Investing in Regenerative Agriculture and Food
Investing in Regenerative Agriculture and Food podcast features 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. Hosted by Koen van Seijen.
Investing in Regenerative Agriculture and Food
199 Eric Archambeau - Drawing from his Silicon Valley experience and after having put €300M to work in food and ag tech, now is the moment to raise VC funds writing €100M checks
A conversation with Eric Archambeau, co-founder of Astanor Ventures, about the early-stage space slowly getting crowded, the enormous influx of talent focussing on food, agriculture and soil, health care costs, AI/ machine learning, the computational power and the future of regenerative agriculture.
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We talk about it at conferences and discuss it over coffee: we should get institutional investors (the pension funds, insurance companies, and very large asset managers) investing in the space. But very few people have actually raised from these players and thought about their role.
Who can write $100M checks to give the scale-ups in the regenerative agriculture and food tech space the time to grow? Why now is the moment for regenerative food and agriculture (as health care costs are getting out of control, institutional players are forced to invest in impact, technology and raw computational power make almost magic possible)?
More about this episode on https://investinginregenerativeagriculture.com/eric-archambeau.
Find our video course on https://investinginregenerativeagriculture.com/course.
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We talk about it at conferences and discuss it over coffee. We should get institutional investors, the pension funds, the insurance companies, and the very large asset managers investing in this space. But very few people have actually raised from these players and thought about their role. Today, we are joined by someone who has done just that and plans to raise a lot more and put it to work. As the early stage space is slowly getting crowded, luckily, we need to start thinking about who can write$100 million or euro checks to give the scale-ups in the region, ag and food tech space, the time to really grow. And we discuss why now is the moment for regenerative food and ag as healthcare costs are getting out of control, institutional players are forced to invest in impact, technology and raw computational power make almost magic possible, and most importantly, the enormous influx of talent focusing on food, ag and soil. 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 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.
UNKNOWN:you
SPEAKER_00:Welcome to another episode. One that's been a long time in the making. I can say friend of the podcast or a follower and supporter as well, which obviously I want to thank Eric for. I've been following the journey of Eric and Astanor and also Quadia for a long time. We had Quadia many, many years ago. I think it was the first 30 episodes or something. But I really wanted to have Eric on to explain a bit of his journey into this fascinating world of impact investing and then even deeper into food and ag. So welcome. Thank you for hosting us as a podcast in your office with a magnificent view on the city of Brussels and I see some wind turbines turning not so many farms but probably if I look far enough I can see some but welcome on the podcast and thank you for making time thank you very much Koen and to start with a personal question we always love to ask why soil with all the career paths you could have chosen I would say after your time in Silicon Valley like you could have gone a hundred different routes how did you end up in the world of food, ag, farming, and not the easiest part, let's say, and impact investing. Well, impact
SPEAKER_02:investing is something I've been growing into for over 15 years now. But what led me to soil is more like food that led me to soil. One is I'm definitely a big foodie, got involved in a number of food-related projects, personal projects, including investing in a few restaurants, not because of trying to make money. You never make money in restaurants.
SPEAKER_00:Listen to this. If you're at the curve of investing in a restaurant for money reasons, step back and think of it as a hobby, because statistically, you're not going to do
SPEAKER_02:it. You're not going to make money. Even in the best restaurants, at best, you're going to get your money back. But I was very fortunate to meet a few chefs that were really inspiring in their vision of the need to change our approach to food and that led to in the supply chain to where this food came from and working with a few scientists also again being you know I became close to one of the very well-known chefs in London called Jamie Oliver, who, through a series of evolution in our relationship, asked me at some point to become chairman of his foundation for food education, which was mostly working with kids. I discovered the really deep problems of our food system, which has been, and I've said that a couple of times before, but has been developed over the past 70 years to deliver very efficiently cheap calories throughout the world, but not cheap nutrients. In doing so, we have been producing huge problem on the health side, so people are being They develop all kinds of metabolic diseases, especially diabetes type 2, that should not exist in the world, but unfortunately does exist, and it's touching more and more people. In the U.S., it is estimated today that 30% of people who are born after 2000 will have developed diabetes type 2 by 2030. Which is tomorrow, basically. It's tomorrow. It's huge. And the other number which I wanted to give before I go back to the soil, which is a really scary number. Today, Americans spend$1.1 trillion on food every year. And a little bit by coincidence, but definitely it's linked, the healthcare system in the US spends 1.1 trillion, the same amount of money, to try to cure the diseases that are caused by the poor nutrition of people. And we're talking mostly about diabetes type
SPEAKER_00:2. Plus then another... 1.1 trillion. Another... two times that amount. I think there was a Rockefeller study on true cost accounting. The cost of the food system just in the U.S. is three times what the U.S. population spends on it. So it's the health and then two times environmental and social. Exactly. And then I get to the soil. That's four, basically. Four
SPEAKER_02:X. No, it's three X. So 1.1 spent on the food by the consumers. 1.1 spent partly by the same consumers, partly by the state to deal with the healthcare issues, and 1.2 trillion spent that is not being accounted for really today, but is the cost to the environment, including the soil, a lot to the soil, biodiversity, environmental, and so on. And so it all starts with the soil. It all starts with the fact that we have been growing monocrops.
