Insights & Trends

Investing in the Oceans: One year of opportunities, learnings, and challenges

Insights & Trends

Investing in the Oceans: One year of opportunities, learnings, and challenges

Words Olivia Brooks

June 7th 2024 / 8 min read

“Whilst hurricanes have always been an existential risk in the Caribbean, their frequency and intensity will undoubtedly increase due to climate change. And this is just one of many threats posed by our planet’s rising temperatures to island nations, coastal communities, and other ocean-dependent populations.”

One year ago, we set out our bold investment thesis to build for the oceans and the people that depend on them. We launched Blue Action Accelerator, a programme to invest into startups addressing ocean and coastal challenges, as well as assembling a comprehensive package of support including commercialisation, regulatory advice, public and private partnerships, and access to real world testing grounds. 

While we’d invested in climate tech before, including several investments through our G-Force programme, it was our first targeted programme into a specific vertical within climate. Reflecting on the small percentage of climate VC that ocean tech received, we had an opportunity to be one of the first movers into a potentially colossal space. 

So a year into the programme, how have we got on so far? 

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Assembling our first ocean portfolio

With Blue Action’s strategic home in the Bahamas, we had a powerful case study for a community that relies so heavily on its ocean and coastal habitat. It also sits on the frontline of climate change and experiences its most adverse effects.

Sourcing investments was based on a hypothesis of ‘How can we build a more resilient island nation?’. Our experience of problem solving through venture building and investing, combined with Blue Action’s local expertise and first-hand experience in the Bahamas, positioned us well to build a portfolio that addressed this hypothesis. 

Seagrass was one such area. The Bahamas is home to the world’s largest seagrass forest, covering an area the size of Portugal. It’s not just the thousands of species of wildlife that this seagrass houses that makes it so important, it also stores vast amounts of blue carbon. 

ACUA Ocean is consciously monitoring threats to seagrass habitats. They’re building a fleet of unmanned hydrogen-powered ocean surface vessels for data collection, one focus being marine conservation such as metocean data and water and air quality, as well as applications in offshore infrastructure, maritime, and defence and border control. 

Adjacent to seagrass, we also recognise the huge potential in building out the market for blue carbon, just as we’ve seen the consolidation of the carbon credits market in recent years. Ocean Ledger is building a scalable approach to coastal natural capital accounting, helping quantify the value of blue carbon ecosystems as well as providing measuring, reporting, and verification (MRV) through satellite observation, field data, and AI. 

We identified carbon capture not just as an environmental benefit but as a revenue stream for islands. Investing in Jeevan was an opportunity to back a deeply-qualified, science-backed team and help them commercialise and scale a technology that could be critical to tackling climate change. They’ve discovered a new method of direct air capture (DAC) which turns captured CO2 into baking soda which, when released into the ocean, helps reverse ocean acidification. 

While much focus has been on offshore energy and infrastructure, there’s been less focus on how island nations power their grid to ensure, in particular regarding access to clean energy. DRIFT Energy is an exciting alternative to offshore—green yachts that can harness wind, wave, and solar energy and convert it into hydrogen which can be distributed to ports on underserved island nations. 

These economies are highly reliant on maritime and shipping, an industry burdened by carbon emissions and crying out for decarbonisation. Armada tackles one of the direct causes of emissions—the ships themselves—through an air lubrication system that reduces fuel consumption and emissions from ships.

Climate adaptation featured prominently in our search for investments. In particular, helping hotter climate environments adapt and remain resilient in the face of rising temperatures. AtmoCooling is doing just this, using a novel cooling technology to influence ambient temperatures that can help transform coastal deserts back into thriving hubs of agriculture, clean energy, and habitation. 

We were also interested in businesses that could think holistically about threats posed to the ocean, in terms of both input and output. Soarce demonstrated this, creating materials at the intersection of nature and performance. They’ve shown how natural resources like seaweed can be deployed to create more durable products, while simultaneously decreasing use of synthetic materials like plastic that pose a threat to ocean environments. 

