Memo #11: Biofouling

 👾 The Problem

• Biofouling is the colonisation of submerged surfaces, like ships hulls, by unwanted marine organisms. Culprits range from ‘hard fouling’ organisms like barnacles or mussels to ‘soft fouling’ organisms like algae or seaweed. 

• Biofouling creates a cost burden for the $14 trillion global shipping industry. Presence of these organisms increase drag, and reduce fuel efficiency, by up to 40%. Vessels also suffer from increased maintenance costs, reduced speeds and ships having to be brought out of the water more frequently. The U.S. shipping industry spends more than $36 bn each year in added fuel costs alone due to biofouling.
  

• Biofouling is also an emissions and biodiversity issue because of its ability to spread invasive aquatic species. Increased fuel consumption translates to increased emissions (up to 55%). Biofouling also serves as a vector for invasive species transportation. Estimates put the cost of invasive aquatic species at $23B in damages annually to marine ecosystems and infrastructure.
  

• Regulation is emerging across geographies to tackle Biofouling. The IMO's aggressive emissions targets (40% by 2030, 70% by 2050) are forcing operators to cut emissions in order to operate. Similarly new guidance has been released specific to biofouling. Some ports are even offering ships incentives for good sustainability performance such as reduced fees.
  

• Anti-biofouling coatings have a precedent of environmental regulations being made against them Historic solutions like tributyltin (TBT) and copper-based coatings have been either banned or face increasing scrutiny due to their toxicity to marine life.

💬 Solutions

• Traditional anti-fouling approaches centered around copper-based paints and coatings, though these face increasing scrutiny due to environmental concerns about bioaccumulation

• Emerging innovative solutions fall into two main categories:

  • Advanced Coatings: Including hydrogel barriers, organism-based solutions, and texture-based approaches that aim to be more environmentally friendly

  • Cleaning Robotics: Utilising various mechanisms including direct brushing, laser-based cleaning, high-pressure water jets, and ultrasonic vibrations, with reported fuel savings of 5-15%

🗺️ Five start-ups to watch

1. Neptune Robotics (Hong Kong, CHN) 

   Provides autonomous underwater robots for hull cleaning and inspection, featuring a unique water-jet system that doesn't damage anti-fouling coatings. Their RaaS (Robotics-as-a-Service) model operates across 50 Chinese ports. 

   Latest Round: Series B; March 2023; $17.25M 

   Investors: Sequoia China; SOSV; Matrix Partners China 

   News: Expanded operations to major European ports in late 2023, becoming the first Asian hull-cleaning robotics company to secure EU port certifications.

2. ECOsubsea (Bergen, NOR) 
   Developed an underwater robotic cleaning system that removes and collects biofouling while capturing debris, approved by major port authorities for its environmental compliance.
   Latest Round: Series B; September 2023; $14.5M
   Investors: Grieg Maritime Group; Deltamarin; Alliance Venture; Håkon Group
   News: ECOsubsea has set out plans to build up its hull cleaning solution in the Port of Singapore

3. HullWiper (Dubai, UAE) 
   Created a ROV (Remotely Operated Vehicle) that uses adjustable seawater jets instead of brushes for gentle but effective hull cleaning, with operations in 18 countries.
   Latest Round: Series A; May 2023; $8M
   Investors: GAC Group; Aster Capital; Middle East Venture Partners
   News: Launched the first automated hull cleaning service in Saudi Arabia's Red Sea ports

4. Armach Robotics (Plymouth, USA) 
   Offers subscription-based autonomous hull cleaning services using AI-powered robots that provide continuous light cleaning rather than periodic intensive cleaning.
   Latest Round: Seed Extension; December 2023; $5M
   Investors: Sea Ahead Ventures; Rhapsody Venture Partners; Braid Theory
   News: Successfully completed pilots with the US Navy, demonstrating 9% fuel savings across test vessels.
   

5. CleanSubSea (Perth, AUS)
   Develops the Envirocart cleaning system that combines robotic cleaning with waste capture and filtration, meeting strict Australian environmental regulations.
   Latest Round: Series A; August 2023; $12M
   Investors: Clean Energy Finance Corporation; Main Sequence Ventures; Breakthrough Victoria News:Awarded a major contract to provide cleaning services for all commercial vessels entering Western Australian ports

But what are the headwinds and tailwinds
for biofouling startups?

Headwinds:

• Long sales cycles. New solutions must navigate complex approval processes (from shipholders, port authorities and reg bodies) across multiple jurisdictions, often requiring years of testing. For example, many ports require proof that tech does not lead to paint chipping on boats, which itself can be a source of contamination.
  

• New innovations will remain motivated by ecological concerns if regulations do not tighten. This may limit market reach if new regulations that are expected are not introduced. While antifouling coatings are more of a proactive approach, there are existing solutions that are already compliant with current regulations = less room for newer players.

Tailwinds:

• The economics of fuel savings offer creative revenue models. With fuel representing up to 50-60% of vessel operating cost. Even small efficiency improvements can translate to hundreds of millions $ across a fleet of vessels.  We’ve been excited by start-ups that have been deploying performance-based pricing models - taking a chunk of the savings they create for shippers.

• Global nature of shipping as an adoption driver: Given the global nature of shipping trade, ports across the world need servicing even if they don’t have strict regulations themselves, e.g. for Chinese ships to enter into Australian and New Zealand waters they must comply with local regs (See recent examples here)

🌬️ Conclusions

So… Biofouling represents a huge cost base for shippers, with significant environmental repercussions, and with growing scrutiny from regulators. For shippers, this equates to a big headache and lots of decisions to be made. 

Despite this, our search yielded few obvious startups helping shippers make better decisions on how, where and when to undertake biofouling treatments most cost-effectively. Companies currently are competing based on their speed, cost of cleaning and ease of adoption compared to pre-existing processes. 

We see an opportunity for start-ups to offer end to end services. Helping shippers to decide when to treat, to deliver the treatment, and then to help report with emerging standards. 

Are you working on helping tackle biofouling head on? or have some insights into what market barriers exist in these spaces? We’d love to hear from you!

Thanks for reading, and to Rachel Lim from the Silverstrand capital team team for collaborating with us on this piece.