SPEAKER_00:Do you remember when that clicked? I mean, you started with food and, of course, the connection with these chefs to soil. But do you remember, was there one moment or multiple when you were like, whoa, it all starts with soil? Like this is not just on the taste, but also actually on the environmental piece, which is for many, I think, actually for me, it was a big shift going from, of course, we eat better food, it's better quality, better taste, better paid for farmers, et cetera, et cetera. But to see the switch to water, carbon, biodiversity, like it literally all starts with the soil was quite an eye opener for somebody who didn't grow up on a farm. Was that the same for you? Was it a natural, to see the potential of, of the issues and the potential of soil in all these areas, on health, carbon, water, biodiversity?
SPEAKER_02:As I said, I didn't grow up in a farm. I didn't study. I spent quite a bit of time now with scientists from UC Davis, from Van Ellingen, from other places on agri now, but at the time, I was really new into that space. from this food side being really aware of how you know all the things around corn and high fructose corn syrup or the things that you know I got into you know trying to understand these mono cultures and and and how including in Europe the monoculture which is sponsored by subsidies you know to keep this statue quo where you basically have a system that you keep subsidizing not just the farmers, but the system that brings all the, you know, all the insurance that you have to put in the soil. And the soil becomes just a very dead substrate. And the ha-ha moment on the soil itself goes entirely, the credit goes to my friends at Soil Capital. So I became, at that time, at the very beginning of Soil Capital, Chuck came to me. I became the first private investor in Sol Capital because I really believed in the vision of Chuck. And he took me to Frédéric Thomas' farm in Sologne. And Frédéric Thomas showed me the difference between his soil, was using regenerative agriculture, and the soil of his neighbor, who did not see the point of using it. I think today he still doesn't see the point of the neighbor, because he gets all the subsidies, you know, to
SPEAKER_01:do things. Why would you?
UNKNOWN:Yeah.
SPEAKER_02:And suddenly it was the aha moment when Frederick started to dig in the soil and showed me the difference in the soil between the two. And everything clicked together. I had read a number of books on the invention of synthetic fertilizers and all these things. And then suddenly I saw that. It was very abstract until then. And that very moment was the famous aha moment where I said, geez, you know, this something to be done here and decide to dig in whether there would be a number of technologies that could be developed and or sponsored for that. By serendipity, I met, no, I didn't meet because I already met her before, but this very famous scientist in France who happened to have a summer house next to my summer house in France. Serendipity. Serendipity, Dr. Pascale Cossard, who is the secrétaire perpétuelle de l'Académie des Sciences. She's like the chairwoman of the French Science Academy, so someone fairly knowledgeable. She's the that actually discovered the role of Listeria and how Listeria goes from cows to the soil back to the cows and everything, and how there's a link between the microbiome of the soil and the microbiome of the animals and people. And until her research in the 1990s, people did not really understand that there was a microbial life under soil because it's anaerobic which means that as soon as you bring it to a lab it's dead so you don't see anything you say okay you know what we don't have to worry about it just put NPK and everything will be fine so her work or pioneering work with Listeria gave birth to all the things we have been looking at and it was a very new very new field of understanding the microbiome
SPEAKER_00:of the under soil and you were discussing that in like in front of your summer house you happened to talk about gardening maybe and soil you discovered that she was and fishing and fishing and that she was that key figure or yes
SPEAKER_02:and I said wow you know this is this is a signal you know I have to do something about it so between the you know visit to Frederic Thomas then a few weeks later my discussion with Pascal and I said you know this is fascinating you know things are happening right now there's a there's a new sector there's a new potential revolution and then my friend in Silicon Valley. Around 2009, there was a big breakthrough in deep learning. The first company I started as a CEO and co-founder was one of the first deep learning companies, but way too early. It was very frustrating. We didn't have enough computing power. We were dealing with single layer neural
