Why we invested in GIT

• The shipping industry accounts for ~3% of global GHG emissions and needs to radically reduce emissions to achieve net zero.
• Biofouling adversely affects a vessel's hydrodynamics and traditional anti-fouling agents leach large volumes of toxins or microplastics into the ocean.
• GIT raised CAD$10M from to scale production and expand internationally.

Series A Capital Raise

GIT Coatings (GIT), a leading sustainable coatings company based in Halifax, Canada, is working to transform the marine shipping industry, and has just closed its CAD$10 million Series A. The round was led by BDC Capital (Canada)'s Climate Tech Fund, in collaboration with a global syndicate of and venture investors including Seventure Partners’ Blue Forward Fund? (France), Stolt Ventures (UK), the investment arm of Stolt-Nielsen Limited, Farvatn Ventures (Norway) and Invest Nova Scotia (Canada), and other new and existing investors.

The Challenge

The shipping industry has a dual challenge. It must meet the demand of the world’s growing population, with more ships and more voyages, while radically reducing its GHG emissions in line with a net zero world.?

The International Maritime Organization (IMO), which is responsible for the safety and security of shipping and the prevention of marine and atmospheric pollution by ships, has set a target to significantly reduce emissions by 2040 as the industry contributes ~3% of global emissions. According to a report by the M?rsk Mc-Kinney M?ller Center for Zero Carbon Shipping, for the global shipping industry to achieve its net zero ambition, it must reduce emissions by 45% in 2030 (vs. 2010) and achieve net zero by 2050.

With ~100,000 commercial vessels consuming ~300 million tons of bunker fuel every year, decarbonizing the marine industry will require unprecedented levels of investments in sustainable innovation, technology adoption, and systemic industry-wide transformation, especially given many technologies are still under development.

Biofouling

Marine vessels that are submerged in seawater tend to be made of metals, alloys, composites, and other materials. These materials are prone to severe deterioration and marine growth because of their interactions with aquatic organisms in wet environments, which results in biofouling.

This adversely affects the hydrodynamics of a vessel (increases propulsive power required to maintain constant vessel speed), which increases fuel consumption. Because the energy required to propel a vessel is proportional to its hydrodynamic performance, a vessel’s marine coating is critical. For example, a marine coating with a smooth finish produces less frictional resistance and reduces the adhesion of fouling organisms. Frictional resistance can account for up to 80% of total ship resistance for vessels when cruising at lower speeds (Sindagi, S. et al., 2019); reducing frictional resistance by reducing the build-up and spread of aquatic organisms is critical to ensuring optimal fuel efficiency and minimizing emissions.

Biofouling on vessels is also a main vector for the unintentional introduction and spread of non-indigenous species and Invasive Aquatic Species (IAS), which can hitch a ride and be moved from one sensitive marine environment to another. This can pose serious threats to local human, animal and plant life, as well as disruption to local fisheries and other economic and cultural activities due to the absence of any natural predators.

Anti-Fouling

Most anti-fouling systems are fundamentally based on the use of protective marine coatings but there are also new complementary techniques emerging such as new surface designs and polishing to increase fuel efficiency.

Traditional fouling prevention approaches have relied on toxic heavy metals since at least 1,500 BC, where copper sheets were incorporated onto wooden vessels. More recently, non-heavy metal approaches using organo-metallic compounds were also developed but later prohibited as they are toxic to marine life. Advancements in materials science have led to new coatings that prevent biofouling, not by being toxic but rather by limiting an organisms' ability to adhere onto a vessel's surfaces or by facilitating its removal through normal cruising and in-port hull cleanings.

The two most common types of anti-fouling agents applied today include:

• Ablative Biocidal (Toxic) Base Coatings: Standard or low friction biocidal anti-fouling coatings are used on ~85% of world’s vessels to protect against growth of aquatic organisms, but these biocidal-based coatings leach toxins into the marine ecosystem due to the high levels of copper and zinc-oxides, adversely affecting the health of sea-life.
• Silicone-Based Soft FR Coatings: Silicone-based soft FR coatings are used on the remaining ~15%, enabling low surface friction and fouling adhesion and are non-toxic, but they are less durable and prone to damage, thereby leaching microplastics into the oceans.

