By Agroempresario.com

The aquaculture sector reached new heights in 2023, with record-breaking venture capital (VC) investment totaling $1 billion. However, signs of a slowdown are emerging in 2024, as both deal value and deal count are on track to decline due to a broader VC market slowdown. As of September 2024, aquaculture investment stands at just $0.2 billion—its lowest level since 2019.

Aquaculture, which encompasses the farming of fish, crustaceans, mollusks, and aquatic plants, has seen substantial growth, with nearly 200 startups pioneering sustainable farming systems and deploying innovative technologies. These technologies focus on improving efficiency, automation, and animal welfare, playing a crucial role in enhancing current operations. Despite these advancements, the bulk of VC investment is still concentrated in Europe, with Northern Europe being a key player due to its more complex, capital-intensive aquaculture systems. This trend is fueled by the presence of large corporations such as SalMar and Mowi, which, through their infrastructure needs, create more opportunities for startups offering supporting technologies.

PitchBook’s report indicates that Europe is leading the VC market in aquaculture, with countries like Iceland and Norway ranking among the top producers in the region. Despite this, only Norway is among the top 10 global aquaculture producers, as the industry in Europe is primarily driven by corporate giants rather than smaller, tech-dependent farms.

In stark contrast, Asia holds the majority of global aquaculture production, particularly China, which accounts for 55% of global output. However, Asia lags in VC investment. This is primarily due to the nature of farming systems in the region, which are less tech-intensive (such as freshwater ponds) and thus offer fewer opportunities for agtech startups and VC investments.

A promising subsegment of aquaculture is plant-based farming, with startups using aquatic plants and algae for various applications, from alternative proteins in animal feed to sustainable agriculture inputs. This subsegment raised a record $114 million across 12 deals in 2023, underscoring its potential for addressing sustainability challenges and creating innovative solutions. Notable companies in this space include Sea6 Energy, which uses algae for biostimulants, animal feed, and biofuels, and Brevel, working on algae for human consumption.

Another high-potential category is feed and feed supplements, with startups innovating alternative proteins sourced from insects and plants. As the aquaculture industry faces challenges sourcing feed from wild fisheries, these sustainable alternatives are gaining traction. Despite a heavily incumbent market, the growing demand for sustainable feed solutions continues to present opportunities for innovative companies.

Since 2020, the food and feed supplements category has raised $1.1 billion, surpassing other aquaculture sectors. However, challenges remain, as companies like Ÿnsect face difficulties securing funding. The broader alt-protein space is seeing investor caution, particularly for capital-intensive projects with longer profitability timelines. Despite these challenges, the demand for sustainable aquaculture feed remains robust, offering opportunities for new solutions in this dynamic field.

As the aquaculture industry continues to evolve, the global divide between production and investment trends highlights the need for greater technological adoption in Asia. Meanwhile, Europe remains the dominant force in terms of venture capital, providing critical support to startups driving innovation in the aquaculture sector.