SPEAKER_00:networks. Shallow learning,
SPEAKER_02:yeah. Shallow learning, single layer neural networks, very slow. It was a bit frustrating from that point of view. Then my friends that who the people I hired in my company fresh out of universities in the in the early 90s where they were by then senior or even senior engineers or even managers or directors of data mining in the big companies at Google and and so a friend of mine actually was the head of search for Google and working on all the things and then you know some people who work for me ended up being the head of data mining for for Amazon and for
SPEAKER_00:Twitter. A good birthplace for many careers. Yes,
SPEAKER_02:exactly. But they were reporting to me with a lot of excitement this breakthrough in artificial intelligence. And I kind of thought, maybe there's something to be done between applying that to basically what has become today synthetic biology and all these things. So I started to look and I found that there were quite a few people working on that already starting to work on that so I said okay you know what this is happening there is a big breakthrough combination of AI and biology that's going to change it will eventually change the way we look at agriculture it's going to be changing the way we have been looking at things we have been making very important simplifications that are not correct anymore you know agriculture is not linear it's not NPK gives life it's much more complex than that. And now we have the means from a computing capacity to actually have much more complex models that will lead to a new order in the way we look at things. So it's a very
SPEAKER_00:high level kind of thinking. Yeah, but it's a fundamental question that I think investors like yourself ask, okay, why now? Like we knew or there's been reports coming out on the poor quality of soil and it's going down and of course books coming out for the last 2030 in some cases you go back with David Montgomery to 100 years ago I mean the early organic pioneers in the UK did observe like observe science but still saw the connection between healthy soil and other things and we still went on the path of 70 years of extremely intensive extractive ag and food so why now is it different than the underlying answer in your case seems and there's a huge breakthrough in computing power which enables 10,000 other things or we cannot even imagine yet and so you said okay I'm not going to continue or maybe you can of course continue part of that in my foundation work and NGO work but I see an opportunity here to apply my VC and my Silicon Valley knowledge into this new world and apply this breakthrough into ag and food was that already like was it a logical step like you from those few weeks of this these serendipity encounters, was it a very logical step to, to found Astanor or like what happened between, okay, this is actually, this could be a massive investment opportunity or it has to be, and it should be, and then let's build that compared to many other paths you could have chosen, like invest in some of these or set up a foundation to push against corn syrup and, or to push computational and deep learning. Like what was that click to, okay, we're going to build an investment house, like quite a substantial one we'll talk about that and to invest in this space because there's a the why now is now
SPEAKER_02:yeah I think I think it is it's exactly what you what you described was this aha moment that I said okay there should be something happening but quite frankly there was enough naivety in my in my you know in my thinking I didn't know enough about the sector to think, okay, it's going to be so difficult, I shouldn't do it. I think if I had been a
SPEAKER_00:really
SPEAKER_02:deep expert in the area, maybe I would have said, you know what, I'm going to stay in what we didn't call metaverse at the time and do gaming. But the thing that really pushed me into that is I'd been fairly schizophrenic for a while you know making investments in companies that were making money whether they were social networks or Spotify or whatever at early stage fascinating you know work to be venture capitalists is really great and I'm super grateful I've been able to do that for a long time and when companies actually do succeed in becoming big
SPEAKER_00:companies you might be listening to this through Spotify as a podcasting player yeah but it's There was something itchy.
