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A Q&A with Kate Danaher and Larsen Mettler on the criticality of investment in Oceans and Seafood

The ocean plays a critical role in the health of our planet. And the seafood industry is a critical protein source for over 3 billion people, making the stability of the ocean and seafood sector important for long-term human health. According to the United Nations Intergovernmental Panel on Climate Change, since 1970 the oceans have absorbed over 90 percent of excess heat trapped in Earth’s climate system. This warming is causing significant changes in currents and sea levels, which affect the health of marine species, nearshore and deep ocean ecosystems, as well as weather systems across the globe.

S2G launched our oceans and seafood strategy last August to support entrepreneurs who are developing scalable solutions to the challenges that threaten the health of our oceans and ultimately people and our planet. Since that time, our two Oceans and Seafood Managing Directors - Kate Danaher and Larsen Mettler - have been meeting with entrepreneurs, investors and strategic players to formulate our investment thesis. I had the chance to sit down with them to hear about their progress since launch, the important role our oceans play in regulating climate and why now is the right time to launch a fund focused on building a more resilient ocean ecosystem and more sustainable seafood industry.

Tell us a bit about your background and what inspired you to join S2G Oceans.

My background is in Impact Investing. And for the past handful of years, I was running a fund at RSF Social Finance that focused on a number of different areas but my expertise and my focus has always been in land-based sustainable food and agriculture. In my years at RSF, we always saw seafood and the oceans as a natural extension of our food system and one that was really broken and needed investment to help fix it. We looked at seafood and oceans opportunities a number of times. And we found that with the type of capital we had, it was just too hard to figure out how to underwrite the risk.

Ultimately, we invested in a number of seafood companies but they looked a lot like the consumer packaged goods and distribution companies we understood. We were not able to get at the really, really interesting things that we thought could create systemic shifts. It’s something that we hear a lot from other investors in the sector - I see the need, I want to do it, but I don't know how to underwrite it because it's just so unfamiliar.

When a leader like S2G Ventures decided to expand into oceans and seafood I got really excited because it's what I consider to be the right type of capital to tackle this problem and a great opportunity to hopefully lead, convene and influence others who are interested in investing in this market.

My background in seafood and oceans goes back to 2004 when I joined KeyBanc Capital Markets Investment Banking. At that time, there was a large commercial banking portfolio in seafood and regulatory changes prompting consolidation but there weren't any specialists really focusing in the US on M&A and financing for these companies. So we launched a seafood-focused investment banking group, primarily focused on M&A, as well as syndicated debt and private capital raises. We partnered up with a number of other banks on the lending side but we continued to see that institutional and private capital investors did not have a deep understanding of the market.

Oceans and Seafood is a much more intricate woven web across the world than I think a lot of people understand. So for me, it was fascinating to get into the depth and the texture of the industry and start understanding those relationships. I fell in love with it.

I ran that group until 2016 when I joined Silver Bay Seafoods as an investor and CFO. The company was very appealing to me because it was participating in sustainable and well-managed fisheries up in Alaska. We integrated ownership and allocated profit to the fishermen so there was a lot of buy-in and alignment between the stakeholders and the processing. Over my tenure, we really focused on utilizing technology to be more sustainable, to increase utilization of the fish and become more profitable overall. A good example of that is, we were utilizing about 98% of the fish in a lot of our plants and competitors are utilizing about 75 to 80%. About 35% of all the global catch is actually wasted - thrown in the trash or spoiled.

Although we were a very well managed firm, in a very well managed fishery, we were seeing a lot of dynamics that were happening outside of our control in the broader ocean ecosystem that were making it difficult to drive a long-term business plan. For example, in Southeast Alaska, 2013 was the last very strong run in pink salmon. Since 2013, the pink salmon harvest on an annual basis has decreased by about 70%. So what is driving that? It's unfortunate but I don't think anyone knows the answer. There isn't enough research and data out there to answer it. So no one's been able to fix it or address it. In my personal opinion, it's warming surface temperatures, it’s ocean acidification, it's algae blooms. But if we don't understand those details and take action to correct it, then it's difficult to manage and run a long-term business.

When S2G called and told me that they were forming a new fund, I was interested because I knew the background and systemic shifts that they were looking to invest in on the Food and Ag side. And I thought, wow, that's really neat if they do that in Oceans. And then they said, oh, by the way, it's an Ocean and Seafood Fund and at that point I was hooked and was very excited to join.


What is your perspective on the broader role that oceans play in the health of our planet and how that is changing with climate change?


As we talk about climate change and the impact it is having on different parts of our planet, I think it's really important to flip that narrative a little bit and realize that oceans and the health of our oceans are a major driver of our climate. So while climate change is unquestionably impacting the health of our oceans, the resulting effects on the ocean accelerate climate change.

Oceans control our climate and weather and produce more than 50% of the world's oxygen. NOAA reports that the US ocean economy produces $282 billion in goods and services and carries 76% of all US trade. Ocean dependent businesses in this country employ almost three million people and global fisheries already provide protein for nearly three billion people. And it's estimated that marine aquaculture could produce 16.5 billion tons of fish per year.

The health of our oceans is so much more than just climate - it's livelihoods, it's global economies and it's trade. When we think about ocean health, it is far beyond just thinking about how we can support a more resilient climate. It's a keystone to supporting life on this planet and for human beings to continue to thrive.

What consumer trends are you watching as you develop your thesis?


