Industry Pulse No. 01: Building Stronger Seaweed Businesses

Seaweed commercialization rarely happens in one leap. It develops as promising ideas move through testing, production and market adoption. This week's Industry Pulse looks at that journey in British Columbia, and at what recent disclosures from two Australian seaweed companies tell us about building a business that lasts.

British Columbia: seaweed acoustic panels move closer to market

On October 28, Canada's Ocean Supercluster announced a 1.5 million dollar project led by Seacork Studio of Vancouver to scale up acoustic panels made from seaweed. Canada's Ocean Supercluster is contributing 403,000 dollars, and the project partners provide the rest. The partners include Stormy Shores Sea Products on Lasqueti Island, Victoria International Marina and Arcadia Earth in Toronto.

The project links coastal seaweed harvesting with standard processing of the raw seaweed, pilot manufacturing, independent performance testing and permanent pilot installations of the panels.

This is an encouraging step beyond the laboratory. The next evidence to watch will be production costs, how the panels perform once installed, and whether pilot users become repeat customers.

Global: sales, cash and financing

Sea Forest, an Australian seaweed company, reported 3.4 million Australian dollars in revenue for the quarter to September 30, a net operating cash inflow of 240,000 Australian dollars, and 12.6 million Australian dollars in cash at the end of the quarter. Interest received on its cash helped produce that positive result.

Ocean Sciences, an Australian company with seaweed operations in Indonesia, reported 960,000 Australian dollars received from customers in the same quarter, but ended it with 72,000 Australian dollars in cash, which it estimated would cover about 0.4 quarters of its operating costs. A loan it uses to finance seaweed stock, 537,000 Australian dollars at 15 percent annual interest, was fully drawn.

On November 4, Ocean Sciences announced commitments from investors for a 700,000 Australian dollar placement, a sale of new shares to raise money.

These cases show that sales, cash and access to finance each tell a different part of the business story. None of these disclosures on its own shows whether a business is profitable.

The economic lesson

A seaweed business lasts on the money its sales bring in. Beyond sales, it needs each product to earn more than it costs to make, enough cash to cover the time between paying its costs and being paid by customers, and borrowing that does not put the business under too much pressure.

These are the foundations that help promising seaweed products become lasting businesses.

Discussion question

Which seaweed business story should the next Industry Pulse follow?