SPEAKER_02:Yeah, it's fascinating to do that. But at the same time, schizophrenia came from the other side of my work. Non-for-profit was to work with social entrepreneurs, which were not very scaling. They were not scaling for the most part. Actually, none of them were really scaling when you think about it. And then I saw the possibility of doing the two things together. And that gave me a boost of... energy, you know, like, wow, you know, maybe I can do something which is meaningful, which is really fun and making money at the same time so that making money is very, very important because it gives you the sustainability, it gives you the attractiveness of working with more and more investors and really have the potential maybe one day to have a systemic impact, which is really what I've been aiming for. Can we as a firm have a systemic impact on the planet? Of course, we're not going to change the entire planet, but can we have, you know, for some parts of the system, can we really change it because of some of the investments we've made, some of the risks we took, some of the conviction we managed to bring to others? And that's really exciting and much more than making money for the sake of making money and much more than giving money to a child organization that you feel good about it, but you know that it's not going to change the world.
SPEAKER_00:And so what was the original idea of Astanor? Because you went big. You didn't go for, let's raise 10 or 20 million and put that to work. You really went for, and we're going to unpack that as well, to go after, maybe not with the first fund necessarily, but definitely with the follow-up ones to attract institutional capital. Was that from the beginning your conviction, we need to go, I mean, I'll ask the$1 billion question, but you're pretty close to that. You're going to get very close to that. Was it from the beginning, okay, we need to move lots of zeros and not just a few to move the needle? Or is that something that happened because the wave started to roll as well and you managed to serve it quite nicely?
SPEAKER_02:Right. Yes. 20 years of venture capital prior to Astanor and a bit more for my co-founder, George Coelho, more like 30 years in this case before we started Astanor, had taught us that money matters and amount of money matters in this business. Why does it matter? Because of what we do. We do things that require high conviction for a while. What I mean by high conviction is there are several ways of practicing venture capital. One is you just follow the trend or you follow some people who are doing things and you put money money following those people and statistically if you have good investors in front of you you don't have to have a lot of conviction you just have to be you know to be convinced in a way that those people know what they are doing so I'm not going to give you names of firms but you know everyone knows yeah you can follow those firms and you'll do well and you don't need to have yourself a lot of conviction about the sector or the companies or the people that you are working there are times where it takes a while for a company to really take off, to really go through a certain amount of time where things are going to look pretty bad. I mean, take Amazon. It took quite a while for this company to become the powerhouse. It lost money for a while. And so investing in such companies, I'm not talking about Amazon. You need to have the stomach to stay. Exactly. You But you need to have the conviction that between the idea, between the timing, the idea, the product market fit, and very importantly, the management team, which you may have to augment, or you may have to do something about it, which is what we do most of the time, is help in one way or another. We help bring new people into that. You are going to be... pushed by a lot of people around you saying, I don't believe in that. I don't understand how you can believe in that. I don't understand how you can put money into that company. I don't see the future. It's a big mistake and so on. But if you are really convinced of that, you have to have the staying power to do that. So if you have a really small fund and you're going to be pushed away by other people or you're going to be washed away or You won't be able to put the resources to sustain this company that for a while. That's what we thought from the beginning. Eventually, we need to have that power to back our convictions. It took not much longer. It was much shorter than we thought. first fund that we wanted to raise. We had a very small fund that was more like us and a couple of friends. But the first fund we wanted to raise, we thought maybe we'd be 100 million and then we'd have another one. And then it turned out to be pretty much 300 million. So that's... Three
SPEAKER_00:times,
SPEAKER_02:yeah? Yeah. And then the
SPEAKER_00:next one, which we... I remember a chat we had at that time. He said, we raised a bit more than we expected, which is good. But it's also a challenge because, of course, you have to put it to work. It's not that you can leave it on a bank account. I mean, for a while, because you can follow your convictions, et cetera. But yeah, your investors expect you to put that. So what made you decide to not put a hard cap at 150 or 200 and call it a day and go for the, and take the 300? Was it a conscious, I mean, of course it's a conscious decision, but you were like, okay, actually I can see the deal flow and the quality for even that amount, so let's do it? Yes. I mean, that's the latter,
SPEAKER_02:actually. We started, when we, we started to look at the sector and made a few personal investments around 2015, 16, at the very beginning. There were very few projects that made sense. We invested in agri-economy at the very beginning of agri-economy, companies like that, which now just raised a big round of financing. But there were very few entrepreneurs that were having a combination of vision, a level of ambition that match our desire to have a systemic impact and the technology
SPEAKER_00:breakthroughs, the product. Is that a fundamental one for you that it has to have that breakthrough piece you mentioned before that happened around 2009 at the core somewhere to, not at the core somewhere, at the core because otherwise it won't scale fast enough? Would you say most of your companies have that somewhere? Yes. Yes. For
