A Saco seaweed company hopes to raise $3.5 million for production upgrades while entering a deal with a new customer, backed by celebrity Tom Colicchio.
Atlantic Sea Farms filed paperwork for the private financing with the Securities and Exchange Commission on Sept. 23. The funding drive comes a year after Atlantic raised $3.1 million in venture capital, which helped pay for the build-out of a 27,00-square-foot processing facility in Biddeford. That’s four times the company’s previous space in Saco.
The company offers a wide range of foodie products from Maine seaweed. The company started out as a mussel and kelp farm, Ocean Approved Inc. But since 2018, under the direction of CEO Briana Warner, Atlantic has expanded and now has 27 partner kelp farmers in the state, primarily lobster fishermen working in the off-season. Those harvesters brought in 970,000 pounds of kelp this year.
It’s not yet clear what the new financing round might mean.
An Atlantic Sea Farms spokesperson, Chief Marketing Officer Jesse Baines, said the company plans to use the proceeds to expand its markets and make innovations at the Biddeford facility, but wouldn’t disclose details.
However, on the day of the SEC filing, Atlantic announced a partnership with Plant Based Seafood Co., a Virginia company that makes seafood-like products under the brand Mind Blown. Atlantic Sea Farms kelp will be added to the brand’s new Dusted Shrimp and Dusted Scallops products this month and to its Crab Cakes in 2023. The products will initially sell at more than 300 Sprouts Farmers Market grocery stores across the U.S.
Mind Blown has been attracting attention for its products, winning numerous industry awards. Colicchio, judge on the Bravo TV network’s “Top Chef” series, invested in the company this spring.
Both Atlantic and Plant Based are women-owned companies that tout a dedication to environmental sustainability and ocean health.
The partnership is also an example of how Atlantic Sea Farms is building demand for Maine-grown seaweed among environmentally conscious consumers. Kelp improves the quality of the water where it is growing by absorbing carbon and other nutrients that otherwise could lead to algae blooms, and making water less acidic in the area it is growing.
“Other brands out there are really eager to make a positive impact with their own sourcing decisions,” Baines said. “Atlantic Sea Farms really rose to the top as a partner that can help them do that.”
The use of domestic seaweed is becoming a way to increase the social credibility of some companies, and branding Maine seaweed as “regenerative” is part of that trend. Atlantic Sea Farms is working with Bigelow Laboratory for Ocean Sciences, in East Boothbay, to quantify kelp’s potential for mitigating climate change and ocean acidification.
Nichole Price, director of the Center for Venture Research on Seafood Solutions at Bigelow, said that Atlantic Sea Farms is working with the center and partners on several studies. One is looking into how kelp can reduce what Bigelow and the Island Institute call the “halo effect” – the weakening of shells in mussels clams and other shellfish because of ocean acidification.
“That research is in the process of peer review publication that hasn’t been published yet, but we’re fairly confident in the results,” Price said. “For three years in a row at one farm in Maine, we were able to detect this halo effect. When we transplanted mussels to grow inside a kelp farm, they grew thicker, stronger shells.”
These studies are now being reproduced in Alaska and Norway.
In other studies with Atlantic Sea Farms, Bigelow is developing genetic tools to verify how much carbon kelp beds sequester in marine sediment and what qualities of a kelp bed contribute to its ability to sequester carbon. The lab is also working with Atlantic to study how adding seaweed to animal feed can reduce the amount of methane the animals emit.
A LOBSTERING ALTERNATIVE
In addition to the environmental benefits of kelp farming, Warner was drawn to its potential economic benefits for coastal communities. Before joining Atlantic, she served as the economic development director of the Island Institute in Rockland, supporting the resilience of coastal communities. There she became concerned by the state’s dependence on lobster, which she called a “monoculture” in an interview with Talking Food in Maine.
“We are at an urgent and critical point right now on the coast of Maine where we need to diversify,” Warner said in the interview last year. “Lobster is going to be around in 30-40 years but it isn’t going to be what it is today. We need to diversity now, while people have capital, while they have careers on the water.”
She saw that Maine’s fleet of owner-operator lobstermen are well-suited to transition into kelp growing in the winter because they are already equipped with a boat and some of the necessary gear.
When she became CEO at Ocean Approved, she set to work building partnerships with fishermen, convincing them to branch out into kelp by offering them seed, training, technical assistance in obtaining leases. And to further sweeten the deal, she also offered a guarantee that Ocean Approved would buy all the kelp they could produce.
The company worked to rapidly build demand for Maine-grown seaweed. Ocean Approved forged partnerships with restaurants to introduce Maine kelp as a healthy ingredient in their menus. Sweetgreen, Chef David Chang, Legal Seafood and fast-food chain B. Good were all on board. Then COVID hit, so Ocean Approved pivoted to retail, rebranded as Atlantic Sea Farms, and developed a consumer product line. It includes kelp cubes for soups and flavored ones for smoothies, fermented kelp salad and seaweed kimchi, in packaging that features stories from Maine kelp farmers.
That guarantee to buy all their partners’ kelp was an important move. A 2017 benchmark study by the Maine Aquaculture Association found that only 1 in 6 seaweed farms were profitable, so it was initially a hard sell to get people interested.
“I think their guarantee to buy from partner farms are critical, especially for new farmers who are learning as they go,” said Sebastian Belle, executive director of the Maine Aquaculture Association. “By guaranteeing to buy the product, Atlantic Sea Farms significantly reduces the risk to the farmer that they will invest time and money and then not be able to sell the product.”
The 2017 study was done just when the sector was starting up, he said, but since then, the profitability of kelp farming has been improving steadily. The association is doing a new study now, and the results should be available by the end of the year.
“I think it is pretty clear that well-run farms are profitable because more and more working waterfront families are getting into it,” Belle said. “If it was not profitable they would not take the risk.”
Baines agreed, noting that one of Atlantic Sea Farms’ partner farmers made six figures last year with a four-acre farm. But kelp farming is primarily used as supplemental income right now.
“It does not replace their income from fishing, but it does cushion the blow on bad seasons,” she said.