Catalina Sea Ranch, a company establishing the first offshore shellfish ranch in US federal waters, has raised $1.5 million in seed funding to try and help bridge a $10 billion seafood deficit in the US.
The company gained a permit from the US Army Corps of Engineers to establish the aquaculture facility on the San Pedro shelf off the coastline of Los Angeles. This funding will enable it to kick-off the first phase of a planned 1,000-acre project.
The company will start by growing mussels on 100 acres and it expects to have its first harvest in December this year. A group of seafood companies, who invested in the company during an earlier $1 million fundraising round, have already agreed to purchase all of the offtake.
These seafood companies include DiCarlo Seafood Company, a local wholesale trader, Taylor Shellfish Farm, North America’s largest shellfish company, and Chicago-located distributor Fortune Fish Company.
The investors in the latest round are a group of local high net worth individuals who preferred not to be identified, according to Cruver.
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“These are local investors that want to show their support for US aquaculture and the local economy, but the potential investment returns are also staggering,” said Catalina Sea Ranch CEO Phil Cruver.
On 100 acres, Catalina Sea Ranch predicts it can produce 2.5 million pounds of mussels which will sell — at conservative levels — for $2 per pound. Catalina Sea Ranch has plans to grow seafood on 1,000 acres which, if used for mussels alone, could mean a $50 million a year business; that’s equal to the amount that the US imports from Prince Edward Island in Canada, according to Cruver.
“And you’re getting those margins for relatively low risk,” he added. Mussels grow so rapidly and don’t get disease, so I call them the ‘weeds of the sea’, and that’s why we’re starting off with them.”
With limited overheads as the mussels feed on naturally-occurring plankton that are picked up from San Pedro shelf’s upswell, and permits to grow higher value shellfish such as scallops, the opportunity for higher returns in endless, according to Cruver. But the fundraising process was tough.
“What we’re doing is so pioneering and unique that there are no metrics for investors to compare against, plus the amount we were raising was too small for venture capital firms,” he said.
Catalina Sea Ranch has another string to its bow; it is developing big data, sensing technology to monitor and research environmental and husbandry data around its ranch. The technology centers around a Navy Oceanographic Meteorological Automatic Device (NOMAD) buoy which will collect and transmit data findings to a team of scientists for analysis.
Dubbed the “Ocean Internet of Things”, this project is being funded through contracts with US agencies and about $6 million is up for grabs. One such agency is the National Oceanic Atmospheric Administration (NOAA) which has internal targets to increase offshore aquaculture in the US by 50 percent in five years. Offshore aquaculture, which currently takes place in state waters, is currently at $1.2 billion, so NOAA wants to see another $600 million in the next five years.
Catalina Sea Ranch does not have to give up any of its IP rights or ownership of the technology through these contracts, according to Cruver.
As the contracts are finalized for the Ocean Internet of Things research, Cruver and his colleagues will focus on preparing for seeding the ranch around April. The mussels will be grown on 10 lines initially, increasing to 40 over time. Around April time, the company might go back to the market for more funding when Cruver hopes the fundraising process will be more forgiving and the company at a higher valuation.
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