Our fund has a global mandate. The maritime industries are a global network so it would be difficult to work in one geography. So we think about trends from a global perspective. Seafood is one of the most consumed animal proteins on the planet. And it's a staple protein for most of the coastal and island nations.

As population inevitably grows, the middle-class grows, which will drive a major uptick in the consumption of seafood worldwide. We really have to think about how we do that in a sustainable way.

For us that's working through improving the transparency, the efficiency and the optimization of the wild fisheries, because we will continue to fish our oceans as long as there are fish in them, and then improving the aquaculture industry.

When you look at the U.S. and other developed countries, the consumer trends that we're paying attention to are really around people's interest in alternative proteins. People do love seafood in the United States but interestingly household consumption of seafood is one of the lowest of all developed countries. We eat it at restaurants but many Americans don't feel confident preparing seafood in their home. And if they do, it's limited to just a few species like salmon and shrimp.

We have work to do around consumer awareness and making different species and proteins easier and more palatable for consumers to cook. And you just can't deny the trends in the United States right now around alternative proteins, especially plant-based. The market for plant-based proteins for seafood is already very big, but we see cell-based proteins also coming online in the next few years.



Currently seafood makes up about 20% of all consumed animal protein worldwide, and that figure will grow as consumers experience rising income levels, increased health awareness and greater product availability.

Aquaculture will feed this growth with precision farming used in at-sea and land-based platforms. Cellular protein will also come into play. These production methods will shorten the supply chain to the consumer, improve consistency and quality, reduce costs and open the door for people to feel more comfortable cooking it at home.

Also, as with any other technology, we will see unintended consequences from aquaculture. Aquaculture will increase the production of fish and reduce pressure on some wild stocks but will increase pressure on others. For example, the Peruvian Anchovy is one of the largest fish stocks in the World, but its biomass is highly volatile due to overfishing for feed. We also know that soy has an unsustainable environmental impact. As we grow aquaculture, we need to be very cognizant of that dynamic and explore responsible alternative proteins for animal consumption.


How do we right the course and move this critical part of our food system towards a healthier, more sustainable and resilient approach.


As we formulate our thesis we are looking throughout the supply chain, starting with ocean health, moving through production and into the consumer world. We have the technology now to start to understand our oceans, really explore the ocean. The foundation is data, IOT, tying it together, taking it out of silos where it is today and aggregating it for predictive analytics. On the production side, we are looking towards advancements in technology that would bring down the cost curve, reduce the human labor component and increase the utilization of the fish.

It starts with understanding the oceans. There's a tremendous lack of understanding of the dynamics, how it's composed, what is driving these substantial changes in fish stocks and weather patterns.

Why is now the right time to launch S2G Oceans?


I've been paying attention to the seafood and oceans space for about the past seven years. And if you go into business plan competitions and investor forums, the sheer volume of new businesses that are emerging to respond to some of these issues is amazing. Five to seven years ago, the emerging companies mainly focused on alternative proteins for animal feed, vaccines and aquaculture.

Today the emerging innovation and technology addresses a multitude of challenges like sensor technology, lost fishing gear, and illegal fishing. And it really feels like finally the tech sector is turning its skills and its attention to solving some of these problems in a way that it just wasn't apparent to me five years ago.

Some great incumbents have been doing a lot of the groundwork over the past many years to get us where we are today. Also we are not the only ocean-focused fund that has launched in the past year or two. There are five or six funds, like Fynd and Blue Ocean Partners, that are emerging globally. It’s a really good indication that people are ready to start moving some capital in this direction.



On the tech side, we are at the point where technological advancements are increasing consumer awareness regarding health and climate change and in turn increasing sustainable technology and access to companies. It's aligning risk management and taking the operational hazards out of the supply chain.

It's aligning the priorities of consumers, beneficiaries and stakeholders all together. What does that mean in terms of investment? It means that we are achieving higher ROI than I think traditional funds would be.

Additional capital across the board is moving to ESG portfolios. From 2018 to 2019 that number went up about 50% worldwide because we are having that triple bottom line effect. The financial return is there as well. Historically people have not been investing in this space because of the lack of understanding and the inherent volatility within it. When we have these additional technological advancements we can take the risks out. We can reimagine the industry in a sustainable way that's not only beneficial to our planet and health but also to the economy and returns of investors. And we do need thought leaders in this space.

Co-investors both on the industry side and on the fund side have done a great job over the last five to ten years. Companies like Thai Union put significant capital and efforts into this industry on the fund side. Funds like Aqua Spark that five years ago, it seemed like, wow, that's a really interesting idea I'll see how they do. And now they've really catalyzed a lot of additional capital by showing positive returns and driving the industry forward. We are at a point where additional leadership will continue to show a great return similar to how S2G did on the food and agriculture side.


S2G Oceans backs and supports entrepreneurs who are developing scalable solutions to the challenges that threaten the health of our oceans and ultimately people and our planet. It’s a big vision, and we know we can’t do it alone. We look forward to engaging with entrepreneurs, co-investors and strategic partners who are interested in affecting real change. We hope you will join us. Follow us on LinkedIn and Twitter to stay in touch with our latest news.

Introducing S2G Oceans

Introducing S2G Oceans


Tonya Bakritzes

Managing Director

Tonya Bakritzes is a Managing Director on S2G Ventures' Platform Team where she oversees the fund’s brand strategy, marketing and communications and provides strategic guidance to the fund’s portfolio companies.


Josie Lane

Art Director

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