SPEAKER_02:the most part, yes. I mean, virtually all of them. But the technology breakthrough is not necessarily an AI breakthrough. It could be something. Most of the time now, by the way, it is linked to biology in one way or another. And if it's not biology, it might be mechanical like Monarch tractors, but linked to a way to deal with the in a very different way. Because if you can pinpoint very precisely where to do things in the least intrusive way and be very precise in what you are going to put in the soil, that's a big breakthrough from that
SPEAKER_00:point of view. And is time and the normal, let's say, VC timeframe frame of a fund we've discussed it many times on the podcast that it's it's it's not yeah it's tricky let's say it's difficult or it's a challenge the speed of which returns are required and the speed of which does these companies have to to scale and grow etc which we need for the planet let's not not discuss that because of course so we can wait 20 to 30 years because that's way too late but the seven or the eight or nine years do you see that that that was designed for Silicon Valley and software most of it and maybe part of hardware. Have you experienced it as a challenge for, let's say, the food and ag tech space to, like, we need these returns relatively fast and we need to put 300 million to work. Is that been a puzzle and thus a challenge? Or you said, actually, there's enough deal flow that can do that and we are convinced that also with the normal VC, the traditional quote-unquote VC methods and structure, we can actually, we can make a meaningful dent? The
SPEAKER_02:That's a very good question. I don't think we have a full answer to date, but you're right. It's not just about agri-food. It's also about other sectors that require longer time. If you develop an antivirus software, you push a button and you have a billion antivirus software that are being pushed to customers. If you grow insects in a vertical farm, you push a button. Embarrassing, yeah. And then it takes nine months for the things to... Which is fast for animal protein. Which is fast. And then another year for that and so on. So it takes... You have to deal with nature. And nature has seasons and nature deals with things at a certain speed. Even if you can incredibly accelerate, thanks to AI and computing power, for example, the selection of new species or new variety of plants that correspond to a certain level without doing gene editing necessarily, you know, just looking at the acceleration of that today with AI, you can go from, you know, 12 years to a year.
SPEAKER_00:But still, it's a year. It's a year. Yeah, and it's not three days. But
SPEAKER_02:that's
SPEAKER_00:what I meant initially about the breakthrough. So did you tell your investors, like, look, this is not your typical SaaS, Series B, like this could take, or did you build something in to make it, to give you a bit more time or was that tricky in the first place? It's
SPEAKER_02:a tricky... It's a tricky thing. Eventually we'll get there. But you're right, we have to remind our investors, for the most of them, that it takes time. So every year we remind them it takes time. Because it's human, you know, you put money somewhere and you're antsy. You say,
SPEAKER_00:okay, I want my money back. And they might go through that J curve and the difficult years. And now with Fund2, are you doing things differently or is it mainly... same investment thesis bigger obviously or are there structural things you do differently? I
SPEAKER_02:think we have built a team so there's a difference between what we were doing at the very beginning you had two guys in a garage making small investments and now we have more of a professional team with about 35 people on two continents and so it's a very different process but what we do and we really work hard on is to keep that pioneering spirit of every single deal is the most important deal we are working on and every single company we have invested in is the most important company that we have ever invested in before and keeping that I would call that almost animal spirit, especially in the case of agrifood, is very important. I think we are not complacent or anything like that. We think that it's just the very beginning. This transition is going to be unfolding for the next 15, 20 years, at least in front of us. We're just at the very beginning of
SPEAKER_00:what's going on. And what has changed or has something changed of the appetite of investors? Like the conversations you have now compared to 2017, 18 and when you were raising the first fund. Has that changed? Are the institutional ones, the larger pockets, are they finally coming? What has been in a very challenging environment we're in now? Obviously, we're recording this in November 2022. What is your feeling of the markets or also of the second fund is it going to be is there more interest and also commission to actually put significant amount to work I mean you already raised 300 million almost so significant definitely but you know you're targeting a considerable larger one what has been the response from from investors so
SPEAKER_02:it's
SPEAKER_00:interesting
SPEAKER_02:because this year not surprisingly private investors especially and smaller family offices are much more cautious about making long-term illiquid commitments. There are a number of endowments and pension funds that have rules, prudential rules that make sense because of the disbursement. You know, university endowments need to be able to disburse to students that need bursaries, they need to do things with research. Same for pension funds, they need to be able to. So, they have ratios of public equities, which are liquid to private equities. And because of the collapse in the value of public equities, suddenly the value of private equities have gone up. And for them, many of them totally stopped the new commitments in private equity, which includes venture capital. So that's a little bit of a challenge. On the other hand, what we are seeing for the first time is that the really large asset managers, the big insurance companies, the big multi-asset managers, have a mandate and or political pressure, depending on which countries they are in, to invest in impact investing. But being big institutions, they are looking for big tickets. That's why they have invested in some of the very large TPG and so on. Big
SPEAKER_00:tickets are hundreds 50, 200.
