Ocean Approved, a Saco-based company that has for several years farmed, processed and sold kelp to restaurants and wholesale distributors, has raised $2 million on plans to scale up and enter the retail market with a new line of kelp products.
The company raised $1.34 million in a recently closed equity round, which followed a $630,000 convertible debt round (which converted on Jan. 2), according to CEO Briana Warner.
The company plans to use the proceeds to purchase additional processing equipment to help it scale production, as well as for product development, marketing and sales.
Ocean Approved’s equity raise was made on a pitch to create what essentially equates to a new consumer packaged good product category—fresh, frozen kelp.
While seafood has been farmed and eaten for ages, what’s currently available on grocery store shelves is dried, salted, or reconstituted, and the vast majority comes from Asia.
Kelp, which is a type of large, brown seaweed that grows in shallow coastal waters, is rich in nutrients and is increasingly referred to as a “superfood” akin to kale’s reputation. Kelp has a ton of omega 3s, vitamins A thru D, and more calcium than milk, according to Warner. The company has trademarked the term “virtuous vegetable” and plans to market products for a number of applications in the kitchen, from seaweed salads to smoothie-ready kelp cubes.
The global market for edible seaweed is roughly $8.8 billion, according to Warner.
“We don’t really know the domestic scale of the market, but that wouldn’t be valuable to us because our product is so new,” Warner told Maine Startups Insider. “The comparison is not other edible seaweeds, but other smoothie ingredients.”
The global smoothie market is projected to reach $17 billion by 2024, according to a research report published this month by Global Industry Analysts Inc.
“Increasing health consciousness and busy lifestyles have transformed smoothies from an indulgent treat to a convenient meal replacement option for on-the-go consumers,” the report’s brief says.
First-mover advantage
Warner said Ocean Approved is the first company in the country with the ability to provide fresh, frozen seaweed to the retail market at scale. There are other seaweed farms out there, but none with the capacity to reach more than a local market.
The company, founded in 2006, has been farming, processing and selling its own fresh, frozen kelp to restaurants and wholesale distributors for several years. But it made a significant pivot ahead of its plans to scale up and enter the retail markets.
“We were the first commercially viable seaweed farm in the country,” Warner said. “That’s a great point of pride, but we’re not actually seaweed farmers anymore.”
Warner, who took over as CEO in August 2018 after serving as a senior community development officer at the Island Institute, has overseen the company’s final transition into solely a processor and seller of products, while leaving the farming to fishermen and aquaculturists along the Maine coast.
“It was a big change in the business, and an exciting one as it means we’ve developed a supply chain,” she said.
Under Warner’s predecessor, Paul Dobbins, who left the company to take a job in Washington, D.C., the company began sourcing more of its seaweed from lobstermen and other farmers. This was in part due to a collaboration with the Island Institute, a nonprofit in Rockland that focuses on supporting Maine’s island and remote coastal communities. Recognizing that seaweed farming offers a viable part-time business in the off season for lobstermen and other fishermen-turned-aquaculturists, the Island Institute implemented a strategy to increase the processing capacity for seaweed in the state. As part of that strategy, the organization actually invested in Ocean Approved alongside CEI Ventures and Maine Venture Fund in a previous $600,000 equity round. As a result of that investment, Warner had been appointed to Ocean Approved’s board as an observer.
“As part of that effort, we started working with then-president [Dobbins] on helping the company find partners to grow seaweed,” Warner said.
So stepping into the CEO role was a natural progression for Warner, who herself is an entrepreneur, having previously launched, grown and sold a popular pie company in southern Maine.
Ocean Approved currently works with 16 partners in Maine who farm seaweed, including one who took over Ocean Approved’s farm in Casco Bay. The partners are lobsterman who farm seaweed in the offseason and aquaculturists who also farm mussels and oysters.
“It’s not only a good social mission, it’s good business,” Warner said. “Now we can focus on growing the market, growing sales and building the brand. From a social-mission perspective it makes a ton of sense and from an economic perspective it helps us take the time to do what we do best and for them to do what they do best, which is growing great seaweed.”
Investors see promise
Warner said the company raised its recent equity round “pretty quickly,” which she attributed to the fact the company has a clear business opportunity to introduce kelp as a new superfood to health-conscious, smoothie-drinking consumers.
“People are excited about the company and the sector and our significant first-mover opportunities,” Warner said. “We were successful raising money, which gives us a much longer runway to see what’s possible with our new product that no one else has.”
Leading the equity round was an Austin-based VC firm called True Wealth Ventures, which primarily invests in female entrepreneurs and women-led companies.
“I’m very excited to have them as part of the business,” Warner said. “Not just because of the money, but they bring a great deal of knowledge that they’ll be able to support us with.”
However, the majority of the company’s investors are from Maine, including angels from both Maine Angels and Bangor Angels and the Maine Venture Fund.
Brett Austin, a former executive at Kepware Technologies in Portland who runs Twenty Four Ventures, is one of the investors in Ocean Approved’s latest round.
“We are excited about our investment in Ocean Approved, because we see significant opportunity in the business and it aligns with several of our investment priorities,” Austin told MSI. “Through this investment we are able to support a growing woman-led company, harvesting of sustainable healthy food, and positive impact on the environment and our coastal communities.”
