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Why Investors Are Excited About Alt-Seafood
Big Idea Ventures’ Director of Programming explains why we should be excited for an Alt-Seafood future.
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Join The Big Idea Food Competition: Big Idea Ventures and GourmetPro will host the Japan edition of the first ever alt protein startup competition in Asia, called the Big Idea Food Competition (BIFC). It will be taking place virtually on 5th October 2022.
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Happy Tuesday Market Shakers. Two weeks ago we wrapped up our alt-seafood series, including commentary from Dr. Dalal AlGhawas, Program Director, Singapore at Big Idea Ventures. Our interview with Dr. AlGhawas was ripe with fascinating insights so today we’re publishing it in its entirety. This interview explores why venture companies are excited about alt-seafood, why we should be too, and the Japanese ingredient that has huge potential to shape the category.
Introducing Dr. Dalal AlGhawas
Dr. Dalal AlGhawas (pictured above) is an Agri-tech businesswoman who has worked extensively in food, biotechnology and medical sciences. She began working in investment as a scientific advisor, before becoming the Program Director Singapore for Big Idea Ventures (BIV).
Dr. AlGhawas is active in supporting the alternative protein movement, regularly speaking at conferences and with companies, to understand how they can retrofit their supply chains to incorporate alternative proteins. She has supported over 100 companies to get funding and establish strategic R&D partnerships, including alternative seafood companies. So why is Dr. AlGhawas and the whole BIV team hooked on the idea of faux-fish?
Why the recent surge in alt-seafood investments?
There are so many potential varieties of seafood and products to explore with alternatives. People often equate seafood with whitefish, like tuna or snapper, but the category has an almost endless number of species to develop alternatives for. From the world’s first cultivated crustacean company Shiok meats making shrimp, crab and lobster to Pearlita developing the first cultivated oyster.
Alt-seafood also has great potential for localization. The varieties and ways of eating seafood differ greatly around the world. Companies can experiment with all types of products - not only whole cuts. We have a company in our portfolio, Fisheroo that is developing cultivated surimi for example.
There are good reasons to get on board with exploring all these opportunities in alt-seafood. Overfishing species to the point of near extinction, and destructive commercial fishing practices that devastate marine ecosystems, to name a few.
More and more innovators are starting to work on alternatives as a solution to these problems. Ingenuity and opportunity are already coming together to produce exciting results and new innovations.
We’re seeing alternative seafood transcend the food category. For example, Avant Meats, who make cultivated meat and seafood has commercialized their ingredients through cosmetic products.
Another example is Jellatech, one of BIV’s portfolio companies, who used cells from jellyfish and marine origins to cultivate gelatin and collagen, with commercial applications in medical and cosmetic products.
Growing innovations like these attract growing investment and vice versa. Interest in new categories from funds like BIV plays an important part in their development. But why has the world suddenly woken up to the opportunities in the alt-seafood space?
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What took us so long to catch on to alt-seafood?
It’s taken a while for interest in alt-seafood to take off. Now that it has, investment is pouring in at record rates. According to Dr. AlGhawas, how people see seafood means they have so far been focused on terrestrial alternatives.
We’ve been aware that terrestrial livestock farming is bad for our planet for a long time. It’s orders of magnitude worse than seafood in terms of Green House Gas emissions. So the F&B industry has been focusing on alt-meat. The same goes for consumer demand. Growing awareness amongst the industry about the dangerous situations our oceans are in and contamination in seafood has opened companies' eyes to the need and potential of alternatives.
Customers are still not there yet though. There’s a general consensus that fish is healthy and much less damaging to our planet (than terrestrial proteins). There needs to be work done to raise awareness that, actually, seafood production does pose environmental threats. What’s more, seafood is also contaminated with plastics and heavy metals, and like livestock, chemicals from farming.
In addition to seafood being considered healthy and relatively sustainable, there are technical challenges to producing alternatives too. The three main verticals, plant-based, fermented and cultivated seafood, all face different hurdles here.
Plant-based has the most potential right now. It has the greatest potential to scale thanks to existing infrastructure and an understanding of plant-based meats. There are very few regulatory hurdles too. But plant-based products struggle to compete with fermentation and cultivated alternatives on nutrition and texture.
Fermentation-derived protein is nothing new and pioneers such as Quorn have developed and commercialised mycoprotein since the 90s, bringing along with it innovations in bioreactor designs (the vessels used to ferment the microbial substrate mix) and novel food applications for microbial strains used in this production system. BIV company Aquaculture Foods uses biomass fermentation to develop whole muscle cut seafood such as squid, white fish and shrimp to be able to develop texturised seafood, calamari and sashimi slices.
