174 Thomas Hogenhaven - A regenerative investment fund for the most disruptive entrepreneurs

A conversation with Thomas Hogenhaven, managing partner at Planetary Impact Ventures, an evergreen investment vehicle based in Denmark, about how to put money to work using regenerative principles, and the ins and outs of being part of a radical fund.
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What does regenerative investing look like? We talk a lot on this podcast about where to put money to work: in soil regeneration, soil measuring tech, food as medicine companies, compost companies, virtual fencing etc., but we rarely talk about the how.

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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

Chapters

• 2:15 Why are you doing what you are doing? Why Soil?
• 9:00 Why did you start an evergreen structure?
• 16:18 How is fundraising going with an evergreen structure
• 27:34 Being in service of life
• 35:57 What should smart investors, who want to invest in Reg Ag and food look out for?
• 53:10 What would you do if you were in charge of a 1B investment portfolio tomorrow morning?
• 58:01 If you could wave a magic wand and change one thing in the agriculture

Transcript

SPEAKER_01: 0:00

What does regenerative investing look like? We talk a lot on this podcast about where to put money to work in soil regeneration, soil measuring technology, food as medicine companies, compost companies, virtual fencing, etc. But we rarely talk about the how. How do we put money to work using regenerative principles in service of life and the companies instead of extracting as much value out of the companies in the shortest amount of time? Today, we have an interview with the team that doesn't want to become the largest fund in regeneration, but but the most radical one. This is the Investing in Regenerative Agriculture and Food podcast, investing as if the planet mattered, where we talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities, and ecosystems while making an appropriate and fair return. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land and our sea, grow our food, what we eat, wear, and consume. And it's time that we as investors, big and small, and consumers start paying much more attention to the dirt slash soil underneath our feet. To make it easy for fans to support our work, we launched our membership community and so many of you have joined us as a member. Thank you. If our work created value for you and if you have the means and only if you have the means, consider joining us. Find out more on gumroad.com slash investing in RegenAg. That is gumroad.com slash investing in RegenAg or find the link below. Welcome to another episode today with Thomas Hogenhoun, manager and partner of Planetary, an evergreen investment vehicle based in Denmark. Welcome, Thomas. Thank you so much. Thanks for having me. And I'm laughing because for sure I butchered your surname, which I practiced in the prequel and I was okay at it and now it didn't come out. Anyway, I'm sorry for that. But thank you so much for taking the time this morning to share with us, to talk with us about your journey into evergreen. I think with some investors, some bells are starting to ring, but with evergreen investments and what regenerative investments look like in the space but to start with a personal question we always love to ask how did you end up because I don't think you have a farming background as in you managed a farm or you were deep in the soil like how did you end up spending quite a bit of time focusing on companies that are looking after soil or indirectly building soil like how did soil become such a focus in your life

SPEAKER_00: 2:35

yeah I don't think I would have predicted I would end up here based on my history it's much more growing up in a city and sitting behind a computer for many years. And I've been part of a Danish tech company that went well. But I think the first thing that really got me in this direction was Jonathan Safran Foer's Eating Animal in 2009, 2010. And I really just liked his fiction. So I also read Eating Animals and I didn't really know what was waiting in it. I don't even think I knew it was nonfiction. But it really struck me very hard about um how alienated we were in terms of the animals we're eating so so after that i've been much more conscious about the food production system but i didn't really do anything about it professionally other than eating weightless meat um then i was part of a company that had an ipo in 2018 in denmark and i i stopped after that to to do something else and um i didn't really know what to do so i went back to university to teach a class on entrepreneurship And I told the students they could work on whatever problem they felt was important. And I didn't really have any expectations about what they would work on. I thought maybe something about a Shopify shop or something for the Friday bar, but all of them chose a development goal and most of them within climate or biodiversity. So it was like a very clear Eureka moment to me that the smartest young people up here, if you gave them the chance to work on a problem, they chose something about the climate crisis, a biodiversity crisis. And I knew enough about the early stage investors up here to know that they were not necessarily concerned about that, that sustainability to them was a cost and something to be avoided if we could, and not the driver of the business. So I started myself investing in some green star startups up here that some of them focusing on food, others were more tech place. And then I met into the founders of the Danish organic meal box company and we did some shout out to the other

SPEAKER_01: 4:55

Thomas for

SPEAKER_00: 4:56

introducing us. Yes. And what I know about soil today is mostly from him and his mindset and is much smarter than I am within soil. And it's been a great privilege to learn from him. And he's sort of a cheat sheet in terms of learning all this. So the first thing we did was that they had made some community gardens outside their office and we wanted to try to spin it out and put it into a company and have many more community gardens. So that was my plunge into learning a little bit of farming and how to grow, not really at scale, it's very small scale, a few acres, but still you know, seeing how many practicalities and how difficult and how much of a craft it is to grow anything organically or biodynamically, let alone regeneratively. And so we did that for some years and then, and it's still running and going fine. And then we talked about that, that I was also running my investments on the site and Thomas also wanted to pay it forward and invest in a new generation of companies. So we decided to set up Planetary as a small fund. And it's by no means the biggest fund. It's only something like 6 million euros to begin with. But we set it up to support the next generation of companies. And it's not only soil and food. We're trying to be regenerative and more in the sort of John Fullerton sense with broader regenerative economics. A lot of it comes down to soil and food, obviously.

