When you're trying to persuade investors to pour money into your new seafood startup, maybe don't use the term maggots.
That's the advice that Hoyt Peckham, president of SmartFish, Inc., offered to one of his fellow competitors last week at the Fish 2.0 competition at Stanford University in California. Think of it as a version of television's Shark Tank – for the seafood industry: Competitors pitch a roomful of highly connected investors and venture capitalists. These are folks looking to put their money into projects that will modernize the decidedly stodgy and murky fish business – while also pushing sustainability.
Peckham, based in La Paz, Mexico, was one of 18 finalists (winnowed from 170 applicants) from around the world who spent a year preparing for the competition. And he offered the maggot advice to a rival, Frederic Viala, president of ENTOFOOD in Malaysia.
"During practice, I told him to avoid the term maggots — he didn't realize that it was repelling to Americans," Peckham said. And at first, Viala followed the advice, instead using the term "larvae" to describe his company's plan to use black soldier flies to produce a protein feed for fish. The feed has the potential to reduce the aquaculture industry's reliance on the world's dwindling — and increasingly expensive — supply of anchovy and sardines needed to make fishmeal.
The actual prize money at stake is modest: $5,000 for each of six overall winners in three different categories. For competitors, the greater prize is the chance to build relationships with deep-pocketed investors. Viala was hoping to score a total of $6.9 million for his fledgling business.
But pitching some 250 investors and industry peers in person can be intimidating for anyone. And a few minutes into his presentation, Viala reverted back to "maggot." In the end, his pitch was nudged out of the winners' circle in his category. Instead, the judges gave the nod to an ambitious project for a fish farm far off the shore of Mexico, and to a low-cost technology that uses algae to filter wastewater from fish farms.
It was the second time around for Fish 2.0 (the first contest was held in 2013). The competition is the brainchild of Monica Jain, executive director of Manta Consulting — which advises companies and nonprofits on social and environmental issues. The idea is that the prize money — and the chance to meet investors — will spur innovative approaches to some of the toughest environmental and social problems facing the seafood industry. It's similar in concept to the XPrize, but with a focus solely on the sea.
Entrepreneurs presented ideas that ran the sustainability gamut: Licensing schemes designed to keep local family fishermen on the water; developing consumer-friendly, ready-to-cook sustainable seafood products; collecting old nylon fishing nets to recycle into skateboards and sunglasses; cutting-edge technology to monitor everything from a fishing fleet's location to the storage temperature for its catch; land-based aquaculture solutions; and programs designed to create both jobs and sustenance for tiny remote fishing communities in the Pacific.
Contestants and their assigned mentors — investors, successful business entrepreneurs and industry experts — spent a year honing their business plans, all in an effort to land a coveted spot on the Stanford stage. For some of the competitors who presented, the contest felt a little more shark-bait than Shark Tank. Several contestants flourished under pressure. Others uncomfortably floundered, forgetting well-rehearsed talking points, struggling to answer tough questions posed by judges, or simply misjudging the amount of time they had to present their pitch.
For the contingent of competitors that traveled from several Pacific islands to participate in Fish 2.0, the entire concept was eye-opening — including the notion of pitching a business idea to investors.
"Teaching someone the concept of an elevator pitch is tricky when they haven't been in an elevator," says Jain.
For Alfred Kalontas of ALFA Fishing, the contest was a world away from his tiny Pacific island nation of Vanuatu — famous for being home to some of the world's first climate change refugees. Cyclone Pam devastated his country in March, and he was here to pitch a complex scheme that would provide jobs to urban women and rural youth. His presentation wasn't exactly easy to follow, but Kalontas — and his passion for improving the lives of his countrymen — clearly moved the audience. He ended up taking home a $5,000 prize. More importantly, he's now in talks with several investors.
What was clear from the pitches is just how much room there is for improvement in nearly every aspect of the seafood industry — as well as some trepidation. While investment dollars pour into land-based food ventures, seafood-based businesses carry different risks.
"As much as 80 percent of all seafood products come from developing countries, which adds another level of risk, including food safety and trade protectionism," says Gorjan Nikolik, an industry analyst with Rabobank International. "Companies are small. There are many different business models. And don't even dream of knowing futures prices" — the way agricultural markets bet on commodities like corn or pork bellies.
"I still don't know how much shrimp China produced in 2013. [The data is] either inaccurate or unavailable," he says.
Even those who work in the industry say transparency is woefully lacking.
"I've been in food-industry supply chains for 25 years, and seafood for three and a half, and by far, it's the most antiquated," Mark Barnekow, CEO of BluWrap, told the audience. "This industry has a total lack of transparency. It's built on opaqueness."
But where Barnekow sees murkiness, the women-led Salty Girl Seafood company sees opportunity. The Santa Barbara-based business buys fish from local California fishermen and sells it portioned, marinated and ready-to-cook, making it easy for the consumer to buy a product they can feel good about eating.
"The whole mission of our business is because we saw the role a buyer can play in bringing change to fisheries," says co-founder Norah Eddy. "Being able to divert demand towards sustainable seafood with a product that promotes education and awareness — that's the direction we need to see if we're going to see widespread change down the supply side."
It was an idea that resonated with the judges and scored the team a win in their category, and $5,000 in prize money. What could prove more valuable: The Salty Girl team was approached by several foundations and nonprofits interested in partnering.
"It was nerve wracking," says Eddy. "But we love the ocean. That's why we're doing this."
Clare Leschin-Hoar is a journalist based in San Diego who covers food policy and sustainability issues.