Blue Economy Funds Exceed Raise Targets
But it's hardly a mainstream theme.
There were two announcements in the last couple weeks, plus one a couple of months ago, that caught the attention of those interested in the blue economy, but probably not too many others beyond that.
This post falls into the ‘spreading the word’ category. It’s both a celebration of the success these funds are having in gaining attention and capital and a belief that there is still is so much opportunity in this space.
The headlines are generally about ocean-focused funds exceeding their targeted capital raising goals.
+Ocean 14 Capital Exceeds 150 million Euro fundraising goal (Aug 2023)
+Aqua Spark releases its 2022 impact report (July 2023)
+SWEN Capital Partners Blue Ocean closes at 170mm euro (March 2023)
Ocean what capital? Aqua who? I know what you’re thinking. Who are these guys?
And you big shot finance and VC people are out there thinking, 150 million doesn’t seem like that much. I mean, look at the headline below which is just one of many every week in the investment and VC world.
“The firms are investing $250mn each to found a new company called Pinegrove Capital Partners”
+Brookfield and Sequoia offshoot launch fund to target cut-priced start-ups - FT
$500 million offshoot fund. Gotcha.
Even here on Emerging Oceans, I recently wrote about an aquaculture startup that pulled in $100 million in a recent financing round. As that article pointed out, early investors included Aqua-Spark (more below), but growth capital came from larger tech VCs such as Sequoia Capital, Temasek, and SoftBank.
+eFishery: An aquaculture unicorn - Emerging Oceans
Let’s unpack these announcements and the companies making them.
Ocean 14 Capital
In a recent podcast interview with Elodie Delagneau on the Oceanovation podcast, Ocean 14 founding partner Chris Barnes is very careful to emphasize that they do not invest in startups.
The money manager believes that there is plenty of opportunity to invest in the growth stage of proven tech in the blue economy without having to pick the winners in early stage rounds.
According to the Ocean 14 website:
Ocean 14 Capital Fund I invests in what already works and aims for even better returns.
O14C has identified an uncaptured industrial core of low-risk, high-return investment opportunities in the ocean. Companies with proven business models at the beginning of the growth stage, which can benefit from the funds equity investment and added value.
After exceeding their initial target of 150 million euro, the fund is now targeting 200 million.
The firm was founded in 2019 and, according to press releases, had raised the first 80 million of the fund by 2021 from institutions and impact investors such as European Investment Fund (EIF), Chr. Augustinus Fabrikker, Builders Initiative and Minderoo Foundation.
The next round that brought them above their target included the Convex Fund, Monaco sovereign wealth fund, and some high net worth individuals and family offices.
I would argue that most of those institutions aren’t exactly household names, even in the investing world.
+Ocean 14 Capital fund nets another €30 million and invests in company reinventing seafood harvesting - OC14C
+Oceanovation podcast - Chris Gorell Barnes
Aqua-Spark
Aqua-Spark is a company that really stands out within blue economy investing. When I first had a chance to attend the Economist Ocean Summit online a few years ago, I quickly learned that panels with anyone from Aqua-Spark were not to be missed.
In a crowd of smart, passionate people, they really know what they’re talking about. It’s the kind of thing where you came away from the session with a lot of notes frantically scribbled down.
Aqua-Spark is strictly focused on the aquaculture industry, so the report takes a very specific look at developments in this sector. But within the report, you find a similar positive message about funding.
Between 2021 and 2022, assets under management at the firm grew 50%, from 300 million euros to 450 million. NAV doubled from 125 to 250 million euros.
So the fund is growing, and performance is stellar.
+Aqua-Spark 2022 Impact Report
SWEN Capital Partners
The headline from SWEN is from a few months back, but the trend is the same. SWEN closed an oversubscribed Blue Ocean fund in March. They exceeded their 120 million euro target by 50 mm.
Unlike Ocean 14, SWEN is a large European asset manager with almost 7 billion euros under management. The Blue Ocean fund may represent just a sliver of that, but it’s still good to see the interest from investors.
According to the press release:
“Institutional investors from Europe and the US, ranging from pension funds to insurance companies, banks, sovereign funds and family offices, account for more than 85% of the Fund’s commitments.”
+SWEN Blue Ocean - Blue Oceans Partners
+SWEN Capital Partners Blue Ocean closes at 170mm euro
Growing, but Far From Mainstream
It’s great to see the success these funds are having in attracting capital to blue economy-focused companies. Yet with favorable industry growth and demographic tailwinds behind many of the ocean sectors, there seems room for much more capital and participation.
Plus, the universe of the potential blue economy investment is huge. According to UNCTAD,
The value of the global ocean-based economic sectors is estimated between USD 3-6 trillion/year. More than 3 billion people rely on the oceans for their livelihoods and more than 350 million jobs are linked to oceans worldwide.
About a year ago, the World Economic Forum blog put up this optimistic post headline about sustainable ocean investing:
+Sustainable Ocean Investing Goes Mainstream - WEF
It states that market-based sustainable ocean investing is “surging”, highlighting “robust new frameworks”.
The article highlights public equity ocean investing options that include the Credit Suisse Rockefeller Ocean Engagement Fund, Columbia Threadneedle / Poseidon Capital, and the Newday Ocean Health ETF.
The private equity investment funds the article lists are Aqua-Spark, SWEN Blue Ocean, and Ocean 14 Capital (sound familiar?).
But in reality, the CS Rockefeller Ocean Engagement Fund has 330m pounds in AUM and is available only to European investors. The Newday Ocean Health ETF has USD 2 million in AUM which seems unsustainable. And I couldn’t find anything further about any specific products linked the partnership between Columbia Threadneedle and Posaidon Capital.
+Credit Suisse Wealth Funds 1 - Credit Suisse Rockefeller Ocean Engagement - FT
+Newday Ocean Health ETF - FT
What this all says to me is that blue economy opportunities are still under appreciated. Institutions are channeling money into relatively small funds with deep expertise in this area.
Public investment opportunities are very limited at a large scale and individuals are left to perform all of their own research.
During a My Climate Journey podcast interview with Scott Jacobs, co-founder and CEO of Generate Capital, Scott mentions:
“We always need three things - good people, good deals, and good money. If you’re a values aligned investor, if you’re a values aligned entrepreneur, if you’re a values aligned potential colleague of mine, we’d love to hear from you. We need a lot of help in all three places.”
This sounds like it applies to the blue economy as well.
And while many blue economy themes fall within the investment purview of general climate and sustainability focused funds, it would be nice to see more thematic opportunities for a regular investor who is interested in the health of our oceans.