Author: Þór Sigfússon

More investors for seafood startups

Þór Sigfússon

One of the greatest challenges for the 100% fish utilization movement is financing. I have felt that investors. financiers and bankers which have some focus on seafood have little or no knowledge about the new seafood industry; nutraceutical or functional food from fish protein or new technology for extending shelf life, extracting proteins, securing trazeability etc. Seafood bankers and financiers know all about fisheries and fish processing but the new seafood is a black box to them.

It is understandable as the traditional and new seafood industry are very different. We should not necessarily try to change the traditional bankers. They have an important role to play in their field. I believe instead we need to better inform investors who have been involved with high tech, pharmaceutical markets, health and beauty about these new opportunities. Get them excited about new seafood startups. But how?

First we have to showcase new startups which are becoming proof of concept; small profitable companies developing products from seafood proteins etc.

Second, the Ocean Cluster Network can be the vehicle which effectively develops and validates a scalable business model from the ideas which emerge from the network.

Third, we have to invest in relationships with these investors. This means we need to get close to them. The Fish 2.0 project in the US is a good example. Our sister clusters in New England (Maine and Massachusetts) are a part of our strategy to connect seafood startups from all over with the global investment community. The coastal areas in New England have a global investment community next door.

Now its our turn to show investors the startup world in seafood which they rarely know exists!

This is a guest post by Þór Sigfússon, founder and CEO of the Iceland Ocean Cluster.

Cover image by Timothy Meinberg.

Innovative solutions for the environment, good business

Þór Sigfússon

Iceland is surrounded by some of the richest and most prolific fishing grounds in the North Atlantic Ocean and fisheries have long been the mainstay of the Icelandic economy. Healthier oceans and environment is therefore a matter of fundamental importance for the country.

I am very pleased to see how companies and startups in the Ocean Cluster in Iceland are emphasising more and more on saving the environment by introducing better and greener technology:

New bottom trawls that do not touch the seabed. These are controllable doors that float above the seabed, saving the seabed and drastically reduce energy consumption. (Like Polar Doors)

IT companies that are focusing on solutions that can increase efficiency, traceability, saving energy and reducing pollution. (Like Controlant and Seafood IQ)

With new fish processing technology comes more yield and higher seafood quality – hopefully we can do more with less in the fishing industry with these technologies. (Like Héðinn, Marel, Skaginn3x, and Valka)

Engineering firms in the field of naval design are introducing energy saving ships; electrical boats with no CO2 emissions. (Like Navis)

New cooling technology onboard ships does not need ice. They save energy and increase quality. (Like Skaginn3x and Frost)

Electric winches on board ships yield the same results as traditional hydraulic winches but use much less energy.

Cleaning and disinfecting technology for fish processing plants use only environmentally safe material. (Like Naustmarine)

All fishery nations have learned that they need to be responsible when using their resources. Environmentally friendly technology can improve our lives in coastal communities, increase efficiency and reduce waste and is therefore good business.

This is a guest post by Þór Sigfússon, founder and CEO of the Iceland Ocean Cluster.

Image by Johnny Chen.

Introducing “The Incredible Fish Value Machine”

Þór Sigfússon

Þór Sigfússon

The following drawing is inspired by the “The Incredible Bread Machine”, a text written by R.W Grant in 1966. The book had an accompanying poem entitled “Tom Smith and His Incredible Bread Machine.” The Tom Smith poem is about a man who invents a machine for producing bread very cheaply, and thus the world is fed.

“The Incredible Fish Value Machine” displays how Icelanders have produced “an industry fishing machine” which takes pride in the fact that no other whitefish nation is utilising more of each fish than Icelanders. While in typical North Atlantic fisheries the head, gut and bones of every cod are discarded, in Icelandic fisheries we have become used to making money out of many of these by-products. Analysis done by the Iceland Ocean Cluster indicates that Icelanders utilise 80%+ of each cod while many neighbouring countries make full use of only around 50%. The study indicates over 500 thousand tonnes of cod are discarded into the sea or as waste in the Barents Sea region and across the North Atlantic from Newfoundland to Norway.

fish-value

There is no single explanation for this huge difference in utilisation. Partly it may be explained by the fact that unlike the year-round long fishery in Iceland, many fishing nations have short fishing seasons with massive amounts landed over a few months, making it difficult to process such raw material efficiently. Secondly, the integration between fishing and processing in Iceland through common ownership is not usually the case among other seafood nations. Finally, and maybe most importantly, the seafood industry is often located in marginalized places and is not in touch with R&D, investors, accelerators etc.  Steve Case writes in The Third Wave: “Over the next two decades we will see cities that were once marginalized become entrepreneurial powerhouses.”  Case points out that “there is appeal to putting down roots where industry ecosystems already exist”. But even in areas where R&D, Universities and investors are close to the seafood eco system we still see all the dots connecting.  This lack of ties is probably the most important reason why so much seafood protein is used for landfill in many countries. The key to creating the “incredible fish value machine” is to build the bridge between these important parts of the seafood cluster.

I am confident that it is only a matter of time when fisheries will stop discarding out value and more people join the 100% movement. As more companies join the by-product market and the market develops further, the prices will continue to increase and the incentives for fisheries to get value from their by-products are also set to increases.

