Having refocused its business on products for farmers, Cascadia Seaweed is setting out this year to raise about $10 million to fund a bioprocessing plant and the exponential growth of its seaweed production.
The Sidney, BC-based company, which operates on the Pacific coast, has raised a total of about $7.5 million since it launched in 2019, mainly from angels, but now CFO Rob Napoli and CEO Michael Williamson are targeting venture capital funds, especially those focused on bluetech or the environment.
Several slides in Napoli’s pitch deck highlight components of the company that should please impact investors. As well as displaying attractive financial prospects, Cascadia generates a product that addresses two of the world’s most pressing problems – climate change and the need for sustainable food production. The company’s business model also relies on strong partnerships with several coastal First Nations in British Columbia.
“We raised about $3.5 [million] to $4 million in 2022,” said Napoli in an interview. “Our investors have largely been family offices and angels, with an interest in the ocean economy and climate change or sustainable agriculture. We’re continuing to do that and this year we’re going to move toward a Series A round with an aim of $10 million.”
The company now operates seven seaweed farms around Vancouver Island, all of which are situated on sites owned by coastal First Nations and developed in partnerships with these bands. Cascadia in 2022 produced 50 wet metric tonnes of seaweed and plans to produce 250 wet tonnes in 2023.
Last year was a significant one for Cascadia because it continued to grow and refine its business model, spinning off its consumer-focused business in favor of the agricultural market. The company had been using seaweed extract to manufacture a consumer product called Sea Spice, but that product is now being developed under a separate company. Cascadia’s focus now is ramping up production of seaweed to be used in two natural products that help traditional farmers improve their operations.
Two Agricultural Products
The seaweed – which captures ocean-based CO2, and therefore reduces greenhouse gases in the environment – becomes a feedstock for the company’s two agricultural products: biostimulants, which are added to land-based crops to replace chemical-based fertilizer and make farming more sustainable; and bioadditives, which are a natural solution to the need for better feed for livestock.
Governments around the world have brought in or are bringing in laws to reduce the amount of chemical fertilizers used in agriculture, because these chemicals eventually work their way into water systems. Cascadia’s bioadditives are part of a global movement to come up with natural products to replace these chemicals so farmers can still produce enough food to feed the world’s growing population.
Cascadia aims to produce 10 million litres of biostimulants by 2028, which it says would help to regenerate 1.2 million hectares of farmland. “Our long-term goal is to reduce chemical fertilizers added to farmlands by 20 percent,” says the Cascadia pitch deck.
Another environment problem posed by agriculture is the methane produced by belching cattle. Seaweed-based additives can reduce these bovine methane emissions by 10 to 95 percent, and Cascadia is aiming for a 10 percent reduction using native, scalable species of seaweed. The company has received grants totalling $5.4 million from Agriculture and Agri-Feed Canada and Sustainable Development Technology Canada for its bioadditive initiative. Cascadia aims to feed 1.7 million cattle by 2035, reducing greenhouse gas emissions by 1 million tons annually.
Cascadia is working with the Verschuren Centre in Cape Breton on developing bioprocessing technology that is specifically designed for seaweed. Napoli describes the technology as “world-class” and said Cascadia plans to employ it eventually in its operations.
100-Hectare Seaweed Farm
The big project in Cascadia’s sights now is the construction of a huge bioprocessing plant to produce biostimulants and bioadditives and the development of its largest farm yet. The company is working with First Nations partners on a 100-hectare seaweed farm, which would in itself represent a four-fold increase to the current acreage overseen by Cascadia. The partners are now preparing for a big buildout expected in 2024.
The plans will require money so Napoli now is focused on the company’s next raise, which he hopes will be an eight-figure sum to close before July. The company so far has raised mainly from family offices and angels – groups that are impressed with the company’s potential for environmental and social impact. Given that small investors frequently approached the company asking to invest, Cascadia even tried equity crowdfunding last year, which attracted several new investors though not a great deal of money.
Napoli acknowledged the funding environment has grown more difficult in the last year, and he is now targeting venture capital funds, which will have different criteria than the company’s existing investors. The team has lowered its target valuation from its original projections, and is targeting funds that have special interests in ocean technology, sustainable food and/or fighting climate change. The growing number of bluetech funds are appealing targets, because they’re already familiar with the financial potential of seaweed operations.
“It’s not reliant on breakthroughs in technology,” said Napoli, referring to the company’s business model. “It’s a steady, strong, good-growth business. We’re somewhere in between [innovation-based entrepreneurship and a resource company with stable income streams], but we’re a really strong sustainable company offering good returns.”