Y Combinator Hearts the Blue Economy

The latest Request for Startups reflects gaps and opportunities in the blue economy.

Mar 14, 2024

In February, the famed startup accelerator Y Combinator published its latest Request for Startups (Darius, thanks for the heads up). By having weekly discussions about the current batch of startups, the partners at YC have also become experts in identifying the gaps in where they are operating.

The Request for Startups (RFS) results from discussions within YC about what they wish they were seeing more of.

I thought this was especially relevant this week as The Economist's Ocean Summit is in full swing. Participants—both startups and investors—are also identifying gaps and opportunities in the path to a sustainable blue economy.

As Chris Gorell Barnes from Ocean 14 Capital pointed out:

"An estimated €147 billion per year globally is needed to achieve Sustainable Development Goal (SDG) 14: Life Below Water by 2030. To date, only €21 billion is available: of this, €16.8 billion comes from domestic and international public sources and €4.2 billion from private investors."

The insight from Chris, combined with the YC list, shows both a supply and demand problem for sustainable ocean projects. More capital is needed, but also more and more ambitious projects.

The YC post states, "This new RFS lists 20 categories, each suggested and explained by at least one YC Group Partner." Below the full list, I examine where blue economy innovations might fit into some of them.

It certainly isn't exhaustive and some of the categories are so technical that they defy my caveman mind.

Here's a look at where some opportunities might lie and some examples of people already tackling challenges in this space.

Full RFS list of categories (copied with links from their post):

Applying machine learning to robotics

Headlines about the risk of Chinese technology in our critical port infrastructure are beginning to grab headlines. Offshore wind farms coupled with wave energy and aquaculture installations, all operating on top of each other, will require efficient monitoring and maintenance.

There is no way to grow a shipbuilding industry that has already maxed out its available labor pool. And if the fish processing industry relies on forced labor, it's time to automate that process.

Earlier this year, I wrote about a startup using robots to clean the hulls of boats. This process, called defouling, leads to greater efficiency in fuel consumption and helps mitigate the spread of invasive species from one side of the ocean to the other. Hullbot is an excellent example of robots taking over a manual and thankless job.

There will be countless more.

Using machine learning to simulate the physical world

Digital twins of the ocean allow the modeling of complex ocean events and our influence on them. It is often said that we know more about space than our deep seas. These simulations are beginning to help fill the gap, but much more is needed.

Global Fishing Watch is using satellites to track fishing vessels and machine learning to fill in the data when they turn off their transceivers and fish illegally. They also use machine learning to identify boats whose behaviors don't match their stated purpose (such as a "research" vessel behaving like a fishing vessel).

Monitoring and understanding the physical oceans and our activities on them will continue to grow.

New defense technology

The war in Ukraine has shown the future of naval warfare. Ukraine has destroyed a third of Russia's Black Sea fleet primarily with the effective use of drone boats taking out naval assets. The drones aren't cheap at about $250,000, but the ROI is impressive.

However, most strategists believe traditional naval ships will continue to be critical, and China is building them at a rate far exceeding that of anyone else.

It seems unlikely that we will catch up to Russia's capability with icebreakers, and with a new chess match being played out over Arctic resources, different tools will be required.

Protecting everything from energy and communications to food resources, monitoring millions of square miles of EEZs, and both implementing and defending against a new world of drone warfare will require new tools.

Bring manufacturing back to America

See above.

Our (the US) lack of shipbuilding capacity has been a theme that has affected everything from naval capabilities to icebreakers to offshore wind buildout. I didn't realize that the decline has been relatively recent and so dramatic.

"In 1975, the US shipbuilding industry was ranked number one in terms of global capacity, producing more than 70 commercial ships a year. Nearly fifty years later, the US now produces less than 1 per cent of the world's commercial vessels, falling to 19th place globally. China meanwhile has tripled its production relative to the US over the past two decades, producing over 1,000 ocean-going vessels last year, versus America's 10."