SPEAKER_01: 6:45

Yeah, of course. With Thomas, Tiara Thomas, as a co-founder as well or as an inspirator, you're going to end up on food and soil very quickly. But to take a step back to that university moment, when you got all those proposals or those business plans or whatever the students end up writing back, was that a moment you thought, oh, this is possible? Or was it like, oh, they're very ideal they would work on this. But have you been exposed at that moment already to examples of companies that were doing these kinds of things? So your entrepreneur mind and your investor mind said, okay, oh, wow, actually they want to work on this and I see it as a path. Or did you see it as, oh, these are very idealistic. This is never going to work because investors and entrepreneurs and the world is not ready for this. Or have you been exposed at that point where you're already exposed to examples? So you could see like, wow, actually people want to work on this stuff and this could turn into companies? Or were you skeptical?

SPEAKER_00: 7:47

No, I think both. All of the above here because they are idealistic and you need to be that still. I think it's often used sort of a derogative to someone who's an entrepreneur and wants to do something good. But without the ideals, I don't think it really matters and you're not doing the right thing. I have seen some companies starting to get traction. It's probably a stretch to call them regenerative because it's such a high bar. And what we are doing today is where it's our north star, but not all of our investments are meeting that very high bar yet, I think. And it's a bar that's moving to us. But even back then, I could see that some of them could think about business models that could actually support their visions. And if you can do that, then great. The other thing you're saying is, are the people ready for it? to get mainstream and know and most things we're doing right now you know the market and and consumers of governments are not ready for it but but we have to trust that the people who can envision a future um that's actually better and that that people will be ready for it at some point

SPEAKER_01: 8:58

and you said we're a small fund only six million i think many first-time funds would quote unquote kill for that uh to get started but of course it's a um like what what is different at Of course, we're going to talk about a few of the portfolio companies and the future, but I think there's a very fundamental piece that we need to unpack. And I mentioned in the intro already, the evergreen structure side. Why did you decide to not only innovate on which companies you invest in, which put a very, very high bar in terms of North Star regeneration, and not just on soil, but on community and everything, but also let's make our life a bit more difficult and also innovate on the fund structure side of things. Why was that necessary? Why is that necessary? and let's unpack.

SPEAKER_00: 9:42

Well, it's actually not making my life a little bit more, a little bit harder, much harder to innovate on the fund structure. But I went around and asked to a lot of the green entrepreneurs up here. I also wrote a book about green entrepreneurship. So I talked to the most progressive founders I could find. And a lot of them, if not all of them, they said that they didn't really like taking in investors with seven or 10 plus two years time horizon because they they knew they would be sold and they wouldn't really be in control about who would own them and they really really feared about their impacts and and all the work they put into this um would just go away if they were sold to a you know bad industrial player something like that so so just to

SPEAKER_01: 10:29

hear because there's there's one sentence in your deck as well that's really interesting but you're saying that the most interesting founders from your perspective the most interesting companies were very reluctant or even not interested at all to take quote-unquote mainstream capital, which means they didn't take it in many cases. It means they were growing less than they could or they didn't use the tool of finance as they could because they didn't want to be sold at seven years or five years to somebody they weren't in control. That's an issue or an opportunity, obviously, for Europe. But it means that there's a whole class of companies that are not using the tool of finance because they don't want to be exposed to the risks of it.

SPEAKER_00: 11:10

Exactly. Exactly. And to me, that's both a problem and definitely an opportunity. And that's the first problem we wanted to solve was to be a service to those founders who actually did have a long-term thinking. And for them to be able to be truly long-term thinking, they need a partner and a fund that also has long-term thinking. Like it's simple math that if your investor is short-term thinking, you can't be long-term thinking. It doesn't really add up. So we decided to do that. And we are never going to compromise on that. And that's the first thing we are promising founders that we're an evergreen fund. And our time horizon, that's crossing generations and not years or a decade or two. And many people also, LPs and institutional investors, they really dislike this because they're not used to it. And they don't really see an easy way out. And it is more complicated. But But we are working on structures to ensure that people can get their money out at some point, including myself, if we need that one day. But it is a tricky thing, but it's also a necessary thing. I've also seen in the tech industry how bad a short-term venture fund can, or how much it can really mess up, that we see so much pressure on founders that are not getting anxiety or stress out or burnout because there is a pressure no one can or very few people can live under. We can see how many of the sort of problems that are externalized because it doesn't really fit in a short time horizon, especially in Silicon Valley. I think that the generation of companies were created there the last 20 years. It's not necessarily those who want the next 20 years. So you're making a case

SPEAKER_01: 13:04

there that there's no space, let's say, for a holistic view if you're squeezed to perform towards an IPO or exit in four years, five years, whatever, like the next series you need to raise. And that treadmill leaves out a lot of things, let's say. Plus, it's very unhealthy for the founder. So there is the need for this. But I would say the founder side of things probably is very interested. I mean, there's that quote in your deck, like one of the companies you invested in turned down all investors until now. They probably got a lot of people knocking. And until now, they always keep the door closed or just listen for a second and said, no, we're not interested. And so now they're interested in you. And then the question comes, okay, if there's not going to be an exit, what will the returns look like for investors? Like how do investors get some return or returns or how do you structure that? I know there's some other vehicles like Triodos has an evergreen fund, AquaSpark on sustainable aquaculture. I used to work there. It has one, but there are not many. So you probably have to explain this many times. Like how does returns work if we're not going to do a Yeah,

SPEAKER_00: 14:11

so one thing we're actually trying, and it sounds crazy in the venture world, but it is to have to create and help create profitable companies. Oh,

SPEAKER_01: 14:23

wow,

SPEAKER_00: 14:27

like profit, profit. fund or another owner that will be even better than we can be for them so so it's not that we will we are against selling but but we will not take the initiative to make that transaction if the founders feel like like they they need to get out and we can find another fund or investor or industrial buyer that will be the right steward of this idea that's great then perfect

SPEAKER_01: 15:02

bridge perfect bridge what do you think of steward ownership like what's the movement in germany especially we had armin on the podcast we i will link it below absolutely need to recheck in with them. The whole purpose driven and getting that into basically making companies own themselves. How far is that away from you? How close is it? Are you cousins, brothers, or sisters? What's the thinking on the steward ownership side?