Both types of anti-fouling agents are considered to be soft (ablative) anti-fouling, in that they are "self-polishing". In effect, this means that when a vessel is in motion, the anti-fouling agent is intentionally designed to wear off (leach) at a controlled rate, thereby helping to remove biofouling growth.

However, the environmental impact of these coatings is significant. In 2022, Environmental Action published a study estimating that 1.9 million tonnes of paint end up in oceans and waterways every year, representing ~58% of all microplastics entering into water, with ~18% estimated to come from the maintenance and operations of ships and offshore rigs alone. To put this in perspective, this is equivalent to ~200 billion plastic bottles every year.

Reducing these harmful toxins and contaminants from entering the ocean, harbors, and sensitive waterways needs to be a top priority for governments, coastal cities, regulators, and environmental action groups. Global shipping companies also need to proactively respond to help protect and create a healthier and more sustainable blue economy.

The Solution(s)

While the biggest impact on shipping decarbonization will be the choice of marine fuel (e.g., methanol, ammonia) or power source, these shifts must go together with greater energy efficiency and improved vessel hydrodynamics. This requires an aggressive uptake of energy efficiency and emission abatement measures such as digital technology platforms to optimize voyages and vessel performance, wind power (rotor sails), air lubrication (“bubbles”) systems, as well as other emerging solutions to cost-effectively improve efficiency and reduce drag, thereby offsetting a vessel’s largest operational cost and source of emissions: bunker fuel.

GIT's Ultra-Slick, Hard Foul-Release (FR) Coatings

Increased fuel-efficiency can be achieved by adopting harder hull and propeller coatings with ultra-low friction to limit biofouling growth. In addition, harder coatings increase durability and time between hull cleanings and dry-docking requirements. GIT has taken this a step further and developed a new class of hard foul-release (FR), eco-friendly, graphene-enhanced marine coatings that not only out-perform traditional marine coating, but that also minimize the risk of unintentional spread of non-indigenous species and IAS.

Independently Verified

GIT's hard FR coatings have been independently verified by Lloyd's Register and the Center for Corrosion and Biofouling Control at Florida Tech, demonstrating best-in-class performance in the harshest salt-water environments, with a surface hardness that withstands underwater cleaning using mechanical brushes.

GIT’s flagship coating product has been tested in multiple independent labs and at sea, on ships ranging from 5-meter fishing boats to 237-meter oceangoing cargo vessels. All trials to date have demonstrated GIT’s superior performance (reduced drag, lower fuel consumption) compared to traditional, soft (ablative) FR biocidal and silicone-based FR coatings.?

Energy Efficiency & Decarbonization Levers

Shipowners and operators can apply a range of solutions to increase energy efficiency and reduce emissions today as mentioned. Utilizing these measures will reduce vessel- and fleet-level emissions while alternative fuels and new hull designs emerge. However, uptake of these more energy efficient solutions varies by vessel type and market segment as shown:

In the Bulk & Tanker segments, leading operators are deploying energy efficiency measures, but overall adoption remains low. As a result, the industry has significant potential to reduce fuel consumption, and limit emissions.

“The commitment to sustainable shipping has never been greater. Global shipping companies have set aggressive climate targets, and industry bodies such as M?rsk Mc-Kinney M?ller Center for Zero Carbon Shipping, Sustainable Shipping Initiative, and Cargo Owners for Zero Emission Vessels (coZEV) are all working together to raise the collective ambition and drive adoption of climate-friendly shipping solutions,” said GIT’s CEO, Mo AlGermozi. “GIT’s coating technology can act a force multiplier, enhancing the ROI of other energy efficiency and sustainable shipping solutions emerging on the market.”

GIT is well-positioned to help propel the marine sector forward. Its eco-friendly, graphene-enhanced, marine coatings help vessel owners and operators increase fuel efficiency, reduce drag, and optimize a vessels’ hydrodynamics and overall performance. It also helps vessel owners score better on their Carbon Intensity Index (CII), a critical measurement of energy efficiency and emissions per vessel, which recently came into force as of January 2023.

“GIT’s coating technology is going to substantially increase global maritime transportation efficiency and therefore reduce GHG emissions and costs,” said Eric Siegel , Chief Innovation Officer at the Ocean Frontier Institute & EIR at Creative Destruction Lab 's Ocean Stream. “We are very proud of what GIT has accomplished and the positive impact that their coating technology will have for the ocean and the blue economy.”??

