To fix the climate, these 10 investors are betting the house on the ocean
Climate change is a problem important and pressing enough that investors have begun to grasp the opportunities that arise when trying to solve it. Now, they've started to cast their nets wider for other, adjacent opportunities.
Tech that serves to conserve the oceans while using it to replace older, more harmful means of generating energy and food seems to be one such opportunity. In fact, when we asked 10 investors in the sector to share their thoughts on the space, we quickly learned that ocean conservation tech startups are seeing more and more interest from generalist investors now that climate change is hot and people are seeking more ways to mitigate its effects.
"Climate change used to be more focused on terrestrial operations. It is now 'warming' up to ocean conservation," Daniela Fernandez, managing partner of Seabird Ventures, told TechCrunch.
The world's oceans and its climate have always been tightly coupled. Winds generate ocean currents, which in turn influence weather patterns both over the open water and deep into the continents.
"Our planet is 70% ocean, so the urgency of facing and solving climate change can only be properly addressed if we include the ocean in the equation," said Rita Sousa, partner at Faber Ventures.
The open ocean also contains tremendous amounts of energy. Previously, accessing it meant drilling into the ocean floor to tap hard-to-reach deposits of oil and gas. But today, it increasingly means tapping the enormous energy represented by the ocean's winds and waves. Just offshore wind alone has the potential to meet global electricity demand by 2040, according to the IEA, which is well in excess of all offshore oil and gas production today.
Stephan Feilhauer, managing director of clean energy at S2G Ventures stressed the viability of technologies like offshore wind as commercial alternatives to fossil fuels: "Offshore wind has established supply chains across the globe. It is possible today to manufacture, install and operate gigawatts of offshore wind energy using technology and equipment that is well-established and has years of operational data to help us understand its performance. Offshore wind is the only ocean-based renewable technology that meets these criteria today."
The oceans are constantly exchanging gases with the atmosphere, too, most importantly withdrawing and storing about 30% of all carbon dioxide pollution. The ocean's capacity as a carbon sink has created problems for myriad marine life, which have depended on historically stable acidity levels that are now creeping higher. However, this very capacity also creates opportunities to put key nutrient cycles to work and capture humanity's excess emissions.
"A healthy ocean will continue to provide crucial opportunities for carbon sequestration," said Peter Bryant, program director (oceans) at Builders Initiative. "There are a number of opportunities for increasing the ocean's ability to store carbon. We have biological approaches that include ecosystem restoration, seaweed cultivation and iron fertilization; chemical solutions where you use minerals to lock dissolved carbon dioxide into bicarbonates; and electromagnetic approaches that store carbon by running electric currents through seawater."
Founders and investors have a growing appreciation for the ocean's potential as a resource for renewable energy and its capacity to buffer and even solve some of the climate problem. "We're confident in the ocean's resilience here. It's simply one of the best resources we have in the fight against climate, and that means opportunity," said Reece Pacheco, partner at Propeller. "We won't achieve our climate goals without the ocean. Full stop."
Christian Lim, managing director at SWEN Capital Partners, agreed: "It took too much time, but finally the ocean is being recognized as a critical piece of our fight against climate change."
We spoke with:Daniela V. Fernandez, founder and CEO of Sustainable Ocean Alliance, and managing partner at Seabird VenturesTim Agnew, general partner, Bold Ocean VenturesPeter Bryant, program director (oceans), Builders InitiativeKate Danaher, managing director (oceans and seafood), S2G VenturesFrancis O'Sullivan, managing director (oceans and seafood), S2G VenturesStephan Feilhauer, managing director (clean energy), S2G VenturesSanjeev Krishnan, senior managing director and chief investment officer, S2G VenturesRita Sousa, partner, Faber VenturesChristian Lim, managing director, SWEN Blue Ocean PartnersReece Pacheco, partner, Propeller
Daniela V. Fernandez, founder and CEO, Sustainable Ocean Alliance (Seabird Ventures)
Climate change is the elephant in the room. Has the issue's rising profile sucked the air out of the room or is it bringing attention to ocean conservation that otherwise wouldn't be there? How have things changed in the past five years?
Climate change has been a topic for decades. It used to be a "nice to have" about a decade ago: "If you have the extra funds to perform climate risk assessment, then we will dedicate it to climate change."
Now, it's more of a "must have." If we don't address climate change, we'll see more extreme weather events. Over the past five years, we've seen more focus on ocean conservation, but there is still a $149 billion annual ocean funding gap. Climate change used to be more focused on terrestrial operations. It is now "warming" up to ocean conservation.
We are just now beginning to see a distinct shift in tone. The thinking used to be that "the ocean is a victim of climate change," but now the thought is more "the ocean can become a climate hero" and play a huge role in reducing our carbon footprint. Yet, this shift is still very much in its infancy. In particular, the philanthropic community is just starting to recognize that there is an urgent need to support efforts to develop ocean-based climate solutions.
Until now, most climate funders focused on terrestrial or atmospheric issues, and ocean funders focused on important, but only tangentially climate-related ocean issues such as ending unsustainable fishing practices and establishing marine protected areas. The ocean is already the biggest carbon sink on the planet, and we need to better understand both what absorption of all that carbon is doing to ocean ecosystems, and how much more it can potentially contribute without disrupting its other critical ecosystem functions.
It's also been encouraging to see governments taking action to truly prioritize and create financial incentives for investing in climate/ocean innovations, such as the bipartisan Infrastructure Law passed in the U.S. in 2022. There is also an upswell of talent realizing that working a "typical" job is no longer an option if we won't have a liveable planet in the next seven years. We are seeing society reset its priorities and climate is one of the highest ones at the moment.
Climate change has been called "recession-proof" because governments and investors have come to recognize the scope, scale and urgency of the issue. Do you think that's true of ocean conservation tech as well?
Yes. Climate change and ocean restoration are inherently linked. The ocean is humanity's biggest protection against climate change, as it produces more than half the air we breathe and absorbs 93% of excess heat from global warming.
Ocean tech and climate change companies and investors all have the same goal. The urgency of the climate crisis has kept passionate funders and entrepreneurs engaged in the development of solutions regardless of the state of the economy.
Climate change has affected the oceans greatly, causing everything from rising water temperatures to more acidification. How are you approaching the question of climate change in your investments?
Seabird Ventures is internally tracking impact and reporting on social and/or environmental factors in our investments. We have externally reported on the following key ocean impact areas:Blue carbon & CO2e removal or avoidance: Initiatives in this category are incredibly important for capturing and avoiding harmful GHG emissions, which contribute to climate change and ocean acidification. The impact of these companies is measured by the weight of CO2e emissions reduced or sequestered as a result of the solution.Waste reduction and circular use: We focus on companies that reduce the amount of solid waste and plastic polluting our ocean. Two approaches commonly used are preventing plastics from leaking into waterways, and plastic cleanup solutions. Plastic pollutants are responsible for choking marine life and destroying both marine and coastal ecosystems. Tracking impact in this category is done by measuring the mass of plastic reduced, avoided or recycled. Companies offering fully biodegradable plastic alternatives are also considered in this area for their ability to displace the use of traditional plastics.