SPEAKER_00: 15:27

Yeah, so with one of our investments, the only other owner is actually a fund, sort of a non-profit fund that their only role is to own that company. But they didn't really have any capital, so they needed someone to come in along with them. And that's us. So in that way, we are cooperating and we see ourselves as a great partner to that. There are some instruments we are looking at that can maybe take us a bit more in that direction. But it's back to the sort of inventing on the fun side that if we also introduce that, then getting L pieces, even after for us. You're going to be stuck with, I

SPEAKER_01: 16:12

mean, stuck is nice, but stuck with six million. Yeah, this is going to be, don't innovate too many things, which seems to already happen. So on the LP side, like how are people responding to this? You said it's difficult for them, obviously, because they're used to control and used to exit and liquidity in different ways. Or I would say even liquidity on paper, like, oh, there's going to be exits, which very often never materialize. But in their mind, especially institutional players, obviously they have the rule books that they need to follow. How have been those conversations And has there been some shift? Like, are you seeing yourself going to 50 or 100 million? Are you going to be at 20? Like, what's the feeling? Or at six? Like, what's the feeling with potential investors, LPs in the structure, in the vehicle or the fund?

SPEAKER_00: 16:57

Yeah, I think a lot is happening here on the sort of high net worth individuals. We see a big shift right now. A lot of or increasing number of people with money. They're really longing to invest. where their values are. And some of it needs to be sort of in liquid stocks. And I guess the best you can do there is a good ESG screen portfolio. But, you know, no one really gets out of the bed in the morning and look at the ESG screen index fund and really get excited about that or really feel that they're making a difference. So we and other funds like some of them you mentioned before, like Aquaspark, I think we're much better at making the transition and the impact tangible, telling the stories and actually letting them be part of what we do. So some of our LPs are also taking the board seats. So we spend some time with them saying that how do we wish to contribute to the boards? What do we expect them to do? What do we expect our board members to do? So we see it as a means of empowered participation. So our LPs can actually contribute in multiple ways to the portfolio companies we're doing. And that's very important for us and also comes out of regenerative economics is empowered participation. So we're working very hard to make sure that everyone around us, they actually get involved as much as they can and want to be.

SPEAKER_01: 18:29

And what's the goal? Yeah, the goal there with like, do you want to keep this small or what's your longer term like in X years I would like to be at 50 or 100 like when does it also make sense economically to run the fund because of course there are fixed costs on these things and I always hear the number of 50 million I always hear 5-0 but I don't know maybe in this case it's slightly different like what do you feel like okay we'd be nice to reach level X at some point

SPEAKER_00: 18:59

yeah I think maybe something like 25 million euros would be a nice place for us to be so we really think about our own impact a lot and it's not necessarily about being the the largest fund that will give us the last impact. But it is being able to be more radical than the other ones. And a year ago, we were merely, I would say, focusing on sustainability. Now we're setting the bar to be regenerative and we'll probably move that bar once other investors are also moving. So we see our role as sort of increasing the spectrum about how can you invest and how close can you get to philanthropy without being it and still being a for-profit fund. And if we get too big or get too many LPs that don't truly believe that, then it will be impossible for us to have that role. So we'd rather have less money, but from LPs who actually really want to support and push us to be more radical in a good way. And the other question you had about institutional investors. A year and a half ago, no one would touch us because of the Evergreen Fund. Some of them are getting back now and saying oh okay maybe that's not really a blocker if you like everything else then let's look at that so I think there is a shift there and

SPEAKER_01: 20:21

interesting

SPEAKER_00: 20:23

and some of the American VCs like I think is it Sequoia Sequoia Sequoia set up Nevergreen yeah yeah and that really helped you know shifting the narrative and they're not really doing it in terms of regeneration or caring about no they see the returns

SPEAKER_01: 20:38

are are there in the long run I think the evergreen structure like summer returns take 15 years and why would you force yourself to exit before if you're purely profit driven purely money driven but also purely impact driven I think it makes a lot of sense for many things I mean just looking at soil or agriculture or looking at agroforestry like it takes years to build up a system why would you want to get out at year 8 if it just starts to get interesting and I think that some people started to realize like maybe this structure is actually limiting us in terms of impact and returns because we have to get out too early.

SPEAKER_00: 21:16

Yeah, exactly. And especially when it comes to sustainability and regeneration that so much depends on governments and new policy and who knows when that will come. Carbon taxes will be very good for our portfolio, for example. When they come. You need to be around.

SPEAKER_01: 21:37

Basically, this is a bet to wait and be there long enough and of course that's why you focus on profitable companies that when the tides change and tides turn I think is the word and the legislation comes in which I mean on food will come at some point a lot of these things will switch and then you need to be around it shouldn't be like maybe it changes at year 11 and you just exited everything which is just from any perspective not very helpful and especially not for the companies and for you as well

SPEAKER_00: 22:10

And I don't think it's too hard to predict sort of the direction we're heading and what will be necessarily, what will not. It's the timing and when the crisis will come. So right now we're facing a huge grain crisis, which means, so we invested in a company called A Grain, which upcycles spent grains from brewery. And they look a lot better when grain is a scarcity because you've sort of taken input from nothing and turn it into flour. And we knew that direction would come at some point because we will see more unstable food production in the future but we don't really know when exactly it will happen right but we know it's directionally right but we want to be there long enough for also to see the upside

SPEAKER_01: 22:57

yeah I don't know which is I'm always, I don't want to quote Nassim Taleb too much, but the antifragility of a portfolio, like be ready for these kinds of shocks or profit from shocks. And in this case, a grain price shock, I think the same with wild farmed that, I mean, if you farm without inputs or mostly without inputs, and if you, then the rest of the bread sector, I mean, they do a very interesting grains in grown in permanent pasture. So without any chemical fertilizer, et cetera. So suddenly prices of bread are rising and your bread isn't rising. So you're almost getting to the same level while the quality obviously is a completely different product. So suddenly it doesn't create a status quo, but it definitely shocks the rest of the sector and not you. And that makes it, I wouldn't say fair, but much more interesting to look at. And this is not going to be the last time that that happens. So in terms of like deal flow, like how, I mean, the LP side I understand is definitely needs a lot of education and time to get But how is the deal flow side? Until now, have you been surprised, excited, disappointed? What has been the deal flow side of things in terms of, is there way more than you could do? What's the status on the deal flow side?