In addition to the fuel efficiency benefits, GIT’s hard FR coatings do not contain any biocides or silicone-oils, and therefore do not deteriorate or leach toxins or into the oceans. GIT has also developed an advanced coating specifically designed to absorb underwater radiant noise, which can reduce stress on sensitive marine life and ecosystems that are rich in biodiversity, thereby improving “Life Below Water” (). And as of last month, companies have even more incentive to utilize GIT’s coatings given the UN's historic agreement to protect international waters through the High Seas Treaty, which aims to protect and better manages marine biodiversity.

Enhanced Dry Dock Operations

GIT can also unlock operational benefits for dry docks as its coating system contains ultra-low VOCs and requires fewer layers, thereby improving air quality and health and safety of applicators and dry dock workers, while reducing the application time in dry dock. In addition, GIT's coatings can be applied across a wider temperature range (-5 to 40°C) compared to traditional coatings, thereby increasing the length of the coating season and enabling more frequent coatings in both warmer and cooler regions, further speeding up the decarbonization of the global marine industry.?

Investing to Propel the Industry Forward

“GIT is propelling the marine sector forward towards its sustainably goals and this investment will help us reach even more customers around the globe. Our eco-friendly marine coatings increase hull and propeller efficiency, delivering significant fuel savings and GHG emissions reductions relative to existing coatings,” said Mo AlGermozi, CEO of GIT.

GIT will invest the CAD$10M in Series A funding to expand production capacity of its sustainable marine coatings in Canada, grow its global customer base, invest in the development of next generation sustainable coatings, and build strategic partnerships to accelerate commercialization.

“The shipping industry is working to develop and adopt innovations to transition towards net zero and GIT has created an innovative ocean technology that not only meets this need, but also delivers additional benefits to the fragile marine ecosystem,” said Matt Stanley, Partner, BDC Capital (Canada)'s Climate Tech Fund. “With proven coatings that deliver an attractive ROI for vessel owners and operators, ambitions to scale, and a commitment to help solve the climate crisis, GIT Coatings is exactly the type of company we like to back.”

For more information on GIT's marine coatings, check out the video:

About GIT's Series A Investors

BDC Capital: ClimateTech Fund (Canada)

BDC Capital is the investment arm of BDC, Canada’s Business Development Bank. With over $6 billion under management, BDC Capital serves as a strategic partner to the country’s most innovative firms. It offers businesses a full spectrum of capital, from seed investments to growth equity, supporting Canadian entrepreneurs who have the ambition to stand out on the world stage.

Seventure Partners: Blue Forward Fund? (France)

Seventure Partners is a long-term equity investor that actively supports innovative companies aiming at generating positive impacts on Humankind, Society, Sustainability, and the Planet. With €950m AUM, Seventure is a leading VC firm in Europe investing in two main areas: (i) Life Sciences and and (ii) Digital Technologies. Seventure's Blue Forward Fund? launched in 2022.

Stolt-Nielsen Limited (UK)

Stolt-Nielsen Limited (SNL), a long-term investor and manager of businesses focused on opportunities in logistics, distribution, and aquaculture. The Stolt-Nielsen portfolio consists of its three global bulk liquid and chemicals logistics businesses – Stolt Tankers, Stolthaven Terminals, and Stolt Tank Containers – Stolt Sea Farm and various investments. Stolt-Nielsen Limited is listed on the Oslo Stock Exchange (Oslo B?rs: SNI).

Farvatn (Norway)

Farvatn is a Norwegian family-owned company seeking profitable impact investments, leaving a positive footprint on the world. Farvatn invests in start-ups and funds addressing the UN's SDG, with particular focus on life below water, life sciences, renewable energy, and gender equality – all essential for an improved and sustainable future.

Invest Nova Scotia (Canada)

Invest Nova Scotia offers programs, services, advice, and other resources that Nova Scotia companies need to grow. Start-ups are a key focus area for the organization, supporting them through venture capital, incubation facilities, expert advice, and other acceleration initiatives. Invest Nova Scotia’s venture capital fund targets high-growth deep technology start-ups.