IV. CAPITAL SOURCES AND REQUIREMENTS 
Many ocean industries in areas of advanced 
technology are so new that they are not fully 
understood. Investors are concerned with such 
factors as obsolescence in a technology develop- 
ing at an accelerating rate. Nevertheless, many 
concepts of profitably using the ocean are sound, 
and the investment community has been intrigued 
greatly by ocean endeavors. This enthusiasm has 
been indicated by considerable publicity and 
advertising in the popular press and business 
journals, the creation of two ocean mutual funds 
in the last year, and numerous symposia and 
publications sponsored by brokerage houses. 
In general, capital has not been lacking to 
finance current industrial ocean projects, despite 
high economic risks. Further, it is anticipated that 
capital will remain available for projects judged by 
the investment community as having profit poten- 
tial. 
Capital for ocean projects is derived from many 
sources. The petroleum industry has in general 
been able to generate and/or obtain funds readily 
to meet its very substantial capital requirements 
for bonus bids, new technology, exploration, and 
drilling. A substantial portion is raised from the 
public based on an individual firm’s credit, a factor 
constituting one of the great strengths in offshore 
growth. To date, about $18 billion has been 
invested world-wide by the offshore petroleum 
industry, about $13 billion by U.S. firms.’ It is 
expected that by 1980 the world-wide cumulative 
investment will reach $55 billion. A large portion 
of this will have to be raised through borrowing or 
public subscription. 
Capital for expansion and modernization of the 
US. fishing fleet has been far less plentiful due in 
large part to high economic risks and legal re- 
straints. In addition, many fishing vessels are 
owned by small entrepreneurs having only limited 
access to capital markets. A detailed analysis of 
this industry’s situation and recommendations to 
Richard J. Howe, “Petroleum Operations in the 
Sea—1980 and Beyond,” Ocean Industry, August 1968, p. 
30. 
help meet its special capital needs is provided in 
the fishing section of the ocean industry chapter 
of this report (Chapter 4). 
During the past few years, several large aero- 
space firms (such as Lockheed, North American- 
Rockwell, General Dynamics, and Grumman) and 
other large companies, (such as Westinghouse, 
General Electric, Alcoa, Reynolds Metals, and 
Union Carbide) have invested millions in ocean 
ventures. They have tended to emphasize the 
heavy hardware and systems approach required for 
special ocean work. Several of the Nation’s largest 
shipyards now are controlled by aerospace or 
conglomerate firms intent upon instituting new 
and more efficient shipyard parctices. 
Risk capital in the hands of entrepreneurs 
finances a variety of ocean ventures. It is very 
difficult to estimate the actual investment from 
this source. However, the reservoir of venture 
capital potentially available for raw investment 
opportunities, both land and ocean oriented, has 
been estimated at $3 billion.? The availability of 
so much risk capital is a very important character- 
istic of the Nation’s ability to enter new fields and 
develop new technology. In summary, the panel 
finds that capital usually has been and is expected 
to be available to finance industrial ocean projects 
with profit potential. 
In view of the National interest in the ocean, 
and lack in most cases of a need for direct 
Government financial aid, the panel feels that 
indirect incentives through establishment of a 
favorable business climate are essential. 
Recommendation: 
Government policy should be to develop and 
maintain a business climate encouraging ocean- 
related investments. Special indirect incentives, 
rather than direct financial aid, are advised when a 
well defined national interest exists and the private 
sector’s response is inadequate. 
?Panel on Invention and Innovation, “Technological 
Innovation: Its Environment and Management,” U.S. 
Department of Commerce, 1967, p. 42. 
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