SPEAKER_00: 24:15

Yes, definitely more than we can do. So that's also the main reason for getting more, raising more money, that we actually have a deal flow side. flow that we want to support. So right now we can only handle maybe sort of pursuing two, three, four investments at the same time, and not all of them will go through, but we're still relatively small. So we get much more in than we can handle. And some of it we just reject early because we don't really feel we have the domain knowledge yet. We're much better in food and agriculture than we are in energy, for example. So that's not really focused right now and it might never be, but it also matters, but others might be better equipped than us for that. But we are getting in a lot and our portfolio companies are speaking quite nicely of us, which also helps others get there. And we are getting a very fast sort of status in the industry, at least here in Denmark, where if you really meaning sustainability and regeneration, then you go to planetary. So we get those first. So it's a good deal flow. And we're mostly focusing on Scandinavia right now because it's easier for us, but we want to increase over time.

SPEAKER_01: 25:42

Which means the rest of Europe as a continent. Is that interesting? Germany? What would you see as Scandinavia is big enough for 2050? We

SPEAKER_00: 26:43

want to support the founders that could also be in Germany as well or other parts of Europe. But we'll probably stay to Europe. We have a broader mandate because we feel that we're still very early and this is very complex. And we don't want to make too many fixed decisions too early because we also want to, like all living systems, adapt and learn over time. And I feel it's silly that you make all the most important decisions earliest when you have the least information, right? And the least experience. So that's why we're also really trying to actually give ourselves some degrees of freedom to change these things over time.

SPEAKER_01: 27:28

And because you mentioned, it's a nice bridge actually, you mentioned in your deck, we are in service of life, right? Which sounds amazing, but can you elaborate a bit on that? What does it mean to you? Because I've heard that multiple times coming back, but not necessarily in a financial, let's say fundraising deck from a fund. I've heard it from farmers that are deep in this movement. And it's this humbleness that really is interesting, I think, and the relationship with nature and being part of nature and in service of life. But what do you mean by that when you put it in a fundraising deck? And then I would love to know the reaction from people when you present this in a meeting. But first, what do you mean by being in service of life?

SPEAKER_00: 28:10

So right now we see the economy as something that's sort of transcending life. It's something even more fundamental than life, something that's on a very special level in our society that we care so much about our economy and GDP and sort of life is in service of our economy that we need to take care of our economy first and then the rest will follow. And we don't think that's the right way to look at it. So we want our finance and our investments to be in service of life, not the other way around. So we use money to support the life and health ecosystems and not try to monetize them or be extractive of those, but vice versa. And I don't know if it's still a vague way to put this, but that's sort of our thinking on this.

SPEAKER_01: 29:05

And when you, I mean, it obviously depends on, on the, the audience, but let's say we're in a theater full of, full of investors, but let's, let's say it's a, it's an institutional one and you, you present your, you pitch your fund to present it. Like, do you get questions on that? Like, what does that mean? Or have you like these institutional investors now call back? Like, do they have like, Ooh, this is, this sounds really hippie. Or do they resonate with that? Like what's the, what's been the response? have there been surprises in when you go to that level? Because this is deep. This is deep regeneration, John Follerton, regenerative economy stuff that resonates with some, but maybe not with all. Do you get interesting questions on that?

SPEAKER_00: 29:50

Well, I see a lot of dead eyes, I think, and some who really light up. So let's say that between 5% or 15%, they really get this, and they really, really like what I... when I say it, and I can't really predict who it will be, because they really have sort of a deep longing inside, like, oh, someone finally expressed what I've been thinking. But then there are all the or some of the suits who don't trust me, because if I don't get up in the morning to make the most money back to investors, how can they trust me? You know, and that's sort of the opposite of, you know, being in service to life, then we are in service to economy. And And the only thing that matters is the returns we're generating. And that's sort of what we need to flip that. We need to generate a return, but it's not the most important thing. It's not why we're doing this. It's a means to an end and not the other way around. But we do get a lot of pushback on that because people think it's too hippie and thereby the thing that we don't really understand finance or understand anything really.

SPEAKER_01: 31:01

It's interesting. It's sort of the same. Sorry, go ahead.

SPEAKER_00: 31:05

No, no, it's just, it can be a hard place to be because at some point, you know, when enough people say that, you know, I can feel insecure about this stuff because, like, okay, they're really getting upset about this, but, you know, that's how it is when you're coming with a new paradigm, I guess. And, you know, I do understand finance, so it's not that I'm stupid, right? And the companies are

SPEAKER_01: 31:28

doing really well. Like, the proof of the pudding is in the eating and, like, the investments you've made, a number of interesting investments with your own money. I think people underestimate how much skin in the game is changing perspective. So it's also like, I'm doing it this way or we're doing it this way. It's been successful. Companies are doing really well. Either join us or don't, but it's not that you don't have to prove anything. No, exactly. Either you come on board or you don't and it's fine. There are other LPs, but I'm imagining there are other potential LPs. I'm imagining it gets tiring at some point. What do you do when you start doubting? Because you just meant in the pre-interview actually, that you made the deck less VC and more radical. Is that an expression of that doubt? Because I don't think if you were doubting too much, you would make it almost a deck looking like a traditional VC and then a few things like, okay, it's evergreen, et cetera. I'm asking because I remember 12 years ago now seeing the first deck of SLM partners and Tony Lovell and not mentioning Soil Carbon in there. And I asked Tony, why did you do that? And he said, I want to be taken seriously. Actually by a Danish pension fund, funny small world And the world has changed, I hope, a lot. This is an asset to be mentioning. Look, we're building soil. And at that time, it was a crazy hippie thing to even talk about soil, apparently. Why did you want to make the deck more radical and step away from the traditional VC deck with a small regenerative source on top?

