The pivot from investment analysis to seafood may not fall into the conventional journey for many entrepreneurs, but Utham Gowda never really had this in mind. He openly points out, “I don’t think I ever thought I’d become an entrepreneur. But an untapped opportunity beckoned.” His expertise in data, analysis, insights and forecasting enabled him to scour ‘unpolished sectors’ that didn’t have smart capital, even while the opportunity fundamentals were very attractive. In 2019, Gowda decided to enter unchartered waters with his seafood supply chain startup Captain Fresh. 

In a masterclass from Accel SeedToScale’s #DecodingMarketplaces held in November 2022, Barath Shankar Subramanian, Partner at Accel and Gowda, founder of Captain Fresh, discussed how Gowda made the interesting shift from investment analyst to aquaculture, the evolution of the business; from test beds to scaling and expansion and how Captain Fresh raised $12 Mn in Series A funding led by Accel. 

Lots Of Water Helps!

Though somewhat obvious, India’s massive coastline was a huge attraction when venturing into the industry. According to Gowda, the $40 Bn commercial seafood market also helped.  He took his first baby steps into the water and partnered with a large seafood exporter to see if the sector was worth diving into.

 To understand and make sense of an unfamiliar industry, he spoke to its stakeholders — from fishermen and shippers to suppliers and retailers. The interactions helped Gowda gauge where he could add real value. 

Travelling across the country, he was amazed by how many people earned their livelihood from aquaculture. And though initial results and conversions didn’t bite, he knew this was a first and memorable dip in the sea

Continuing To Fish

Gowda’s next step led him to support an ambitious client and help drive his business towards an IPO. This seemed like a good way to tread water. “I was looking for something that would be compounding,” he recalled.

The intervention of Barath Shankar Subramanian, a Partner at Accel, also provided support. At the time, Subramanian  was exploring multiple and varied geographies,  trying to understand how, as purchasing power starts to improve, there’s a very strong correlation with protein [seafood] consumption.

So, besides having some great beaches, India’s long coastline also provides a sustainable source of protein!

Subramanian’s interest was further piqued by Gowda’s exceptional ability to educate and articulate his vision, his emphasis on creating real value and ideas about structuring a fairly disorganised sector. These teachings helped drive investment, and, as Subramanian  explains, “there was also a massive opportunity to scale this from a supply-first business to something global.”

The waters were further cleared as Gowda’s business was already healthy. It had already clocked $10-12 Mn in revenue, a strong margin and underlying tailwinds,” said Gowda. 

Muddy Waters, But So Much Potential

For such a potentially lucrative, resource-rich and valuable sector, it was surprising that big players hadn’t taken the plunge. “Why hadn’t a Tata Group or a Godrej, who have access to capital and possess knowledge about the market and distribution, touched this yet?” wondered Gowda as he dived deeper.

This was probably because the industry had no real documentation. As many players were part of the unorganised sector, it suffered from low levels of knowledge sharing. The waters were already muddy.

Gowda reiterated, “This is a supply chain which is not documented in any manner. This is a supply chain where the incumbents think access to knowledge is a differentiator, which means nobody would willingly educate you.”

Such barriers would dissuade most entrepreneurs but Gowda  saw this as an opportunity to add real value and organise a highly fragmented supply chain.

Deep Dive Into Decision Making

Building the business meant making big decisions. Two of these were whether to initially focus on aquaculture (controlled fish farming) or marine farming (in larger seawater bodies) as well as deciding to choose between a B2B and a B2C business model.

 In both cases, the first option won over as Gowda  realised aquaculture was pretty much consolidated in a smaller area (usually in Andhra Pradesh) and going B2B was “a natural choice in a fragmented industry where it’s a supply-deprived phenomenon.”

But bigger questions would still come up. Gowda had to figure out how the business would later extrapolate for marine. And this was a tough business. The seafood itself has nearly 100 commercially attractive species. “It is a complex, multi-species business with a lot of unpredictability, seasonality, and demand differences,” added Subramanian.

A Matter Of Taste

Matching supply and demand is one thing but factoring in how to match the supply to different customer palettes is quite another. The diversity within India is well-known and is underlined by regional tastes, especially in seafood. 

Fish-eating regions across the country have very different tastes. A fish that works in Calcutta may not touch a pan in Kerala or Bombay. Overcoming this required taste matching to understand demand preferences by location and drive supply accordingly.

Where To Drop The Anchor

Tastes aside, Gowda still had to decide where to start. The toss-up was between Hyderabad and Bengaluru. In the end, Bengaluru got the nod to initially focus on selling more products in one city as a one-stop solution. The city’s cosmopolitan outlook and discerning and well-educated foodies also helped hone in on a consolidated customer set: institutions that represented large purchase orders.

Taking these big decisions laid the way for capital investment and Gowda’s business model helped balance capital efficiency and the ability to scale.

The Bait: Pitching

As a single founder, Gowda knew that scaling would require hiring the right people. However, Captain Fresh began scaling in the peak pandemic months. Therefore, finding talent that was required to be physically present across locations was already a challenge.

But what about the hiring process? What should the pitch highlight? Fish? Seafood? And how?

“It should be around people who are passionate about adding value [and] creating a legacy,” reflected Gowda.

Diving in, Gowda rode the talent wave and absorbed as much as he could about potential hires. Skills and experience were great, but character, length of time spent in previous roles and deep referencing were key. A clear hiring process was created and it paid off. Of course, some hires didn’t work out, but this was only when gut feeling skewed the process.

By not straying away from the process, Gowda forged a strong, close-knit team —  one that regularly connected and relied on each other. This helped create leaders who could step in and support teams when and where required.

Sea Facing View: Data, Insights & Forecasting

Leveraging technology was another aspect to consider. Constantly monitoring multiple channels was crucial in keeping players engaged with the platform. Fortunately, its stacks could be scaled globally, which helped attract more players and Captain Fresh also added the ability to manage exports.

Gowda’s analyst background has helped reshape aquaculture. Subramanian himself mentions that Gowda’s predictions about where Captain Fresh would be in a year and a half were almost spot-on. Forecasting is never easy in an industry with complex dynamics, ever-changing regulations and multiple players. But Gowda believes in setting clear goals, quarterly targets and diversifying the business across geographies, segments and species.

These contingency plans have worked well, especially during the four months (April-July) when India’s aquaculture supply diminishes. Having had the clarity and foresight to explore other locations, Captain Fresh is now exploring western and southern African countries for products so as not to disrupt the existing supply chain.

Digital Seafood: Platform Retention & Loyalty

Though he has restructured the industry with a platform-driven system, the question remains,: ‘How do you know you’re doing well?’  For Gowda, retention and loyalty are critical parts of his answer.

“It’s if a customer gives you recurring orders and if your supplier comes back. Basically, there is retention on both ends of this pipe and you have solved something,” said Gowda.

Though technology has definitely helped and there is interplay at every point, Gowda was quick to add that “a customer on the platform wants somebody they can rely on. They are hyper-focussed on value.”

This attention to value has led to seafood shipment wastage being reduced to less than 5% (20-30% is the industry average). It has also provided a stronger foundation for suppliers who now have the option to connect and sell their products globally.

Riding The Waves 

With a combination of sharp analytical skills, intense market research, due diligence, planning and a relentless focus on hiring the right talent, Gowda has been able to restructure a challenging, fragmented and complex industry. So how does he reflect on what Captain Fresh has achieved so far?

“When we entered there was not a single multi-city distributor in seafood, which is a huge statement. But now there is,” said Gowda.

That’s sea(food) for thought!