Fermented and cultivated alternatives will have a longer time scaling. The production facilities and processes are still being developed and refined. We also haven’t regulated these types of alternative proteins, especially if they require genetically modified (GM) applications, and doing this will take time.
So, low awareness about the unsustainability of conventional seafood and the associated health risks, and then the technical challenge of making alternatives are the reasons why it's taken us so long to catch on to alt-seafood. Challenges remain, for sure, but VCs and their partners are invested in helping faux-fish innovators thrive.
What are BIV looking for in terms of investments?
BIV is particularly interested in investing in startups that have synergy with their partners. They work closely with their partners to identify opportunities for collaboration.
Ultimately, we need to leverage our network and make optimal investments that create opportunities for startups and our partners. Our partners, from processors through to distributors, are keen to support our portfolio companies so they can collaborate and scale.
For example, our partner NRF, a Thai company that is a leading co-manufacturer for alt-protein and plant-based foods, are working with us to retrofit their facilities with technology that can support the alternative protrein ecosystem and our portfolio companies.
Another example is our partner Buhler, the extrusion experts, who launched a Protein Innovation Center last year with Givaudan. So we seek more companies to add to our portfolio who can benefit from enhanced texturization of seafood analogues.
The industry can only grow together and BIV are seeking big ideas from startups that have synergy with our partners.
If you’re a startup and you’re interested in collaborating with BIV, reach out to here.
What is the potential for alt-fish in Japan?
Japan is a challenging market for alt-seafood. Even so, there’s already a lot of pioneering activity in the category. For BIV in particular, a traditional Japanese
ingredient may be the key to unlocking waves of potential for the market.
Konjac is an interesting ingredient that is growing in the alt-protein segment. It’s already widely used in Japan and very common. There are clear applications in alternative seafood for the ingredient. But it doesn’t stop there. Our portfolio company, the Japanese alt-egg maker, Umami United is using the product as their core ingredient. It’s highly nutritious and very versatile.
A plant-based ingredient, already familiar to the Japanese palette, konjac presents an interesting opportunity in Japan. So far, only one company is making use of the ingredient for seafood alternatives domestically. However, abroad there are several examples of companies who are using it to create innovative alternatives.
There’s a company in Singapore, Growthwell Foods, who make an alt-calamari using just konjac. It’s a whole food, and quite authentic. I’d be interested to see how innovators in Japan, where food processing technology is extremely advanced, can use konjac for alt-proteins.
Dr. AlGhawas also points to cultivated seafood as a high potential vertical for Japan.
Japan has very innovative cultivated players such as IntegriCulture. Then there’s the big players who are investing and building partnerships in cultivated seafood. This is a clear sign of the belief in the potential of cultivated protein in Japan. It’s where we’re going to see progress in the future.
For now though, it’s important to understand that for most countries, governments and industries are focusing on aquaculture as a sustainable seafood solution. Governments are focused on building facilities that can produce many different varieties of seafood including seabass and salmon. This means there are less resources to dedicate to faux-fish innovations.
Aquaculture is a competitor to alternative seafood. It’s important to remember that it can be a sustainable source of seafood for many people. In the future, especially fermented and cultivated fish have the potential to be produced using less land and water resources than aquaculture. Potentially at a lower price. For now, governments are likely to continue prioritizing aquaculture, because it’s a technology they know and the infrastructure needed is currently cheaper than alternatives. Despite this, investors and corporates have a role to play to invest in the future and support the development of seafood alternatives now, leading to commercialisation and scalability, and ultimately affordability.
While alt-seafood in Japan looks like a challenging category on the surface, there’s plenty of opportunities to be discovered. We’ve already seen a lot of innovation, and with VCs such as BIV on the lookout for more, the future of the category in Japan and globally looks promising.
If you’re interested in exploring more about the future of F&B innovation in Japan, make space in your calendars on October 5th. GourmetPro is working with BIV on the Japan Edition of the largest competition in Asia for alternative protein startups: the ‘Big Idea Food Competition’! The competition invites all Japanese entrepreneurs and startups creating plant-based products to register. The top 5 companies in each country will be pitching their product ideas to a panel of industry professionals and experts in the field.
That’s all folks
Thank you for reading today’s insight-packed article. And a huge thank you to Dr. Dalal AlGhawas and the Big Idea Ventures team for supporting this interview.
See you next Tuesday for our new Market Shake series. Until then, enjoy the Summer ☀️
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