SPEAKER_00: 32:57

It actually started after I talked to a family office advisor who really hated what we did. Like, he just talked trash for 30 minutes he barely listened and he had so many ideas about how bad this was and I was actually so I talked to some of the people I knew who are even more radical than or at least as radical as I am and they sort of picked me up and gave me the confidence that there are enough people out there just so go for it because trying to do both it won't you'll get stuck with those advisors too much. So just meet them with love, but don't try to convince them. And then find the people who actually really want to do this and then go as far as we can in that direction. So we could only do that after we talk to some people who actually wanted to become LPs in the sort of most radical world of them. And that's been such a big help. And I think it shows also how much the ecosystem and making these introductions and connections it really matters and you're doing that a lot and other good people are doing that and that's really what's you know carrying us forward and giving us the audacity to do this

SPEAKER_01: 34:21

yeah I think it's an interesting point of it's better to go more radical and extreme because you don't get stuck in the middle like you don't get mistaken for another sustainability or SDG fund or a climate fund that put a few, put also a pillar of agriculture like under there, but they're not really doing anything and are still going for the same extreme returns or extreme speed mostly. And just be very clear what you're not and what you are. But yeah, of course you need the confidence to do that. So luckily you had the ecosystem around you to support you to take that step. And it's going to be very interesting, I think, to see who comes out of the woodworks that is interested in this and is able to make investments Of course, I mean, there are many radical people, unfortunately, without the portfolios or wallets to do these kind of investments. But let's hope there are enough to kickstart this and show what's possible when investments are done differently. And I think you're lucky in a sense that there are some other evergreen structures out there. Sequoia became very, like last year, but also, of course, we mentioned AquaSpark and Tridos Bank has a fund or Tridos Investment Management. And so you're not the first. At least you can point to others like, look, they're still alive. They're still alive. They're doing more than fine. And so there are many investors that invested and have seen these documents before that understand, okay, there's going to be a lockup period and there will be liquidity, but it's not instant and et cetera, et cetera, et cetera. And what would you tell, like, let's go back to that theater. Now let's remove all the institutional ones, except the ones that really understand. So 10% stays, but the rest is filled with investors that are deeply interested in soil, deeply interested in regeneration and are wondering about, okay, how do Why start regenerative investments? Apart from, of course, this is not investment advice, but getting in touch if you're interested, if you're in Europe, et cetera. But if you're, what do you want them to think about or do after they leave that theater? What should be, if we're on stage and we should give them some advice to, okay, if you want to know more about regenerative investments, if you want to start questioning how to put the money to work, not necessarily where, but where is of course also a question, but let's, we say convince you about food and act. Great. Now let's say something about how, what would be a good first step? for somebody that's interested in different ways of investing?

SPEAKER_00: 36:39

I think the first step is to understand what returns means for them because economic returns is one thing they're looking for, but it's certainly not the only one and it might not be the most important one. But what is it? Is it natural resources? Is it cultural capital? Is it social capital? What is most important for them to generate and help generate? and give back. And once you sort of start seeing that and also trying to understand the connections between them, and that's still something that's emerging in my head, how social capital and natural capital are really related in many ways. And we thought we would be mostly about climate and biodiversity, but you can't really disconnect it to, or you can, but it's not right to do it, I think, to sort of climate justice or poverty, you know, It all gets related at some point, but you need some focus points about what's important to you. That's the one thing. And the other one is maybe a bit more vague, but it is to sort of try to get rid of reductionism and understand that this is very, very complex. Somebody's

SPEAKER_01: 37:54

pitching me one trick that we can do or one solution that fixes everything in Fudanag. I shouldn't believe him or her.

SPEAKER_00: 38:02

That's what you're saying? Yeah. Yeah, yeah, yeah. And try to sort of understand that or just acknowledge that this will be sort of a moving target for you, that some of the early investments you'll do will maybe be too simplistic or you won't be too proud of them 10 years from now either because more founders will create something more interesting or also because your knowledge wasn't deep enough at that point. But But that's okay. It's about getting started and getting to talk to people and understand the complexity and the businesses in it. Yeah, and I know it's not the typical two, three, four, five investment advice, which are really specific because I don't really believe you can do that. I think get started

SPEAKER_01: 38:53

is a good one as well. I mean, if you, like what you said, know that the first few might not be perfect, quote unquote, then you're maybe more comfortable to do them and learn from them. And as you said, nobody knows everything at the beginning. Probably we know very little. And so as you're on that journey, make sure their feedback loops, make sure... keep an open mind, make sure. But yeah, don't, I see that with many investors in general, when they start on their impact journey, they wait for the perfect one to come along, which obviously never does and can take them three years to make a first investment. I'm like, you just lost three years of learnings. If you made a few investments, smaller ones that, I mean, depending on the returns, the risks, the capital you have available, but learn from doing and risk it all, obviously, and make sure you have these feedback loops, have the community around you to support you as well and know that the first few when you look back in 10 years might not be the ones you're most proud of but who knows maybe they will