Icelanders have long taken pride in their efficient fisheries. There is no one explanation for why Icelandic fisheries have for the most part been more efficient than others. I believe there is, as is often the case, a very pragmatic explanation: Icelanders have never had the luxury of treating their fisheries lightly. As the core industry in Iceland it cannot be government subsidised. The entire cluster of seafood businesses in Iceland has, for a long time, been at the heart of the income tax base for government and not the other way around. The same applies to a great extent when examining Icelandic fish by-products; if there is value to be found in by-products, effective fisheries used to focusing on value will find opportunities to use them.

The Incredible Fish Value Machine is not hypothetical. It is very real. The Icelandic model has proved reliable and this model can be duplicated in seafood industries all around; creating new opportunities in coastal areas.

This is a guest post by Þór Sigfússon, founder and CEO of the Iceland Ocean Cluster.

Image by Chris Davey.

Building bridges with clusters

thor

Þór Sigfússon

In 1973, Mark Granovetter came up with an idea in sociology which would later have a huge influence on the study of relationships in networks. The idea was fairly simple: weak relationship ties can act as important bridges in a network building, and for that purpose, they are sometimes more important than strong relationship ties (family and friends). Granovetter’s research showed that when people think about who might help them in a job search, they tend to make a short list of very close friends and family – the strong ties. However, Granovetter’s research showed that your closest friends are not really your best bet when searching for a job. Why not? The answer is that their network is very much like your own. So, to get to a larger group of people in your job search you are better off tying up with people with whom you have weak ties (you barely know) than by those with whom you have strong ties.

This idea inspired me to study relationship networks in my Ph.D. and later to establish the ocean cluster network.

My first real-world test in Granovetter’s spirit was to bring together seafood technology entrepreneurs from different parts of the seafood value chain in Iceland. Most of them didn’t know each other! It still amazes me to see entrepreneurs and startups meet together in various settings and witness how, despite living in small coastal communities and working in ocean-related industries, these individuals have rarely – or even never – met before. Clearly, an abundance of unused weak ties exist here.  

After our initial networking events in Iceland, where I the witnessed seafood tech entrepreneurs introducing themselves to each other for the very first time, I interviewed the entrepreneurs and asked why they had not met before, given that they could learn a great deal from each other and collaborate on projects important to each of them? Most of them responded by saying they didn’t have time for “socializing.” I always remember one entrepreneur who had doubts about my interpretation. He stated: “I have very strong business links with great customers in the fisheries and I nurture them. With others, such as these tech colleagues, I knew about their existence and if I needed to contact them I would just do so. We are so few on this island, we know everybody!”

These entrepreneurs regarded their networks with an island mentality, in which you think you know everybody and can connect to them whenever needed. The problem with this view is that those connections that could so easily be used in reality seldom if ever occur. For an entrepreneur, it is crucial to be good at extending both your domestic and global network in order to develop a sustainable business, and connecting with people outside of your local market is crucial, particularly if that market is very small. Many of the entrepreneurs I spoke with did not nurture their weak ties and were instead happily focusing on the few strong ties that upheld the status quo and allowed their business to merely survive. The cluster’s mission is to extend the network of entrepreneurs and inspire them to actively use this network to grow their business.

I later discovered that the same lack of connectivity was true for most coastal seafood areas, such as in the United States. The seafood industries in these regions, despite their relative proximity to large and dynamic centers of finance and research, were in essence islands as well: fairly isolated from each other, academia, investors, metropolitan startup hubs, and other various resources.

I know we can change this, and we do that by challenging the startup community and the media to get excited about new companies and opportunities in the ocean industry. 

It’s essential to work closely with the startup community and support its growth. This startup community is very strong in Iceland, and the Ocean Cluster is able to actively support startup events hosted by various industry associations, universities, and private entities. Our role has been to inspire more entrepreneurs to establish startups in ocean-related industries. As soon as these startups have gone through the initial startup process and competitions, we are ready to nurture them further – offering a close community, assistance with business planning and strategy, workspace, networking opportunities in our field, forming connections with investors in ocean businesses, and beyond. We have been quite successful in inspiring and supporting startups in our field: the business value of startups in the Ocean Cluster House in Iceland, which have been in our facilities for the last three years, is approximately USD 100 million.

I was very pleased to learn about the Fish2.0 startup initiative in the US and our vision is to work closely with them and provide the startups coming out of great initiatives like Fish 2.0, a network community to make sure they will not become islands!

Our experience with the early success of the New England Ocean Cluster has taught us that even though fish species are different from one region to the next, many industry characteristics remain the same, and clusters can learn from each other. The early success of the New England cluster is definitely a result of a strong local leadership which had focused on building relationship ties among seafood entrepreneurs and between entrepreneurs and academia – bridging these islands. We are confident in stating that we are continuously learning more but also realizing that all this work is firmly grounded in fairly simple ideas of human interactions.

This is a guest post by Þór Sigfússon, founder and CEO of the Iceland Ocean Cluster.

Image by Tanya Hart.

Nortstack – Reporting and analysis of the Icelandic startup scene