Modernising the world’s maritime fleets is far from plain sailing. But while commercial shipping requires substantial investment to bring boats into the digital age and to drive decarbonisation, a growing ecosystem of technology-driven start-ups hope to play their part in this transition. And a new $100 million fund from venture capital investor Motion Ventures promises to accelerate many of these enterprises.
The scale of the challenge is significant. Most ships still run on fossil fuels – and particularly on heavy fuel oil, which produces high levels of greenhouse gas emissions. However, the International Maritime Organisation has set tough targets for the sector: the industry must achieve full-scale decarbonisation by 2050 with demanding staging posts along the way – a 20% reduction by 2030, and a 70% reduction by 2040.
Moreover, even leaving aside the environmental imperative, outdated technology is costing shipping companies dearly. Research from Kongsberg Maritime, for example, suggests that equipping conventional vessels with new technologies to reduce their fuel consumption could deliver savings of up to 56%.
“Studying the maritime sector is like travelling back in time with a time machine,” says Shaun Hon, founder and general partner of Motion Ventures, which is today unveiling its Motion Ventures Fund II. The industry remains dependent on manual, paper-based processes, he points out, with many operators still relying on fax machines. “It can be pretty chaotic.”
The good news is that this makes maritime an exciting opportunity for innovation, with a growing number of start-ups targeting the sector. Allied Market Research expects the maritime technology sector to deliver average growth of 10.7% a year between 2021 and 2031, with the market worth more than $400 billion by the end of that period.
Some of those start-ups are focused on energy consumption, with new technologies ranging from air lubrication systems that enable boats to travel through the water more smoothly to wind-assisted propulsion and battery power. Others are developing technologies that enable fleet owners to map their progress – by tracking fuel consumption and carbon emissions in more detail, for example.
Automation is also a significant opportunity. Ship owners able to manage vessels more remotely hope to optimise routes and speeds in order to cut fuel consumption and to manage changing sea conditions in real time.
An allied development is the growth of internet connectivity at sea, particularly through the use of technology linked to LEO satellites. This is unlocking a range of digital innovations aimed to improving communications, boat management, environmental performance and safety.
Motion Ventures’ first maritime fund, a $22 million vehicle launched in 2021, largely focused on software solutions for the maritime sector. Innovation in hardware often requires larger upfront investment, Hon points out. “Our second fund will offer investments of anywhere from $250,000 to $10 million,” he says.
The venture capital firm has also put together an industry consortium comprising 17 large maritime companies that can offer start-ups advice and support on new innovations; in many cases, these companies may become customers. “Very often, the solutions we’re now seeing require industry buy-in if they are to be viable,” Hon says.
Motion Ventures Fund II has already made three investments, taking stakes in OceanScore, a specialist in emissions data, and Fernride, which develops autonomous vehicles for ports, as well as a third business as yet undisclosed. Hon expects to build the fund’s portfolio to around 25 maritime businesses over the next couple of years.
Jan Holm, as adviser to Motion Ventures, argues that the consortium model is a particularly important feature of the fund. “The maritime industry is no stranger to complexity, but the challenges we face now, from lowering emissions to digitising operations, require a new level of collaboration,” he says. “By pairing ambitious founders with strategic backers, this fund represents a crucial step forward, bringing together fresh solutions, both digital and hardware-based, and fast-tracking their path to scale.”
Nakul Malhotra, vice president of the emerging opportunities portfolio at shipping operator Wilhelmsen Group, also stresses the importance of joint action. “[This is] an industry that is hungry for innovative solutions with robust value propositions,” he says.
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