SPEAKER_02:It's very difficult for many of them to put less than 100. For some really, really large ones, it's like 500 minimum. And then the smaller one is 50 plus. But we are seeing them suddenly because we have been growing recently in our fund size. And we are Article 9, 9.3, which is very rare in terms of investment. So it's the SFDR taxonomy to say that we are a real impact because a real impact feels like Twitter blue. We are a real impact. It was 9.99 per month. Exactly. Thanks to that, now we are Article 9. There are not that many places where those people can invest. Suddenly, we see a lot of interest, the theoretical interest for now, but I think it's good news for all All of us, we are working sincerely in that sector that are genuinely investing in impact investing for the agri-food space. There is a handful of funds that are doing that at a certain size. I think it's very important that we have that power to invest in later stage investments. They are not just seeds, they are not just series A, but we can go at a higher level because those companies will need sustained power. because they are changing the world. It's not going to happen overnight. They will not be profitable overnight. And that, again, requires high conviction. We have a lot of colleagues, venture capitalists, who are dealing at the lower amount level because it's an earlier stage. They are doing a fantastic job of nurturing those companies. There's not enough money going into the next stages, the growth stage. The growth, not in the sense of what people are doing today with more mature industries. These are still pioneering industries. And if it takes another five years for a company to be profitable or another three or four years, it's really difficult to find today to fund that gap.
SPEAKER_00:10, 20 million to go or more.
SPEAKER_02:Probably more, like 100 million. How do you find that today is a challenge for many companies? So we think, you know, this... new interest from the very large asset managers for this type of impact fund. Some of them, like ours, will be channeled to the agri-food space. This is key for the sector to get there because otherwise we won't be able to fund this transition.
SPEAKER_00:And what would you tell the private investors that are holding back a bit now? Let's say we're in a theater and it's a room full of private investors and the smaller endowments and family offices. What would you tell them? Obviously, we're not giving investment advice, but what would you like to leave when they leave the room, when they leave the theater? What should be the thought on their mind? Where should they go and dig a bit deeper? Where should they go and understand more of this space? What is a good place to start? As
SPEAKER_02:you said, we don't want to give investment advice, certainly. I think the first thing to really realize is regenerative agriculture is going to happen. Like it or not. Because there's no choice. The good news is what we are seeing right now is you are thousands of really bright entrepreneurs who were not thinking about that before. They were not thinking about regenerative agriculture. They were not thinking about biology that needs to be developed. They didn't think about mechanical engineering that needs to be developed, about big data that needs to be developed for region ag to become really the mainstream.