Despite our efforts to cover numerous challenges that faced island nations, a portfolio of 8 will inevitably leave certain gaps. Wider challenges around island resilience and sustainability feel like a massive opportunity, ranging from maritime to utilities to transportation. Ocean Carbon Dioxide Removal (CDR) was another area that emerged a lot, and will certainly be an area we’ll continue to look to invest in. Similarly, aquaculture was another area high on our agenda: although we found this was just not as big in the Bahamas as it might be in other geographies, where we may be likely to invest in the future. 

There are also areas where the market has simply not progressed far enough—such as waste management or noise reduction—where we remain poised to invest should the right company at the right stage come along. 

What have we learned so far?

When we launched Blue Action Accelerator last year, it felt like we were launching our own experiment around the best way to support cutting-edge climate tech startups. So what have we learned? 

The breadth of technology is huge. As you can see from our portfolio, the ocean and coastal ‘niche’ is most certainly not a niche—it touches energy, transport, physics, chemistry, agriculture, investment, and dozens of other industries, creating an opportunity for a very broad investment thesis. Not just this, but the range of business models stretched all the way from SaaS to hardware. 

Given the relative infancy of the ocean space, we might have had some original concerns around sourcing investments. In the end, we found much of our deal flow came through VC referrals (who knew we were actively operating in the space), while we also identified top talent coming from universities, port incubators, and ocean hubs. 

We were impressed by the supreme level of talent building in this area. A number of our companies are led by top scientific and academic founders. Jeevan founder Dr Arup Sengupta (pictured above), a professor at Lehigh University (which itself has a strong reputation in the ocean space), is internationally renowned for his research and technological breakthroughs, having founded a number of companies in the ecology and climate change space. Ocean Ledger, meanwhile, was born out of the PhD research of Dr Dimos Traganos on coastal aquatic remote sensing at the German Aerospace Agency (DLR) in partnership with Osnabruck University.  

It’s not just top academic talent—we’re seeing operators at prominent tech and engineering companies moving into the space. AtmoCooling, for instance, was founded by two senior engineers from SpaceX and Renault who met at a venture studio in Paris.

Another question stands out—were we able to offer startups exactly what they needed?

Commercialisation has undoubtedly been a primary focus. This means taking outstanding intellectual property (which has often come out of a research lab) and turning these into commercially viable ventures through the support of our product, growth, and data science teams. In certain cases, this has meant selling their technologies into large businesses for the first time. 

Stakeholder mapping has been another key area for support. We’ve started to assemble a valuable network of partners, ranging from ocean investors to experts to public sector figures, and providing introductions to these various players has been important. At a recent Founders Forum event in Dubai, AtmoCooling pitched to a room of investors and industry leaders as part of their Rising Stars competition.   

We’re starting to see the early signs of traction around pilot opportunities for our portfolio. Jeevan have started conversations with AltaSea (the Port of Los Angeles), while our team has made introductions for DRIFT to meet government offices in Barbados and Jamaica regarding inclusion in a special economic zone dedicated to blue and green economies. 

Elsewhere, commercial opportunities have been promising. Armada have started conversations with Carnival Cruises, while both Ocean Ledger and ACUA have been in conversation with Beneath the Waves, an NGO contracted by the Bahamas government for seagrass mapping. 

In just over a year, we’ve seen tremendous momentum picking up in the ocean sector. Investment, at least at the early stage, is noticeably growing. Yet at the same time, for an opportunity area that literally covers two-thirds of the world’s surface, the number of people building and investing here is alarmingly small. The critical role that the oceans play in the Earth’s climate and atmosphere—creating 50% of our oxygen, and absorbing 25% of CO2 and 90% of the world’s heat—is an urgent reminder of how we need the best minds working in this space with the backing of the world’s top investors. 

In business, they say you should steer towards where the waters are moving fastest—so come join us!

About Olivia 

Olivia Brooks is Head of Investments at Founders Factory and Blue Action Accelerator. She was previously an investment analyst at Creator Fund.

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