Venture capital investors focused on food tech are calling 2023 the year when alternative seafood startups will make notable strides. Meanwhile, investors expect 40 investments to be made in this sector this year, up from 36 in 2022, according to the Good Food Institute’s annual investor report.
Within the past year, TechCrunch reported on a number of those investments into startups producing alternatives to traditional seafood. For example, one of the biggest venture capital investments into alternative seafood in 2022 went into Wildtype, which raised $100 million in a Series B round for its cultured salmon product. Meanwhile, New School Foods, Plantish, Bluu Seafood and the ISH Company also announced funding.
Today, Chicago-based Aqua Cultured Foods is adding itself to that list, announcing $5.5 million in seed funding to bring its pipeline of cultivated seafood alternatives to market.
Prior to starting the company, co-founder and CEO Anne Palermo was in finance, but always had an interest in health and wellness, so when the opportunity presented itself, she decided to go back to school to learn about product development and science.
“Shrimp” dumpling. Image Credits: Aqua Cultured Foods
Following that, she started her first health snack company that leveraged proprietary formulations of a high protein snack through the use of protein isolates.
“It was really during the development of that product in particular that I got into the alternative protein set scene because it helped me to understand that there are a lot of alternative proteins that are not highly refined and do not come from animals,” Palermo said.
After learning about the microbial fermentation process for making food, Palermo decided to focus on seafood, explaining that “it is the most unstable supply chain of any animal protein,” due to things like the rise of the middle class and the increase in demand because of population growth in regions like China and Southeast Asia where seafood is the No. 1 protein consumed per capita.
However, overfishing and climate change is depleting the supply of fish, and “after really seeing and identifying what’s going on, I knew that we had to come up with a really fantastic product that could meet the look, texture, nutrition and commercial scale be able to eat it and to make the maximum global impact,” Palermo said.
Aqua Cultured Foods is creating whole-muscle cut seafood alternatives, including calamari, shrimp, scallops and filets of tuna and whitefish. The company also produces minced “seafood” fillings for applications like dumplings, ravioli and sushi rolls.
“Just texturally speaking, there’s nothing like it,” Palermo said. “It is nearly indistinguishable from tuna when it is inside of a maki roll. It is nearly indistinguishable from scallops. The products are currently optimized to be raw, and the texture is just so beautiful and silky. It’s quite an accomplishment.”
Palermo was mum on exactly how the technology worked, but did say the company was using proprietary mycoprotein (fungi) fermentation processes that don’t include any animal inputs, genetic altering or modification. She also said this process yields food with a lower price point to narrow the gap in price parity with traditional seafood.
“Aqua created novel processes and methods of production based on technologies and products that have existed for thousands of years, so we don’t have the same regulatory hurdles as other types of technologies have,” Palermo said. “They are already generally recognized as safe by the FDA. It’s part of the reason that we’re able to have such an accelerated market and be able to have so many really fantastic tastings.”
Aqua’s new investment was led by Stray Dog Capital and included H Ventures, Aztec Capital Management and Amplifica Capital, which joined existing investors Supply Change Capital, Big Idea Ventures, Hyde Park Angels, Aera VC, Kingfisher Capital and Swiss Pampa. The round also included a strategic investment from Asian food manufacturer and distributor CJ CheilJedang. In total, Aqua has raised just over $8 million, Palermo said.
Brittany Chibe, Aqua’s co-founder and chief growth officer, has been in the food industry for over a decade and said the new funding will enable the company to begin manufacturing its first products by early summer. That will include tuna, scallops and ground shrimp.
The company recently acquired a 5,000-square-foot food-grade facility in Chicago, almost nearly built out, for its pilot facility. Palermo expects Aqua to be able to grow between 5,000 and 10,000 pounds of product in a 450-square-foot space.
“What that does is open us up to have decentralized manufacturing,” Palermo said. “When we eventually do move into new markets, for example, Asia, we’re going to be able to have a grow facility in Asia and we won’t have to ship products from the U.S. That’s a big area where we differentiate as well as just the inherent scalability of our products.”
Aqua will also use the investment in hiring additional employees and expanding its roster of restaurant and foodservice outlets for product introductions this year.
Chibe said the company sees “a path to quickly reach commercial scale,” and will respond to inbound interest from chefs with some initial pop-up shops to see how it goes.
“We’re not really sure what demand looks like, so if we can dedicate one weekend to specific restaurants, we will know about how much of it they’re going to sell,” Chibe said. “Then we can produce it ahead of time to get exactly what they need.”