Aquaculture PE firm talks sustainable food

US venture capital and PE firm Seven Funds' partner, Chris Cogan, tells Agri Investor about his plans to create a leading sustainable food company.

Seven Funds, a US hybrid venture capital and private equity firm that focuses on the aquaculture and sustainable food sectors, is currently raising capital for its food brand Healthy Earth. The firm’s first investments have been into the aquaculture sector and it recently acquired Anna Maria Fish Company, a sustainable mullet fishing operation in Cortez, Florida. Here Chris Cogan, partner at the firm and chief executive of Healthy Earth, tells Agri Investor how the firm got to this stage.

What brought Seven Funds to focus on aquaculture?

Seven Funds is a consolidation of three different investment managers’ operations and when we funded the holding company with our money and that of some of our industry partners, a couple of them had deep domain expertise in the food sector, mostly notably seafood. My background has also been in water and wastewater utilities and back in 2010 when I was working at Morgan Stanley, I began investigating sustainable food and looking at agriculture for some of my larger clients.

One notion that investors were interested in was transforming traditional farmland into organic farmland, and through that process of evaluating the sector, I came across developments occurring in the aquaculture sector; that began the process of exploring this.

When ultimately I merged with Russell [Vernon] and Ross [Barrett], they had also been looking at opportunities in the sector and had offices in New York and Louisiana, which has a big marine aquaculture and wild fishing history, and they were looking to expand into Florida where I had a presence and connections. My home is in Sarasota which is where the headquarters of Mote Marine Laboratory, a non-profit research centre and aquarium is based, and one thing led to another.

Aquaculture investment fits very well with our model and our domain and partner expertise. We felt we were uniquely qualified to pursue opportunities there and the sector made for a very compelling investment thesis. So for the past few years we have fine-tuned our investment thesis and in November 2014 we made the first of a number of planned acquisitions and investments in Mote. We have already closed on another aquaculture deal this year – Anna Maria Fish Co, a Cortez-based sustainable mullet fishing operation – and we have at least six in the pipeline over the next few months.

What other types of aquaculture deals are you looking at?

Through our holding company we are sampling different types of investments across the entire supply chain from fish production to inputs to natural feed replacements. We are also looking at buying research and technology companies operating in the sector because there are many applications for the by-products of aquaculture.

We are also interested in high-value agriculture where we can produce quality vegetables and more at value. We are not looking to compete against the largest production-type growers but where we can find niches to grow high-value agriculture, we will do that. We feel we have a competitive advantage because we have the ability to provide nutrients for growing plants from aquaculture. We are in the process of acquiring several new age farms including one award-winning farm but we are not in a position to speak in detail about these yet.

What is the ultimate goal of Seven Fund’s aquaculture and agriculture business?

To create and become the leading sustainable foods company in the US by aggregating innovative technologies and production methods across the entire spectrum of sustainable foods.