This week, the Iceland Ocean Cluster (IOC), a pioneering, aquatic startup incubator in Reykjavik, celebrated its tenth anniversary amid multiple milestones in its mission to develop a “blue economy” of investments in and around Icelandic waters. IOC, headquartered in Reykjavik Harbor, is a meetup and matchmaker for industry, R&D, startups, and venture capital investors. The presence and proactiveness of this harbor hothouse has played no small role in creating a culture of global entrepreneurship in the Icelandic ocean economy, a sector valued at around $5-6 billion, or 25 percent of Iceland’s total economy, but with plenty of room to grow.
According to Iceland Ocean Cluster’s own figures, the number of ocean-related startups in Iceland has grown 150 percent over the past decade, driven by growth in areas nutraceutical and oceanic health products, seaweed startups, food/ag-tech, fish farms and ocean environment. A clutch of these firms today are worth a combined $600 million: these include Kerecis, the maker of biotherapeutics using fish skin cells for human skin regeneration, Arctic Fish, cold-supply-chain as a service startup Controlant, marine bioplastics maker Marea, trawler technology developer Optitog, and food additives maker Marine Collagen.
According to IOC director Dr. Thor Sigfusson (himself a three-time blue economy entrepreneur), says Iceland’s emerging success as a blue economy hotbed has to do with the country’s mindset around its limited resources and the imperative to treat them well.
“Iceland offers, first and foremost, a mindset of innovation and growth in the ocean space,” Sigfusson told Investable Universe. “Foreign blue startups have had a much easier time finding partners in industry to test their ideas. The high trust level in Iceland has also been important in this regard. Foreign investment in our core industry – fishing – is restricted, but many foreign investors have entered the highest growing sectors such as marine biotech, aquaculture, processing technology and seaweed.”
At the core of IOC’s mission is its “100% Fish Project,” a campaign that aims to inspire food processors and other oceanside startups to utilize more of each fish caught in Iceland, increase the value of each fish landed, increase employment and business opportunities, and decrease waste. Improved processing and handling, as well as advances in R&D, have allowed companies within the Iceland Ocean Cluster, for example, to export dried fish heads and bones (long regarded as waste by-products of commercial fishing) as a raw material for supplements, proteins, cosmetics, pharmaceuticals and other high-value products.
According to IOC, Icelandic cod filet producers have seen their filet product yield–which accounts for 35-45 percent of the cod’s overall weight–increase by up to 20 percent over the past two decades. Since the 1990’s, utilization of fishery by-products in Iceland has increased 30-fold, and the export value per cod kilogram has risen four-fold as the portfolio of marine products has expanded. Today, per IOC, due to key technological advances and the ability to connect with other companies and investors in the fishery supply chain, Icelandic cod producers today can use up to 80 percent of the total fish. This compares to an average raw material utilization rate for of just over 50 percent in Europe and North America.
Exporting this approach to fishery and ocean management is an area where foreign investment is sorely needed, according to Thor Sigfusson.
“The challenge for Icelanders is that, due to limited global network in biotech, nutraceuticals etc., domestic investors have not been able to support our startups in their globalization as I would want,” he said.
Besides its efforts to attract venture capital to Iceland, IOC is also supporting the growth of “sister clusters” in the United States: independent entities where similar aquatic R&D work is occurring. These include an offshore wind energy development in Massachusetts, lobster farming in Maine, and kelp cultivation in Connecticut.
For more information on the emerging venture capital market for ocean economy startups, Thor Sigfusson recently authored a book, The New Fish Wave.