Sea Ahead Interview – Have Maritime Startups Finally Reached A Tipping Point?
I recently wrote a Boston Globe cover story about the maritime startup ecosystem and had the opportunity to sit down and talk with, Mark Huang, Managing Director of Sea-Ahead, a public benefit corporation in Boston that supports maritime startups at the intersection of innovation, sustainability, and the oceans.
Mark has over 15 years of cleantech venture experience. He co-founded Novus Energy Partners in 2008, a US-Norwegian cleantech VC fund, which was followed by Tolero Ventures, a boutique sustainability investment fund. Prior to that, Mark was with GE for 10 years. Mark is a US Army Veteran and a graduate of the Webb Institute.
Relatively few ships and a tiny percentage of mariners are American. The world’s most innovative shipyards are in Asia. Many of the world’s top maritime technology companies are in Europe. If most of the customers are overseas, why launch a startup here?
The U.S. economy is still a global leader in entrepreneurship and venture investment in areas such as tech, cleantech, materials, data analytics, and material science. Many breakthrough technologies that can apply to shipping can come from this US startup ecosystem. The Boston area became a leader in cleantech innovation not because it is historically an “energy hub,” but because it is anchored by global research institutions such as MIT and Harvard.
Silicon Valley is seemingly awash with money, yet very few venture capitalists and Angel investors understand the maritime and offshore industries. How do we educate modern investors, so they are more willing to fund maritime startups?
Educating a market is difficult. Money follows opportunity. We are seeing historically conservative sectors such as energy utilities and Big Food now setting up structures to work with, invest in and acquire startups. This isn’t done out of altruism or need for pure investment return — it’s for strategic reasons. The rest of the venture investment community notices this activity, so investment for earlier-stage deals increases.
So for maritime, the sector needs to meet the venture ecosystem at least half-way. If not, then the entrepreneurs and investors will focus on other sectors.
There is an abundance of highly intelligent and hardworking mariners working aboard ship. Many officers we’ve talked to have great ideas, but very few know how to execute their ideas. What advice do you have to help them get started?
Many coastal cities today have vibrant incubators and accelerators within urban innovation districts. These ecosystems are fueled by an entrepreneurial drive regardless of industry vertical. A startup doesn’t just get mentored by an experienced domain expert. Being around an environment of experienced entrepreneurs and those who backed them is as important as domain expertise. At SeaAhead we have seen this work with several of our member startups – one is run by an ex-Coast Guard Master Mariner, another by an ex-Israeli naval officer, and another by an ex-US Navy Admiral.
How do maritime technology startups differ from Fintech, Medtech, Hightech, and other industry segments?
Industry adoption for technology in maritime is still heavily driven by regulations, not by the market. This scares investors. The potential for slow adoption in the industry can drive up cash burn for a startup, and increase CapEx needs. Contrast these kinds of startups to Fintech, which is essentially all software with a fast uptake. If the maritime industry were to start getting more active in the venture ecosystem, a lot of this risk could be mitigated.
The ocean physical environment is extremely challenging and dangerous to operate in. Hence, the industry can be conservative since the stakes are high at sea. Other sectors that involve hardware also have unique operational challenges such as shock in commercial EV trucking, but the ocean environment demands a focus. The venture community is not currently tailored to tackle the ocean environment.
We seem to be at a tipping point for maritime startup innovation. What is needed to reach the summit and start the downhill ride?
The industry has to show up.
gCaptain recently featured Boundary Layer Technologies, a new YC startup working on fast hydrofoil containerships. Many readers — including highly regarded maritime experts — contacted us claiming this idea is not new, not practical and has little chance of success yet BLT has received millions of dollars in VC funding and were accepted into the prestigious YCombinator startup program. What do investors see in this company that our maritime professionals cannot?
I don’t know this particular story — but about 10 years ago there was this internet startup guy named Elon Musk who wasn’t from Detroit, and he decided to put laptop batteries in a two-seat car. With electric vehicles, the list has been long on “why it won’t work” — yet consumers and regulators are demanding them and now there is a worry the incumbent auto sector will be too slow to adapt.
So change can come from an industry blind spot. Similarly, consumer purchasing behavior has been changing, and Big Food is trying to adjust now — but not before their stock prices have plummeted. So the rhetorical question is: what non-linear impact might be coming that the incumbent maritime sector won’t see?
Angel investors are wealthy individuals who invest modest amounts of money in brand new startup ideas. Most angel investors focus on whatever industry they work for in the past. The maritime industry has no shortage of wealthy individuals, but very few angel investors. Why?
Tech innovation from startups has really not been in the long-term DNA of the maritime sector. It seems like the industry can view vessels as assets similar to commercial real estate — put it to work for a return. Start-up derived technology, at least in the past, was not very relevant. We are trying to change this. In Boston we are a seeking to be a catalyst, pulling together bluetech angels in the Northeast that are interested in investing together.
Your team art SeaAhead is investing considerable time and energy in hosting the upcoming Global Bluetech Summit. Why is this event important to you?
We had our first launch event in at Venture Cafe in Cambridge last September, basically introducing the community to bluetech and the potential of venture innovation for the oceans. With not that much promo, we had over 650 attendees show up that night, demonstrating a very strong interest.
In NYC we are hoping to get a similar vibrant energy from startups and the tech community, but we are also hoping to bring the financial and foundation ecosystems to the table to talk about how we increase funding in the sector. The more interest we have on ocean sustainability and an increased role for venture innovation, the better. Our ocean needs “all hands on deck.”
Your website has a page dedicated to startup resources that list incubators, accelerators, prizes, and pitch events that founders can leverage to help launch their startup. Can you discuss these different types of resources and how SeaAhead fits into the mix?
Our ethos at SeaAhead is not to create lots more “dots” in the global blue economy but to draw darker connecting lines. So, if other regional ecosystems are working on bluetech, we are eager to connect with and work with them. Bluetech is inherently global in nature – for example, shipping, seafood and the offshore wind sector in the U.S. are largely being driven by experienced European players.
But we are creating one “dot” by forming a bluetech hub with our partner CIC, a leader in developing co-working spaces that focus on startups and new economic clusters. We believe that New England has a dense and diverse portfolio of assets and capabilities in bluetech and that our new nexus centered in Boston will help to create a stronger bluetech cluster in New England. And this cluster could potentially sync with the competencies of Canada, Norway, New York City and more.
You spent most of your career in Silicon Valley, and some have suggested that you move SeaAhead to Europe or Asia. Why did you choose Boston?
I am actually a New Yorker, and was in the Bay Area during the cleantech bubble and subsequent crash. The Boston ecosystem has some unique venture attributes. The area is differentiated in certain sectors such as cleantech, robotics and additive manufacturing. And the ecosystem isn’t afraid of hardware; as shown by the numerous incubators and accelerators with maker space. The second dimension is that the coast of New England has a dense concentration of assets and capabilities related to the ocean. From oceanography research centers, to a port that lands the largest amount of seafood by dollar amount in the US, to the growing offshore wind industry. A bluetech cluster that connects the venture ecosystem of Boston to the ocean (and vice versa) is a powerful story as we all start to pay more attention to the challenges facing our oceans.
Related Video – Mark Huang, TEDx
You can learn more about Sea Ahead’s efforts to spark innovative maritime startups by visiting their website, subscribing via Twitter and registering to attend the 2019 Global Bluetech Summit in New York City.
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