+Shipbuilding: the new battleground in the US-China trade war - FT

Ten ocean-going vessels a year ain't gonna cut it. And it isn't just the military vessels that are needed.

"More than 90 per cent of military equipment, supplies and fuel travels by sea… the vast majority on contracted commercial cargo vessels. All of these are made overseas, including some in China."

With the increase in geopolitical tensions, lack of defense capabilities, and the growth (however sputtering) of offshore renewable energy, we need a multiplier effect in shipbuilding capacity, and (see robots above) there isn't the workforce to do it.

Climate tech

Climate tech is a broad category, and each category YC lists has a "blue" equivalent. As they state:

"We're interested in funding people building in these five top-level buckets: Energy Related, Science Required, Climate Adaptation, Green Fintech, and Carbon Accounting & Offsets."

So much about transforming our ocean economy to a sustainable blue economy could fall under climate tech—carbon sequestration, sinking seaweed, storm mitigation infrastructure, and adaptation to a changing ocean.

The fact that YC lists this category as underrepresented is quite surprising. Hopefully, it isn't because all the big brains are just trying to build the next social media app. I think it just speaks to the size of the opportunity in climate tech.

Commercial open source companies

Despite the vast quantities generated, data collection on our oceans is in its infancy. It will be interesting to see what models emerge for accessing and processing all of it.

One place to keep an eye on is HubOcean.

Spatial computing

AR/VR technology is rapidly improving. The distances involved in working in and monitoring our oceans are so great, and the elements are so unforgiving that these technologies will have significant applications in the ocean economy.

As YC states:

"We would like to see a new set of startups building software on these devices, solving practical use cases that go beyond gaming."

Sounds good to me. But for now here's a cool video about how the Smithsonian is recreating coral reefs with AR:

New enterprise resource planning software (ERPs)

"As companies get larger they end up adopting some software suite to help run their business. This piece of software is widely known as an "ERP", or Enterprise Resource Planning software." (YC)

The blue economy isn't just about seaweed startups and oyster farms.

The largest companies in the ocean economy are massive corporations that dominate their industries, from shipping and ports to energy, seafood, and tourism.

These companies are ripe for the disruptions in ERP software that YC is highlighting, especially as they grapple with the energy transition, new manufacturing centers, sustainability initiatives, carbon accounting, grabbing their slice of the government subsidies from the IRA, and integrating AI throughout their systems.

But speaking of those seaweed startups and oyster farms…

These companies are grappling with extensive delays and added expense in getting operations rolling due to their reliance on both federal and state managed waters, managing environmental regulations, and building new supply chains.

There is an opportunity to create a whole new generation of ocean farmers, but it shouldn't take as long to get going as it does. While groups like GreenWave are helping to educate people interested in this new option, the potential scale is much greater than the current process can accommodate.

Someone give these folks a hand.

LLMs for manual back office processes in legacy enterprises

The blue economy isn't just about startups. As the Ocean 100 research showed, the ocean economy is dominated by large companies, so anything that brings these firms along the technology curve certainly applies.

"The port of Lagos in Nigeria has one of the worst reputations for bribery, perhaps because for many years a ship required more than 130 signatures from inspectors before it could offload any international cargo." (Outlaw Ocean)

While the Port of Lagos in Nigeria is an extreme example, it shows the scale of opportunity.

A way to end cancer

Marine biomedical research is a core category of the blue economy.

Any given week, you can find a story about hundreds of new species being discovered, and the opportunity for medical breakthroughs to come from them is untold.

Ending cancer is inextricably linked to preserving biodiversity in our oceans. Everything from warming oceans, bleaching events on reefs, and deep sea mining are working against us here.

YC Wants You

I came up with blue economy opportunities in about half of the YC categories, but I'm sure there are more.

Groups like YC are there to help get ideas off the ground, and blue economy solutions are right up their alley.

Emerging Oceans

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