SPEAKER_00:Do you see that deal flow now? coming? Do you see also a shift in the investments Aston has been making? Is it getting more into the ag space or the region ag space? Or has it always been food plus ag? Or has it been the themes, have they been shifting over the years of investing and thus going forward? I
SPEAKER_02:think initially the low-hanging fruits were more on the food side, because it made a lot of sense and so on. ag we have been trying to do things around that but um there is some fundamental data plays that need to happen um for region ag to be um on par in terms of of profitability from a farmer's level point of view the other thing is farmers don't have the money to invest in that so it needs to come from from something else or we need to have the means to um point them into a new process, new form. The good news and the bad news is there is a huge generational transition happening everywhere in the Western world when it comes to farmers. The numbers vary between 50%, 75% in the next 10 years, 15 years in the US, in Canada, in Western Europe. There will be new farmers I mean, existing farmers will need to retire or will retire. And then someone needs to take over. So the bad news is many, many, I mean, a large proportion of the children of farmers don't want to become farmers because they've seen the progressive destruction of lifestyle that this current generation has had. They had a great time. regardless of what they were using in terms of techniques and products and everything until recently, but they have been going down now. And we might be able to, as a society, I'm not talking about us two here on this table, but we might be able to attract people back into a new form of farming because of technology, because of data-driven decisions and so on, that will make farming more much more livable I'm not even talking about you know but you'd be if you can be in you know in the countryside in nature every day if that's something you are really attracted to and you don't have to break your back you don't have to walk you know 90 hours a week to make barely minimum wage or even less you know that's not very attractive but if you can do something better than that if you can actually have a business model that makes sense. So we have been working with Hector in France and Audrey Bourleau. She has done a fantastic job at modeling what it takes to make farming again an attractive position, I mean an attractive career proposition. And I think this is the important thing to realize is we We are getting to the point where what we see in terms of technologies everywhere, new technologies, new processes, is likely to make that happen. There are a number of companies out there that are just starting to grasp what needs to happen and what needs to be delivered to the farmers, to the companies that are buying from farmers, which is very important, the ecosystem, companies that are selling to farmers, all All this ecosystem needs to adapt. To me, looking at the trends and the willingness from a number of people to push that evolution, I think it's going to happen. Message is- It will happen. It will happen. There are already some really interesting companies
SPEAKER_00:to invest in. The choice is you want to be part of that journey or not? And are you optimistic? You said it's going to take 15, 20 years, and then you described a number of technologies, and we don't have time to unpack all of them. But are you optimistic at this moment in this transition phase?
SPEAKER_02:Yes.
SPEAKER_00:VCs always have to be optimistic.
SPEAKER_02:Yeah, otherwise I would do something else, definitely. No, okay, everyone tells me I'm too optimistic. They've been telling me that for 25 years. I'm right enough times to continue to be optimistic. I think not every company is going to be succeeding in that space. It may take longer. Something will go faster than others. But I can see this momentum building into what is really the most, you know, the highest reason to be optimistic is to see the level of brain power that is being poured into that sector to think about next level solutions in the right direction. It's unparalleled. People who are meeting more and more on a higher frequency basis is really amazing. So that's what makes me optimistic because when you have this connected brain power with the type of technology we have that powers it between biology, synthetic biology, AI, and so on, I cannot tell you about all the projects are seeing, but some of them are mind-blowing. And the consumer is starting
SPEAKER_00:to shift. And then on the other side, the consumer... Because somebody has to buy this, obviously. We cannot just throw it on lower costs and that will be okay, and input costs, etc. I mean...
SPEAKER_02:Yeah, but if we go back to
SPEAKER_00:the
SPEAKER_02:very beginning, if you have a... Take the US, and you have a mostly private sector health insurance who are going to die. I mean, these companies, these healthcare companies are all going to go bankrupt if they don't do something they're going to move and they're going to mandate a number of things they're going to push people they're going to push enterprises they're going to push consumers they're going to push a lot of things do you think the health angle is the the health angle is one of the big ones and the you know consumers themselves the younger generation who I think the health angle is going to be the real driver more than you know environmentally conscious people which are a big minority, but they are not the majority yet. People still think that someone else can take care of that, not them, because they are busy and they need to take their cars to go somewhere, and I fully understand them. But the health side is going to drive that.
SPEAKER_00:I want to be conscious of your time and ask a final question, which is never the final question, but if you had a magic wand, you could change one thing overnight? Could be in food and ag, could be in general, economy, society, etc. What would you change? I have people that say, yeah, I would change this, this, this. No, one thing. If you could change only one thing overnight, what would that be?
