US company betting on new tech for fish feed

Calysta, an American startup based in Menlo Park, Calif., is aiming to make bacteria into feed, thus reducing the amount of animal-based proteins needed.
June 24, 2015

For businesses looking to function sustainably, especially in the seafood industry, the concept of a company making a profitable, environmentally-friendly product via some new advance in technology is a dream come true.

So-called “clean tech” and “green tech” ideas are a dime a dozen, but unfortunately, so are the failed business ventures that follow such innovations.

Good ideas for creating sustainable products turn out to be less than cost-effective so often that most critics are hard-wired to believe the worst when they hear from the latest budding entrepreneur.

Alan Shaw is betting he can prove them wrong. He is the president and CEO of Calysta, an American startup based in Menlo Park, Calif., and he thinks he can make bacteria into feed, thus reducing the amount of needed animal-based protein.

“In terms of sustainable, it doesn’t get any better,” Shaw told SeafoodSource.

The scientific name for it is “methanotroph.” It’s a microbe that can be cultured, in a process he likened to production of yeast or tofu. “The microbe grows and becomes the protein.”

Shaw said Calysta started as a Norwegian company back in 2005, but the idea was so new that EU rules didn’t exist to govern it yet, and by the time the regulations caught up in 2011, it was too late. Shaw said the Norwegian firm had “mothballed and decommissioned” the business in 2006, so Shaw bought it in May 2014. He plans to rebuild it, with the first farm in the United States. He expects his feed can be used to raise tuna, tilapia, salmon, trout and shrimp.

But Shaw has no illusions about the risk of “clean tech” like this, and said he has vetted the concept from a business perspective thoroughly.

“There’s absolutely no point in saving the planet if you can’t save yourselves,” he said.

He jumped in with his eyes open – he conducted market research with major retailers and aquaculture producers to see if anyone would be interested in feed from his company.

“The response for this product has been extremely positive,” he said.

It’s not a crazy idea, or a new one. Michael Tlusty, director of ocean sustainability and science at New England Aquarium in Boston, Mass., USA, said he has been working with KnipBio, another startup working on the same type of feed. In May, that company held a public taste-testing of shrimp fed with cultured feed.

“It was hard for the average consumer to tell the difference,” Tlusty said.

Seafood farmers are under ever-increasing pressure by environmental activists to find a better way to feed their stocks. Traditional methods such as fishmeal and fish oil, which force feed mills to deplete stocks of small pelagics such as anchovies, are giving way to feeds based on soy and other substitutes, a need that is likely to increase.

“There is a need and a niche for these products,” Tlusty said.

Along with being environmentally-friendly, Tlusty said, it’s not dependent upon a location or climate, compared to an anchovy fishery that could lose its raw material if the stocks ever migrate. “The infrastructure would have to adapt, and that would be hard.”

By contrast, entrepreneurs like Shaw can install a bio-reactor for making methanotroph-based feed anywhere, but will it turn a profit? Shaw thinks so, and so far he’s raised USD 20 million (EUR 17.6 million) in capital, with a new round of funding solicitation underway. He has a big target, but not too big.

“It’s not hundreds of millions, it’s tens of millions,” he said.

Tlusty said the financial risk will always remain, but any entrepreneur that keeps a good business head while producing this technology has a chance to do well as the needs for nontraditional aquaculture feed grow.

“Maybe they’re on to something,” he said.