei, through BioMar-Tongwei Biotech, its 50/50 joint venture with China’s Tongwei; Ynsect, a Paris-based mass-scale breeder and producer of insects for the livestock, fish and pet feed markets which raised a $15.2 million Series B in December 2016; and Calysta, a sustainable, biological fish and livestock feed developer and producer that closed on a $30 million Series C round of funding that included Cargill, Dutch pure-play sustainable aquaculture investment firm Aqua-Spark, the Municipal Employee Retirement System (MERS) of Michigan, Old Westbury Global Real Asset Fund LLC, Walden Riverwood Ventures, and Pangaea Ventures.

-Lynda Kiernan