SPEAKER_00: 39:55

yeah and I might be going out of a limp here but one thing that has sort of been a big thing in my head recently is that I think what it really means to invest regeneratively or trying to is very subjective because it is very very complex when you're get rid of the reductionism, then there are so many different parameters and it's so interdependent that at least my head can't really, you know, get it all right. And I think other people, it's the same problem to them. So people I really respect and I know they come from the same place as I do and they want the same thing. We get to radically different conclusions and different investment opportunities. Is this good or bad? And it really depends on how you weight sort of efficiency versus maybe animal welfare. Or there are different criteria and you can't get them all, but you're still all going in the right direction. And I think we have to acknowledge that and not point too many fingers about, oh, but they invested in that. And because we're all trying and no one is investing in coal or fossil fuels or like no one is doing anything obviously bad, but there are different sort of ideas about what an ideal future looks like. And the investments will follow from them. And there's not one right or wrong way to do this. And if you think there is, then you'll never make any investments.

SPEAKER_01: 41:24

Yeah, probably it's good that there are different views or visions on the future, because it would be a bit odd if we all have the same vision about that. I would start to get worried.

UNKNOWN: 41:33

Yeah.

SPEAKER_00: 41:34

Yeah. And just an example that I talked to one I respect a lot who invested in some fish farming, which is a very efficient way to sort of create proteins for human consumption. And, you know, you can take the waste and put it into the soil and for nutrition. So you can almost create a closed loop in it. But I come from a place that, and that's also back to the respecting life, that I really prefer plant proteins and I don't think we should make animals sort of a means to our ends. So I wouldn't make that investment. vestments I get why he's doing it but to me it's not sort of it's not my bar of what regenerative looks like but it's not that I'm making any claims about my bars is the right one

SPEAKER_01: 42:25

yeah I think it's like with many I think especially on animal protein I mean we've had many conversations here on the podcast like I would always ask the question what's the the service of the animal in that case is to make fertilizer is to make like what's the role of the animal in regenerating a landscape, which could be a seascape as well, then I think it gets very, very exciting. If it's just between quotes and quotes, and we still have to do that, but create more efficient protein, I think there's, yeah, you're going to be fighting things and it's going to be difficult to, I mean, close the loop is very tricky because there's a lot of feet that needs to go in. Which type of animal are you growing? How do you interact? What is the complexity? What is the diversity? I mean, is it in or out? I mean, there's some, but I think that if the goal is to regenerate a bay somewhere, so suddenly I think bivalves and oysters and mussels make a lot of sense, maybe together with certain fish. And so what's the, how do we use, quote unquote, the tool of animals to regenerate and not just make it a bit cleaner? I think it's an underlying question that we hardly ever ask. And they are amazing at doing things that we can't, like ducks. Yesterday in the interview, I said geese, but ducks are amazing at grazing and create very interesting protein, both in the eggs and the meat. And it shows that I'm really not a regenerative farmer, obviously. And ruminants are doing something we can't, turning grass into something. But of course, that can be done extremely extractive and extremely regenerative if you do it well. But it really, I mean, it's us that need to make that choice. And unfortunately, many, many times we didn't make that choice on, let's say, the right side, or at least the non-creating life side. I think in service of life, you make different choices with these kind of investments. And it's not easy, but at least the direction is clear. And I think we see more and more people that, okay, what's the direction of life or creating something that's slightly cleaner, slightly less pollutant, slightly more this and like, yeah, I don't think that's, we don't have time for that. We need to do it, but I'm not getting excited about

SPEAKER_00: 44:27

it. No, me too. And we see a lot of those with tailpipe solutions, you know, a better tailpipe for a diesel car, right? And it's, you know, it's better than not having it, but it's also, yeah, someone who invented a machine to suck out methane from from cows, but it only works indoor. So it's only the worst kind of animal production you can facilitate with that. I know you've talked about this in previous episodes as well about how much do you trust tech and how much you don't trust tech. And I come from the tech industry. And to me, the tech solutions are often an expression of a reductionistic understanding of what needs to be done. So it's not that we are against tech, but we're not the ones who just invest in an app and hoping for that to solve everything. We really like that it has a connection to the physical world.

SPEAKER_01: 45:57

And to flip the question then, what is tech that you're getting excited about? Or have you seen tech that you get excited about? We can talk a bit about a few of the portfolio companies, obviously, as well. But in terms of tech, do you see tech out there that you're either invested in or not invested in, but in general, you're getting interested in or excited about when of course, with your tech background, but also with your deeper generation focus now.

SPEAKER_00: 46:23

Because I really like plant-based proteins, I think fermentation is a technology that's under... Would you call it a

SPEAKER_01: 46:31

technology? I mean, it's more approachable.

SPEAKER_00: 46:34

That's sort of, you know, to some, a piece of paper is a technology. So the definition is also... Or an investment fund. I

SPEAKER_01: 46:40

mean, if you take the Greek definition of technology, where, of course, I don't remember where it comes from, but I think... in a vehicle like an evergreen structure is a technology. And looking at your current portfolio, I mean, I want to be conscious of your time as well. And I've got a question, but just to describe a few, like how is the diversity, first of all, because that's, of course, a company, a question people would ask. And like what are, I mean, you mentioned the grain company. What are some others you always like to bring up when people ask, okay, this sounds all nice, but how does it get concrete? Like what did you invest in already until now? And what kind of cool things are you back

SPEAKER_00: 47:16

Are you part of? I think that's wrong. Yeah, be a partner of a service is what we're trying to use. Sorry, my language is still

SPEAKER_01: 47:27

very VC.