SPEAKER_02:Probably, I think... They're not one thing to change. That's the issue. There are so many pieces in the system that need to change, and they all are interconnecting to one another. I would start with the soil. I would start with the soil. I would give every farmer a magic wand that says, yeah, now I know that I need to take care of my soil differently. and I have this new toolbox that doesn't cost me more than before, that I will be using from now on, and that will progressively regenerate the soil I'm on. If you give that to the farmers, they will all say yes, because the land, as David Montgomery, who I really admire, I've been very lucky to have spent quite a bit of time with him personally, every farmer knows that the land is the most important part they have the most important asset they have. But if they cannot, you know, if it's too expensive for them and too time consuming to do it, they won't be able to do it. But if I have this magic box, they have this box and now they are putting that on their tractor and it will regenerate the soil over time. I think that's what we should start with. Everything else will then flow through.
SPEAKER_00:And it's also a mindset piece there for farmers that want to, but might not. Like the neighbor you mentioned, earlier on might not want to see or are able literally to see that there are other ways because if you're stuck in this system for 70 years it's very difficult and very confrontational to think that might be something going wrong and to step out of that is for the very few the stubborn the crazy the etc and not everybody can be there so to change the I think somebody said the most probably Gabe Brown the most difficult piece between the ear, the real state between your ear to change. Maybe I'm not coding him right. And final question and I really stop. When you go, I don't know if you go often to like Regen conferences, there are not so many, but when you are in the Regen crowd, where are you contrarian? This is definitely inspired by John Kemp, who asked that question, like where do you think differently or where you don't agree or where others don't agree with you in your own bubble, let's say. When you go there, where are you contrarian? Is that the machine learning piece or the technology piece? Is the optimism piece maybe? Or we need more than a billion to put to work or VC can work here, but what What would be the main thing you said, I'm actually thinking quite differently than a lot of other people in the region I can afford? Could be a kind of warm season.
SPEAKER_02:No, I think, and again, I invited John Kempf and he came here to Brussels a couple of years ago. It was really fun. He's a great character. Yes. I think the idea that people, consumers, will actually, majority of them will will say, you know, I'll make that. purchase decision because of environmental, it was better for the environment. I'm not really convinced of that. I'm not convinced of that. They, you know, it's, I think people, I mean, and again, I'm not sure they will make very easily a decision about their health. The big issue we are having, if I stop being totally optimistic for now, for one second, is that when you tell people wow you're eating really badly I'm going to show you all kinds of different things you know your sugar spike and everything and so on and people say oh okay that's bad what's going to happen to me we say well in 25 years you're going to develop you know diabetes and or in 35 years you'll be dying of at much higher rates of of you know some cardiovascular thing and they say wow well that's bad maybe I'll do something in 20 years. For the next 20 years, I don't care. I'll continue to eat my...
SPEAKER_00:How do we bring it forward?
SPEAKER_02:So, yeah, people have been, I mean, people as animals, we have been wired to be extremely efficient at fleeing immediate danger. So we are really good at getting a lot of adrenaline and run. But when you tell someone, you know, stop eating this milkshake every day because in 10 years or even five years, something bad is going to happen. We're not really good at dealing
SPEAKER_00:with that. Climate change and sea level rise. Stop driving this because in 15, 20, 30, 35 years, maybe.
SPEAKER_02:It's only when people get exposed to immediate issues. Big droughts, extreme hail that destroy everything around them when people are exposed to that and they see that it's happening more and more, then suddenly the climate becomes part of the global discussion. But it's not yet on the horizon for... It's starting with water for agriculture, but it's not yet on the food and ag space. People are not yet feeling the real pain, even if... See, when you have 30% of people or in the Middle East, it's 40 to 60% in some areas of the population who have developed diabetes type 2. When you get past 50%, it means that every single person knows someone around them that has that disease, that came from bad food, they are starting to pay attention. So I think we are just getting to the tipping point where things are. But when you are in these conferences and where people are trying to convince each other of what they're already convinced of. That's what I'm thinking. Maybe we need to think a little bit
SPEAKER_00:differently. What are other people thinking? I want to be conscious of your time and thank you so much, Eric, for having us here and for sharing. And of course, good luck in these challenging times to raise a significant fund. And hopefully a few of the institutional ones will not just, like talk is cheap, not just do, oh, we're interested, but actually follow through, which is way more difficult because because you have to jump through, I don't know how many institutional hoops to get it signed, but you have experience with that. So good luck with that and hopefully we have some nice announcements soon. Thank you, Koen. Thanks again and see you next time.
