In considering the future of regenerative food and agriculture systems, a massive portion of our planetary systems – roughly 70 percent of it, in fact – is drastically underrepresented. That 70% represents the portion of our planet that happens to be covered by the ocean. This oversight is not unique to food. Across all issue areas, the most underfunded of the United Nations’ Sustainable Development Goals (SDG) has been SDG 14 – Life Below Water. 

Partly as a result of this oversight, Transformational Investing in Food Systems (TIFS) has begun exploring the potential for regenerative systems change in the production of food and other resources from our shared global ocean, and particularly how to develop sustainable systems of ocean farming – of fish, shellfish, and seaweed – in U.S. and Canadian waters. After co-hosting a series of roundtable discussions on the Missing Middle of Blue Foods Systems in 2023 and 2024, our team, in partnership with Upwell Solutions, convened an additional discussion during the Pacific Marine Expo in Seattle last month focused on the finance needs of a burgeoning industry in the northern waters of North America: seaweed farming.

The Missing Middle of Seaweed Aquaculture

“Investing in Seaweed Aquaculture: Addressing the Missing Middle,” brought together seaweed leaders from across the Pacific Northwest to consider the future of their industry, and particularly how to give investors greater perspective about the obstacles and opportunities for development of this versatile, quick-growing crop. While most beach-goers’ perspective on seaweed is that it’s the slightly slimy, sometimes smelly nuisance they have to pick from between their sandy toes, entrepreneurs around the world are learning what coastal Indigenous communities have known for millennia: seaweed is a multi-faceted tool, and a miraculous wonder crop.

A 2023 report from the World Bank has projected that seaweed farming could grow to be an $11.8 billion industry by 2030 in 10 different economic sectors, from biostimulants to food for humans, livestock, and pets, to plastic alternatives, fabric, and construction materials. It’s also restorative to ocean ecosystems, and could have significant potential to fight climate change by removing carbon dioxide from the atmosphere and locally de-acidifying waters whose changing chemistry is hampering growth of marine organisms. 

Globally, production is already booming. According to the USDA, seaweed production has increased 1000-fold since 1950. In the United States, production in 2022 was 33 times greater than it was in 2014. The vast majority of this growth has come in Maine waters, where in 2022 farmers produced 70 times as much as they did in 2015. 

Despite this sudden growth spurt, TIFS and Upwell have found that further increases in production have been hampered in large part by access to capital, making it a classic example of what we define as the “Missing Middle” in food systems. Our dialogue on the topic led to a few key takeaways for the assembled group:

• Initial market opportunities emerging in the seaweed industry are in biostimulants (high volume, lower margin) and food products (lower volume, higher margin). Future opportunities include aquaculture and livestock feed, plastic alternatives, biofuels, and other products. With existing products already dominating each of these markets, seaweed must provide a better product at a lower price with consistent delivery. 
• Because each phase of the industry (growers, processors, and end users) are simultaneously still in start-up mode in North America, questions remain about how quickly the industry can scale in each phase and what is needed to make that happen.
• Key to this growth will be investment and finance structures that can help bridge the “Missing Middle” gap while each phase of the industry is simultaneously in start-up mode. 
• There is also an education gap between funders and producers; funders don’t adequately understand the intricacies of the process, while producers don’t have a full understanding of the needs of the finance community and what financial products could be developed to unlock capital. 

This is where TIFS’ Missing Middle dialogue series comes in. We bring together stakeholders in a food or agricultural sector to leverage their collective intelligence to find opportunities for actions that can build toward systems change, in part by calling out risk and figuring out what’s needed to alleviate it. 

A Lighthouse Initiative for Ocean Farming

One goal of this process is to develop “Lighthouse Initiatives” that bring pieces and parts together to illuminate a landscape – or in this case, the seascape – and show a pathway for the utilization of different kinds of capital, including public funding, traditional finance, venture philanthropy and other forms of catalytic capital. We do this by incorporating the goals of non-profit organizations seeking collective gains with those of for-profit entities that identify and promote winning ideas. 

Establishing these structures will require a combination of:

• Innovative funding mechanisms to mobilize catalytic capital and expand venture philanthropy models;
• Policy tools such as production tax credits or incentives for end users to incorporate these new materials into their business models, and potentially direct infusion of public funding through programs such as DARPA and ARPA-E; combined with
• Communications products that tell better stories about what is possible and what the benefits will be, and who will pay for creation of those mechanisms.

In addition to seaweed farmers, community development organizations, government representatives, and financiers, our coalition at this most recent meeting also included representatives from several ocean cluster organizations based in Alaska, British Columbia, and Washington. These entities serve as aggregators for businesses and entrepreneurs working to develop the Blue Economy in their regions. TIFS and Upwell will continue to work with these hubs of development in the Pacific Northwest, New England, and other areas of the country where aquaculture and mariculture (as seaweed farming is referred to in the Pacific Northwest) are emerging as growth industries. 

Next Steps

As a result of the knowledge and perspective gained across our Missing Middle of Blue Foods dialogue series, TIFS and Upwell will continue this work by:

• Continuing our outreach and conversations with key stakeholders in northern North America and with government officials, investors, and philanthropists interested in regenerative systems change to elevate this topic, educate the broader community on opportunities and ongoing real-time developments in the industry, and spark development of creative solutions. 
• Working with our network of funders and investors to create innovative financing mechanisms and partnerships capable of providing the patient, catalytic capital the industry requires to find traction and realize its potential.
• Elevating the stories of successful entrepreneurs, companies, and innovators who are building this market with the potential to reform existing supply chains to be cleaner, healthier, and more climate-friendly.

We are always looking for partners in this work, and we would welcome your engagement. Please reach out to Mike Conathan, Managing Director of Upwell Solutions at mike@upwellsolutions.net or Rex Raimond, Director of TIFS at rraimond@tifsinitiative.org to join the conversation. 

Contributed By: Michael Conathan, Upwell Solutions and Tim Crosby, TIFS