SPEAKER_00: 47:28

Oh, mine is too, but at least we're trying here to do it the right way. We invested in a company called Beyond Coffee, which is growing mushroom on spent coffee grounds. And I think they have a very holistic way of circular way of producing. So they take coffee grounds and grow the mushrooms and that and then they take the mycelium resin and create some very good compost out of it so I think they are doing all steps right which we are very impressed about and you know it's not really technology heavy to create mushrooms so what we also really like is business model innovation and they created some mini farms so they they grow the mushrooms at their farm, which is all local and only serve 20, 25 kilometers radius. Then they create another farm after that. And then they put them in some mushroom fridges in canteens so they can grow there and people can see how a mushroom is growing and how beautiful it is and hopefully get inspired to eat more plant-based. So we get to a

SPEAKER_01: 48:40

discussion, like is a mushroom a plant or not? Like it's sort of another kingdom, but it's for sure one of the most stunning things things coming out of nature. Like if you see mycelium grow through those coffee bags and through those, and then in a day or two, like an explosion of life coming out of those, it's really magical. If you haven't done it at home, find a local producer. And because this is, yeah, we drink the coffee, we throw away, I think 99.5% of the coffee grounds, the rest is your coffee. And it's still, it's a very good soil amendment, but you can first grow oyster mushrooms or mushrooms in general, and then use it as a soil amendment and something you can easily do at home with children, etc. So go and do it if you didn't do it yet.

SPEAKER_00: 49:20

Sorry. Yeah. And then another investment we just made is called Biomix. It's some researchers from a Danish university. So they created a small bio trap. So they go out in the soil and they catch the good bacteria there. And then they go home to the bioreactor and they feed it some organic inputs. And then they actually scale it and they can take out a lot of of the bad fungicide in it. So it's good enough for organic farming, and it's a way to use biofertilizer from pretty local inputs. I think it's a really interesting business model. It's still rather early there, but I'm really excited about the potential, at least from the lab studies, from how much it can actually improve yield in organic farming.

SPEAKER_01: 50:16

And so basically, you're investing both very early and slightly later stage, or is it mostly early, or what are you normally comfortable with?

SPEAKER_00: 50:25

Yeah, and so mostly early if we use that, but we also invested in a company called Aurion, which has been leading biodynamic grain producer in Denmark. And I'm almost 40, and Aurion is older than I am, but they never raised a dollar. So what stage is that really? Yeah.

SPEAKER_01: 50:46

it's their first round but still they're very experienced

SPEAKER_00: 50:50

yeah yeah exactly and that's the company that has stewardship ownership mostly besides us and they couldn't really move on because they needed funding and they didn't really have access to that and they got a lot of offers from other funds and they rejected them because they didn't really believe they would care about their values and keep it as the founder intended in terms of being biodynamic. They're really interested because they buy most of the biodynamic grains in Denmark, but they also set up production for legumes, which we need a lot more of up here. If a startup had come just on the legume side and saying that we're ready to process this, then we would be all ears. Then this company came around and much older, but still all all the right values, then I think it's a great fit.

SPEAKER_01: 51:51

Probably better even because they are in business, they have set up their value webs, their mercedium, they are selling, they know, I mean, the chances, the risks are so much lower if you're around for more than 40 years that you're around for another 10 is pretty likely compared to a startup that could disappear tomorrow, literally.

SPEAKER_00: 52:12

Yeah, so it's also good to balance risk, I think, in a portfolio and i know that that's usually not how it works because then you have pure vc which is very high risk and then you have some later stage funds which are less risky but but we still we have a hard time finding those who really believe this enough for us and also have a right idea that we are maybe a little bit stage agnostic. We want meaningful ownership, but we could get that in this case. So we don't want to be too locked in by saying that we're only pre-seed owner, seed owner series at A stage.

SPEAKER_01: 53:33

Yeah, sure. And to switch it a bit in terms of, I mean, you're saying 25 million would be a nice amount. We want to stay as radical as possible. Let's say crazy, life event, you're suddenly in charge of a billion dollar or billion euro fund, and it can be as radical as you want it to be. So you have all the possibility to choose the longest time horizon possible, liquidity is up to you, et cetera. It has to be investments. What would you focus it on? What would be your priority sectors? Could be in food and ag, obviously, it could be anywhere else. What would you focus on? Would it all be in legumes in Denmark? What would you, or in special tech that we don't know yet, to bring complexity to farms like what would you focus on if you had that access to to that kind of kind of portfolio

SPEAKER_00: 54:23

I think I would split it in two buckets one I wouldn't really expect to make any profit from that would be sort of facilitating a conversion of land to regeneration or restoring ecosystems and the other half I would invest in companies that would sort of create services for those working to convert the land and obviously those companies could also sell to to other regenerative farmers so I think being able to create a large local ecosystem where people would get the right people who actually want to convert the land and maybe also you know be small whole farmers whatever there are many things we can do in terms of creating more regenerative agriculture and restoring ecosystems but then creating all the companies around that who can create those services. And some will be more tech than others. But I think that would be really interesting to try to create that local ecosystem and make sure that the entrepreneurs, they have access to the farmers and they really understand what they need.

SPEAKER_01: 55:31

And when you say services, could it be food companies as well that buy from these, that buy food rotations, for instance, that would be an amazing service for many, many farmers and not just one cash crop and means services in the broadest sense of the word.

SPEAKER_00: 55:45

Yes, exactly. So it could be food companies, it could be robots for weeding or whatever the farmers would say they needed in order to be able to do that job probably and protect the soil and the biodiversity. And I think if you could get the right people together here and make sure that there were enough money to sort of support conversion of land while giving the opportunity to smart people to innovate around that I think that would be a really, really powerful way to spend a billion euros or dollars or whatever we have here.

SPEAKER_01: 56:18

And you would focus it mostly or predominantly say here in Denmark where you're like in your local context. Do you see that potential there mostly or would you, would here be somewhere else?

