AbstractGlobal expansion of bivalve aquaculture can drive sustainable protein production. Inland culture of mussel spat can play an important role in supporting extensive mussel farming. Nursery culture of bivalves is, however, dependent on nutritious, cost‐efficient, and more reliable diets for spat. The aim of this study was to assess the impact of dietary alternatives to commercial algal feeds (Shellfish Diet 1800) on the survival and growth of Mytilus galloprovincialis spat, widely farmed in Europe. Spat (6.8 ± 1.1 mm) were supplied with different diets for 6 weeks: commercial microalgal diet (A), microencapsulated feeds containing a 1:1 blend of the macroalga Undaria pinnatifida and the microalga Schizochytrium (BioBullets; BB), or commercial microalgae and BioBullets combined (ABB). Unsupplemented spat showed no growth and little change in body condition (CI). Spat fed microcapsules grew at comparable rates, and body condition rose at higher levels (shell growth rates: 8.5 ± 3.7 μm day−1; ΔCI: 6.1 ± 1.1%) relative to those fed commercial microalgae (8.5 ± 5.7 μm day−1; ΔCI: 3.3 ± 0.8%). Supplementing microencapsulated feeds with the commercial microalgal diet did not significantly improve growth performances (9.3 ± 2.3 μm day−1; ΔCI: 4.7 ± 1.4%) relative to mussels fed microcapsules alone. Microencapsulated feeds for M. galloprovincialis spat production can significantly reduce nursery costs compared with commercial feeds or cultured microalgae. By sourcing encapsulated algae from aquaculture side streams, microencapsulated feeds can further promote circular economies.