SPEAKER_00: 56:31

So I think Denmark is a very bad case because we sort of grow up all our land. So I think we have a lot of work to do up here that can be used other places in Europe. But I think I think there is a sense in choosing a place and creating a community there. So it could be in Denmark, it could also be Germany or other places. It doesn't really matter too much where it is, but I think it's about creating the solutions that also work locally. And then let's see where else can this be applied? Because I think one thing we're also starting to learn that the last 40, 50 years in large-scale globalization, we have seen the same solutions applied everywhere And that might not be the right thing going forward. We need more local solutions and some of them can scale globally. Some of them needs to be adapted. Some of them shouldn't be scaled and that's okay. But I think keeping it to one place would be good. And then we can copy that model about spending a billion dollars to other places as well and see what's right in that ecosystem.

SPEAKER_01: 57:39

And... We take your fund away. I mean, people know this question is coming, but if you had a magic wand and you could only, you could change one thing, one thing only in, I would say in the regeneration space could be on the investment side, could be global consciousness, could be better taste. It could be all land should be steward owned. It could be anything. What would you change overnight?

SPEAKER_00: 58:03

I think I would really like to, to make humans not like meat anymore to, to, and everyone into a vegetarian or vegan. In my mind, that would help solve a lot of problems of all this extraction we're doing in this world. So if we could sort of free ourselves from industrial meat production, then we could free up so much land because we don't need all the feed going into those animals and we could end so much suffering and hopefully also be a bit less alienated to our food. because I think industrial farming, it only works when we're alienated from how it's done. So I think that would help us in many different ways.

SPEAKER_01: 58:52

And do you think that would be, because I have this conversation often, that would be enough? I don't know if taking away the CAFO operations, which should end tomorrow, would also end the system of destruction. You say it could free up a lot of land, which it could, and that's always the eco-modernist approach, but it also could not. Maybe they find another way to burn that stuff and let's say the landscape doesn't change, except of course that there's a lot less animal suffering. But you could argue there's a lot more because we keep dosing those fields in chemicals and plants. and killing an amount of life and wildlife on those fields that is enormous. Would that be the entry point? Because I see from a lot of plant-based protein sites that it's not grown at all regeneratively and we're sort of hiding where the ingredients come from. I told you you could only do one thing. So I'm making the question way more complex, obviously, now and opening a can of worms. But I'm afraid that it's too reductionist or too simplistic, but maybe that's the way I asked the question. I don't know. know if it would fix it and we just find another way to to create an enormous amount of of extractive ingredients to to go somewhere else to go to salmon and of course that we won't do animals anymore but like we'll find another way to to squeeze the system in in a wrong way are you scared about that like pushing plant-based like singular plant-based um in that way

SPEAKER_00: 1:00:44

yeah of course and and i think it's a totally valid point you're raising here and um and you know when we only have one one solution, it does get reductionistic. And I think most solutions- You should stop asking this

SPEAKER_01: 1:00:57

question, yeah.

SPEAKER_00: 1:00:59

No, no, but it will only work maybe if there is a good CO2 tax or you limit how many fields you can grow or send some radio about how much can be farmed and how much cannot. But yeah, so that would be an entry point, but no, of course it wouldn't be enough. Just like a CO2 tax is a very efficient way to sort of reduce carbon, but you know, it doesn't really work in isolation and none of these solutions do. And that's the problem about all these crisis that it is. So that's a

SPEAKER_01: 1:01:31

question I wanted to ask actually on slide eight in your deck, you might be changing this. So when people see it, it's different, but there is a carbon tunnel vision slide, which I've seen a lot on LinkedIn, et cetera. But so basically what is your point that you're trying to make with, with the carbon that our singular focus on carbon is maybe also reductionistic. Like how, how does it go down with, with investors? Like when you put a, tied on, which is quite early in your day.

SPEAKER_00: 1:01:54

Yeah, no, they get surprised because, you know, to them, the crisis we're facing right now is a carbon crisis. And that is one of the crisis and probably not the largest one, to be honest. So, and, you know, if you get a ESG report for your portfolio, you know, it will be about carbon intensity and it will only focus on carbon. There is nothing else right now and no other metrics in terms of sustainability. And to For me, that's a really big problem, but it's also a very big opportunity. I saw some statistic about how much venture funding went into ecosystem restoration versus electric vehicles. It's nothing. You can barely see the ecosystem restoration funding on that chart compared to just electric vehicles. Then you get to carbon capture and storage and PTX and other stuff on top of that. So to us, it's such a great investment opportunity to invest in regeneration and sustainability outside the carbon space. And that much more funding will go there in the coming years. So being there early, you know, not too early. We need to keep the companies alive until others realize that we also have other problems. It's much more attractive right now because we can see how much funding and how crazy the valuations valuations are for some of the electric vehicle companies, for example.

SPEAKER_01: 1:03:27

No, absolutely. And I think on the warming side, like water vapor and biodiversity and re-vegetating the earth is, if you're really worried about global warming, that's where you should focus on. And people are coming around and there's much more attention now for evaporation, et cetera. But it's, yeah, carbon is a very small part. It's a big problem, but a very small part of a much bigger problem we have and we're facing. And people are coming around to that. But yeah, if you're early enough and you can stay around. That's the place where you would like to be. I want to be conscious of your time. I know you have to go relatively soon. I opened a can of worms, two can of worms probably at the end of the conversation, which means we need to check in again. We need to sit down and unpack many of these and other investments you've been making at that time. So I'm looking forward to that. I want to thank you for your time this morning and looking forward to unpack the evergreen structure of Planetary in the future.

SPEAKER_00: 1:04:22

Thank you so much for having me and having this conversation.

SPEAKER_01: 1:04:28

Thanks again, and see you next time.