A check-in interview with Marcus Link and Mark Drewell, founders of New Foundation Farms (NFF), about how they went from trying to raise £20M to buying 1000 acres in the UK, building their stacked enterprise on leased land and ending up going almost full circle back to the beginning.
Having learned a lot in the past 3 years, Marcus and Mark realised that in order to build a highly profitable and ecologically sound business, they don’t need 1000 acres, but only 250. So, they are back in fundraising mode to raise £5m and to show the world that we have passed the iPhone moment of regenerative agriculture. What if they are right? What if we can build profitable abundant regenerative companies? If that is the case, that will put the food and ag world upside down, and those are enough reasons for us to follow this story closely.
Join our Gumroad community, discover the tiers and benefits on www.gumroad.com/investinginregenag.
Support our work:
More about this episode on https://investinginregenerativeagriculture.com/mark-drewell-marcus-link.
Find our video course on https://investinginregenerativeagriculture.com/course.
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.Support the show
Feedback, ideas, suggestions?
- Twitter @KoenvanSeijen
- Get in touch www.investinginregenerativeagriculture.com
Join our newsletter on www.eepurl.com/cxU33P!
Support the show
Thanks for listening and sharing!
A check-in interview with the founders of new foundation farms about how they went from trying to raise 20 million to buy 1000 acres in the UK to deciding to focus on building their stacked enterprise on Leesland and ending up going almost full circle back to the beginning. Now, having learned a lot in the past 3 years, they realized that in order to build a highly profitable and ecological sound business, they don't need 1000 acres, but only 250. So they are back in fundraising mode to raise 5 million to show the world that we have passed the iPhone moment of regenerative agriculture, which makes me wonder what if they are right? What if we can build profitable, abundant regenerative companies, if that's the case, that we put the food and ag world upside down? And those are enough reasons for us to follow the story very closely. This is the investing in regenerative agriculture and food podcast investing as if the planet mattered, where we talk to the pioneers in 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, nrz, grower food, what we eat, where 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 you have 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 comroadcom slash investing in regener ag, that is, comroadcom slash investing in regener ag or find the link below Welcome to another episode of the podcast, a very special one, as we are back with Marcus and Mark of New Foundation Farms and we have recorded quite a few interviews with them before, so special series. I will definitely put the link below in the description or the show notes, and we also recorded an update interview in November 2021, but we never released it because there were so many things happening in New Foundation Farms over that time that it just didn't feel right because it wasn't up to date anymore. Things were changing and things have been pivoting, merging, changing, coming full circle. Let's say it's safe to say, a lot has happened at New Foundation Farms and I'm very much looking forward to release this interview first of all, but first of all to actually record it and checking in with Mark and Marcus, who I don't think we ever had together on the podcast at the same time in an interview that we actually released. So it was great to see at Groundswell and to meet actually Marcus for the first time in person and Mark we've had met a few times and to check in and now we're recording this the end of summer 2023 and I'm so much looking forward to unpack what has happened, what is moving forward, your insights and what's going to happen on the ground and so much more. So welcome, welcome back both of you.Speaker 2:
Thank you very much. It's great to be here.Speaker 3:
Wonderful to be here. Thank you, Kuhn.Speaker 1:
And let's say somebody is listening to this relatively soon, so somewhere in autumn of 2023. What would you say as a snapshot of where New Foundation Farms is now? I remember I think I put the headline a long time ago you're raising 20 million and buying a thousand acres and, like large numbers, always do really well in title. So we, of course, put it there as well, but it was your goal. Where would you say you're now, as we are recording this, at the end of August 2023?Speaker 2:
We're going to have that funny moment where whenever both of us are on any conversation, we look at each other to try and sense who's going to respond. So let me dive in and say where we are is we're about to launch a 5 million pound fundraise after an extraordinary 20 months or so since we last were live on the podcast, and with that we're going to acquire our first 250 acre site and lots to tell about that and build the first vertically integrated field to home hub in the UK for deep regeneration and the basis for the transformation of the food system. Nothing modest about that.Speaker 1:
And what's the biggest surprise? I would say we get to lessons learned over the last 20 months as you have been trying to fundraise, came to the conclusion that probably in that market and now the market is changing more 20 million and buying so much land was a thousand. Now you're back to 250 and I know you were on a path for a while to lease land of others. Like, how has the journey been over the last 20 months and what was the biggest surprise?Speaker 3:
There's been a number of different pivots in the process, and the pivots have both been brought about through our own developing thoughts. People who've joined the team there are now 10 of us. At the same time, the conversations we've had with, especially organisations that are interested in bringing finance to this emerging market, as you want, have obviously hugely influenced us, and one of the pivots was this change that we pursued for nearly two years of leasing land instead of buying land. That was inspired by a large funder who saw great potential in the lease opportunity, and so we worked that through in great detail and we explored that opportunity with major landowners in the UK. In fact, we've worked through a holistic planning process with six landowners of different sizes, but the ultimate outcome of that journey was that actually the organisational constraints of large landowners, or, in fact, the established world of institutions, has a real hard time as an institution not as the change agents in the organisation, but as the institution itself, with its embedded policies and decision making frameworks and so forth that those organisations really struggled to engage with the necessary change that we're facing. People get it, they love it, they engage with it, they want to see it, and then it comes to the crunch point where you have to make a decision making. Committees have not been up to that task. That's been one of the major lessons and the reason for several of our pivots, since the first 1000 acre fundraise, and then the pivot to leased options, and now our final approach to buy 250 acres, which is so much smaller than the original 1000 acres and another big pivot for us.Speaker 2:
Kuhn, can we jump in? Because, as I was thinking, the great thing about being two of us on this is one can talk and the other one can come up with an even cleverer answer. But the big surprise for me, actually as Marcus was talking, was that the big plan hasn't changed at all. So here we are four years after we started Newfoundation Farms, and our clarity of vision to be, within a decade, operating on 60,000 acres of land and having a supply chain ecology of 600,000 acres in the UK hasn't changed. It's all been tactical. It's all been how do we get there? We have not had a scenario in which we've said, oh, hang on, we've got the wrong big idea here. This doesn't make sense. It's been all about tactical solutions to move forward.Speaker 1:
So forever didn't listen to our original series. What's the big idea?Speaker 2:
We're looking at each other and to see who's going to answer. That's why we have video. We don't record the video.Speaker 1:
We use video for this conversation so people can point. It's always useful.Speaker 2:
Great. So the big idea is that the solution to the challenges of the food system that we've built are not going to be found in simply tweaking the system we've got. The big idea is that the power of the science of regeneration that has developed over the last 25 years through our understanding of the relationship between things in ecology is opening the door to a completely new food system. That's the big idea, and that that food system is built on two principles. It's built on the principle that land can be highly productive and highly ecologically productive highly productive of the food and highly ecologically sound, and the consequence of that is that you end up with a requirement then to transform the whole food system between the field and the person who eats the food at the other end of the supply chain, simply because what's happened is you're now producing lots of different things in smaller quantities in stacked enterprises on the land, and that enables you to then process and sell locally and do that everywhere, and that is the food system that is coming in our view. We want to help make it happen fast, and it will shatter the framework of the current global commodity industrial system, because you're dealing with the whole food pound in a way that can create a highly profitable system, as opposed to the current one, which doesn't make any sense for the ecology or for society, or for those people who grow the food.Speaker 1:
So why haven't we seen that stacking? Yet, if this is so obvious through the regeneration science that we've seen, and also examples of very productive ecosystems, both on food and on biodiversity, why haven't we seen many, let's say, larger scale, highly profitable iPhone moments? Let's say that everybody's like yeah, of course I looked at an ecosystem before. I looked at a farm before, and now I realize we were only scratching the surface in terms of potential. What is unique here, or what makes this more than a nice vision? Why haven't we seen this materialized in many places?Speaker 3:
Let me zoom out for a moment in answering that question and focus on a different sector just to establish a few principles. When the fossil fuel sector delivers 100% of electricity to all homes, it seems to some people to be nonsensical to try out a different form of renewable energy production through solar panels or wind turbines. Why would you want to do that? It's risky, it's new. Nobody's done it before. We haven't connected it to finance. Then you have the emergence of a new kind of knowledge and connection with finance and it creates disruption, market disruption through disruptor enterprises. That's what happened with the emergence of renewable energy at scale. We had that same disruption in the communication sector when landline telephony was actually quite fast replaced by mobile telephony, when people in the landline business didn't understand how that might be possible, to the extent that some people now don't have a landline. It's no longer the necessarily default communications option 100 years later after the invention of the telephone. But then within the communication sector there was this next thing that you just referred to call the iphone moment, where in a way one business decided that the game wasn't about hardware, was also about hardware, obviously, but it was about the software and the way that you use the piece of the hand held device in order to enable a lot more, then just the communication, and now we use the phone very little to talk to each other and for all sorts of other things, including measuring what we eat, how far we walked. I don't know what you listen to, your podcast, for example. It's opened up whole new ways of thinking about things that are possible when you, when you're looking at it through the lens of an existing system.Speaker 1:
What is the lens with with the food and egg sector where either at our iphone moment or already had our iphone moment, just to say that matter for another is a perfect one. But just to understand, just to get to that for investors especially, why now, instead of five years ago or in five years like, why is this Two thousand twenty three the moment to put resources in this?Speaker 2:
We think we're at the iphone moment, because there's a technology that can transform everything. But, just like apple launching the iphone, what's happening to most people is there, sitting there and looking at it and saying, well, why it doesn't do that?Speaker 1:
it doesn't do that, it doesn't do it took quite a bit of time.Speaker 2:
actually for many, including myself, you need a keyboard, like of course you're not gonna, and we all know how that ended but the bakery and yeah, that's an interesting point and so, if you draw the parallel, what's happening in the in the food sector is the scaled response currently is not an iphone response, it's a landline response where what's happening is big food. Big players in the food industry send me saying, okay, is this new technology? What it means is we can make more ecologically friendly food and shove it through the same supply chain, and so where's all the emphasis? It's on Quality assurance down the supply chain and things called standards so that we can measure whether or not something is ecologically sound. But it's not doing what. What what apple saw in the iphone. This is gonna change everything. Why? Because it enables us to do things we couldn't do before. You couldn't deliver low cost, affordable, nutrient dense food to everybody without a stocking great global supply chain. We believe we now can. That is the power of what the regenerative system enables, and that is requires a level of Reorganization of the food system that is way beyond simply making sure that what you buy at all the little saints, breeze, whichever is your favorite supermarket is more eco friendly. It's a completely different supply chain. Just imagine last point. And then Is just imagine. Somebody said to me the other day it is, with all the technological development we've got, we're still doing what we did in the nineteen thirties we're going to the supermarket to buy our food, not withstanding the home delivery, most of which is actually people in a truck walking into a supermarket, picking off the shelves and delivering for us. That's a incredibly on developed, an unreformed food system. Compare with what's now possible. We can have ninety percent of the nutrients that we will eat delivered directly to our homes fresh from predominantly local grown sources enable by this regenerative system. That's the iPhone moment, because people, we, what we think is that very few people are seeing that opportunity and putting in place the capacities and resources to do it. So what the doing is typically saying okay, well, we need to do things more regeneratively, but hang on, it's complicated, because I've got to have twenty or thirty or forty or fifty different Enterprise stacks on the farm and I'm just one man and a farmer and I can't do that, and it's usually one old man as well. I'm saying no, no, no, that you know any other industry. You would say hang on. That means we need to reorganize everything. We need a much more sophisticated organizations that are capable of this vertical integration. So there's a whole lot behind this is critical to the transformation and is also the potential of the opportunity that can be now captured, right now. We don't need to wait. It can be done today.Speaker 1:
And yet you didn't manage to convince a landowner to get on board with that, or at least the not the final decision makers or the committee maybe we're enough people or a few people that were interested in this but that process did get you to realize that you don't need a thousand acres to start, which I think is a very valuable lesson. So how, how did that process go and how did you realize you need one? Fourth, basically, which also brings down not saying it's easier to raise five million compared to twenty. It's actually it's a lot less money, so it might, might, might be easier. So how did that process go, from from one thousand to two hundred and fifty, realizing that that could be the MVP or that could be enough to show a lot of these things, because All of this is on paper, all of this has been calculated, all of this makes a lot of sense, but until people see it, feel it, touch it and see what a really productive stacked enterprise farm could be, I think it's gonna be very difficult for people, for many people, to To see the potential to use all the iPhone. It was very difficult to see the potential of touch screens etc, even though we saw a few small examples here and there, which we also see Info the nag, with your few farms really stacking a few things and doing relatively well, and but you don't see that scale, or at least not not a lot. So how did the process go from One thousand two fifty and? Was that a moment? Was that a calculation? Was that a realization? Like actually we need less.Speaker 3:
Let me let me zoom out one more time. When we started, we were absolutely, we were absolutely persuaded that regenerative approaches to agriculture were the method, if you want, that was going to make it possible for us to transform the way we Produce food for Form of civilization and that that would take it from an approach that was the pletif or degenerative of the underpinning ecological assets to building it, but that the way farming is organized, especially in the UK, you've actually got a situation where you have currently, just as a statistic, three percent of the farmland in the UK or less is organically certified. There are twenty million acres of farmland or land on the man agricultural management in the UK. There are two hundred and twenty thousand farms approximately, as an average of about two hundred acres. There are a lot of people doing lots of very inspired and good work in small ways. What we recognize is a lot of small doesn't make big. What we also recognize this, this disconnect between large investors and small good projects, and it's not. It's. There's a clash of values, a clash of Perspective language, but also a very good yeah, how do you translate An organic market garden into an investable asset class? it's difficult. There isn't the spreadsheet that you can download, there isn't the the masterclass that you can do. And then, do you have the time? Do you have the time as somebody engaged in this? It's a real struggle getting access to land. So there are hurdles stacked against new entrance with new ideas. The market, the free market, isn't quite so free when it comes to farming. There are some very vested interests in Maintaining a fragmented, disparate workforce in mostly men if it's arable or whatever else in a tractor cabin and organizing in such a way that they eat out I'm barely a cat a livelihood and supply food that I don't even know what it tastes like, and so forth. And it's, it's a in systems thinking. You would call that a pathway. It's entrenched. This is people get out of bed, they think like this. They don't have enough time to think any other way or to educate themselves to do it differently. So you got this disconnect between small and big, both in terms of the finances and in terms of how people go about the practice, and so it's very difficult to find a lever point in that to change it. So the lever point that we've been focusing on with new foundation farms is how do you take something like this and develop an enterprise that scalable both in operations and impact? And that's that's a paradox, and that which is that most scaled large enterprises are actually centralized. Where is in? If you think through holistic approaches and regenerative approaches to land, one of the mantras or the first principles you come across is that it's all Context specific. So ultimately you have to find a way of managing something, of organizing something in such a way that it's place based. If something is place based in our in the world we're living in at the moment, this is a total paradigm shift. Forget about all the other details. Business is not organized in a place based way. We're organized in a globalized, uniform, standardized way where we do things in one country and the same way in another country, because that's allowed us to create thousands of widgets in the same way and then sell them in various ways across the planet. What we're proposing is that this possible to create a large enterprise that's actually sensitive to local context, grow An abundant, hyper, diverse, a range of food fruits, vegetables not seeds needs, etc. And distribute that as locally as possible to as many people as possible. We call that hyper diverse. I put local everywhere, so that's. There's a lot of complexity there, which is why I talk about the, the, the, the, the. The iphone moment was the switch from hardware to software, and I'm sure that there were plenty of people who said people don't want to Mobile computer, they don't want to tick all those boxes, they just want to talk to someone. I'm those people, the so-called late adopters or laggards in the adoption curve. There are ways to time to talk to, because they're very good at maintaining the status quo, but they're not very good at disrupting the status quo. Where we're about disrupting the status quo, and and this is ultimately when you think those thoughts through you end up with this kind of place based logic. And there's one final thing in this, which is that as we got, when deeper and deeper into the logic, we arrived at the recognition that this isn't just about a different way of doing business. This is about a different way of perceiving of ourselves as human beings on planet earth. This way of thinking isn't possible unless you recognize the possibility of yourself as being a custodial species on planet earth, which is anathema to the way many people think about the role of human beings on planet earth. We've come to see of ourselves as a scourge, as the opposite of the natural world, as the artificial species versus the natural world, and we're saying hang on, we are of nature, we are capable of integrating ourselves with nature, we are capable of farming in such ways that we can leave a landscape better off than it was when we harvest, than it was when we sowed the seeds. So there's a whole lot of stuff that we've been through, and along the journey with us has been a software model that's gone through some seven iterations or seven major version changes, called cow-how, and cow-how has accumulated all of this thinking, and so, in a way, this is the possibility here of thinking about farming differently through the software, because it's enabled us to track all of these individual incremental thoughts that actually add up to a major perspective change. And that perspective change manifests itself, for example, in our initial idea Well, we're going to have to have a thousand acres in order to make this work. And now we recognize with a further fine tuning that much of the magic in our thousand-acre model was actually happening within 250 acres. But you have to spend time and go through the details and have people on the team Like we've got Dr Annie Rayner and Ali Murrell on our team now who have dug deep into that data and given me a very hard time and questioned many things and made it so that we didn't need a bigger model. We developed a model that was capable of showing we can do this on less land. That's, in a nutshell, some of the aspects that have come up for us as we dove deeper. If you want, it's been a journey of the soul, it's been a journey of the spreadsheet and it's been a journey of thinking through different ways of doing business and what disruption can mean.Speaker 1:
And so there's a lot to unpack there, but I want to bring it to you to the now, and the cow-how obviously is a piece of that. So what are you currently looking for proposing? What is the current form that new foundation farms wants to? Let's say, we talk in a year from now, the summer of 2024. What would you ideally be talking about, ideally, at that time?Speaker 2:
So 12 months from now, we will have acquired a 250-acre farm, we will have started our operations, we will be commencing the process of engaging with local people who will become customers, not consumers we hate that word, consumers. I don't know about you, but I'm a human being. I'm not a unit in somebody else's marketing department. I am a customer of companies or organizations and I am a citizen. So we will have a growing list of people excited about the prospect that there's food coming their way. We will have employed a bunch of people on the first site and we will all be ready to be rolling up our sleeves in terms of phases two and three of this three-phase expansion of new foundation farms into operation. Just quickly to say what they are, because it's quite important in the understanding We've got a team of 10 people. Now why would you have a team of 10 people in the core to run a 250-acre farm? Well, you don't. You have that because we're building the capacity to create a complete transformation in the farming, the processing and the food delivery or retail systems. So we need all of this capability. So, first phase 250 acres. Second phase is to expand that through leased land so that first hub becomes bigger and to develop partnerships with other farmers. And I would say that the second phase is grow that 250 to pick a number of 1,000. And as we grow, partner with other local farmers who then go on the journey with us and we provide them with a guaranteed offtake route to market at a fair price and because we're cutting out all the middlemen. There's nothing new about that. That's what Riverford do, for example, who have the vegetable box schemes here in the UK, but deep, long-term partnerships with other farmers willing to go on the journey. So we've expanded to 1,000 acres and as we do that, we go into the third phase. And the third phase is then where we go to much greater scale With, if you like, this visible proof that this is starting to happen on the ground in one hub and the vision there is. Over the next 10 years we go to six hubs plus minus it's the numbers not important, but each of 10,000 acres of scale spread around the UK. And at that stage we're starting to make a serious dent in people's understanding of what the food system can look like. And in order to do that, we then have a series of different financial solutions for each of the three phases, which we can, I'm sure we'll talk about in a minute, but it's a combination of operational planning and financial frameworks that will allow us to build an enterprise from 250 acres to 60,000 acres over 10 years in a three-step process.Speaker 1:
And just for the customers that join in that first hub, what should they expect in terms of food? Like you were mentioning the stacking of different things, I'm mentioning it's more, larger quantities of different things. What is the full replacement of the supermarket or majority one? What's the food that these diverse farms can deliver to my doorstep, or do I have to pick it up? I mean, that depends probably on what I want. But as a customer, what do I look forward to if I join, let's say, a year from now or slightly?Speaker 3:
this so there's a whole range that we'll be engaging with right at the beginning. So first let's start at the simple end. The model is based on home delivery, and the home delivery will happen in rechargeable electric vehicles and they'll be in the fourth year. We will have built up to 300 deliveries a day and they'll be delivering the average shopping basket worth 55 pounds to approximately 2000 homes or 2000 families. So some of the calculations are based on the idea that there's an average of a four person household buying what we have to offer. And what we have to offer ranges from grains, including oats, to various, in fact 42 lines of vegetables, herbs and soft fruit, there's honey, there's eggs, there's top fruit and nuts, there's milk and then there's meat in the form of beef, poultry, pork and lamb or goat, and in fact we've got a bit of a debate about the value of sheep and agriculture altogether. That that's for a separate conversation. Now there are obviously things that you can't grow everything that's already quite a significant amount, but there are things like cacao and coffee that you can't grow here even if you tried. And we're not against trade. We're against the faceless trade in the form of commodities, just like Mark doesn't like the word consumer quite rightly. I don't want to buy commodity. I want to buy my things from people. Have an understanding that they actually come from people, if you want, from another community. So we will be trading with other communities and encouraging regenerative approaches, whether it's in the regional collaborations or whether it's in international collaborations, and we'll be very mindful of the footprint. Where we can deliver by cargo ship, maybe we will deliver by cargo ship. There are businesses that are now going that route rather than fossil fuel for the delivery where that's possible. So we will be curating that kind of thing and delivering a very wide range of things that should be on the immediate appeal of it being much healthier. Appeal also because of the variety of things that basically mean you can replace your weekly shop at a grocery store with the weekly home delivery from new foundation farms.Speaker 1:
And was the home delivery always part of the plan? I remember we talked a lot about the farm shop years ago. Is that been a change deliberate? Or is there still both options? What has happened there? Or maybe nothing.Speaker 2:
I think we've. This is where, if you like, the iterative process has led to deeper insights. And the deeper insight around food retail is this idea that it's largely an undeveloped system since the 1930s, since it was founded in the 1930s, 20s different ideas, but anyway between the First and Second World Wars and that the futures we see. It is fundamentally about direct home delivery of the bulk of nutrients that you need on an ongoing basis from local sources. And then retail has a different purpose. When we did the original designs, we saw retailers replacing the supermarkets. We now see physical sites as much more about education and demonstration, communication. Yeah, yeah, yeah, you know the sort of and the model is already there. Again, there's nothing that we need to invent in this principle, because it's a principle that a lot of brands have understood for some time that the purpose of a store is not sales. That happens online. The purpose of a store is to excite people, to engage people, to allow people to experience and learn, and that's how we see it. So it's a shift in terms of the pipeline, of how things ultimately end up in the home, but it's a blend of different solutions to enable people to learn, engage and ultimately make the decision to change the way that food is goes from the field to the fork.Speaker 1:
And I'm going to ask a question that might sound wrong but is the countryside ready for that home delivery? In a sense, you would imagine these kind of things to work really well in London, in Milan, in Amsterdam, in New York, where we're super used to we I'm saying the general we to clicks and stuff arrives on my doorstep and we're annoyed that that doesn't happen and blah, blah, blah, blah, and you're going to be in the countryside, obviously, because you're going to buy a farm and do you select as well, like good internet penetration or like how do you select for that? Or has it shifted so much over the last years, through COVID as well, that were almost everywhere in the UK? People are ready to click that button Because it has to happen online and it has to get delivered to their place, as the shop is not the main interaction point or the main sales channel, at least.Speaker 3:
Well, unlike other geographies, that one of the benefits of the UK is that it is a rather small island and even when you're in the countryside you're actually apart from when it's really remote not that far from significant conurbations. So clearly that is a part of our decision making process. For the ideal sites, there needs to be something that is say that the limitation is the reach of the electric vehicle, so that we can have a reasonably responsible supply chain. We are not holding ourselves to this idea that local means within 20 miles or 200 miles, because that's actually again a matter of local context. What we mean first and foremost by local is that it's the opposite of the global supply chain. So it means it's connecting you with a region and an identity that comes from the natural environment that you inhabit. Ethan Soloviev's idea of the life shed that phrase that the recognition that I am dependent and live in a reciprocal relationship with a piece of land and the water and the food etc. That grows on that land is very much at the heart of this. So that's the idea of local that matters here. Even in the UK it's very much possible to identify hundreds, thousands of locations like that. So that's one. The second thing is that there has actually been a silent or quiet revolution in the UK in terms of shopping or farm retail. There are large numbers of farm shops. People are used to this way of shopping and COVID shifted things in favour of that. Where you had global supermarkets that were reliant on global supplies, we all realise how fragile they are and more local opportunities blossomed. The UK is well connected. There isn't a significant not spot environment. We're all very connected. Our first hub only requires 2,000 households in the fourth year. We're talking about fairly moderate numbers, as I used to work at Riverford where we were dealing with hundreds of thousands of deliveries per week.Speaker 1:
And so you're raising. Now what are you exactly raising for? Is it the simple? We need a quarter, so we need 5 million, because we used to try to raise for 1,000 and we're targeting 20 million. What has anything shifted? There Is 5 million. Does it feel more reachable? Because sometimes it's actually easier to raise a lot more than it is to raise less. That's an interesting piece. You've probably talked to any investor interested in agriculture and food over the last years. So how does it feel to go to market now with this raise?Speaker 3:
It feels like the right thing to do because we know that this is the way it can go. The number also comes about in part because, if you want the alchemy of our journey in that that was just above that number is what we soft circled in our first attempt. It wasn't enough to get us over the minimum threshold to buy a thousand acres. But if you turn back the clock and we were only raising 5 million, you could go through the mind game of saying, oh yeah, we achieved that then. So there's the connection. The two are connected in that we did actually get to that number theoretically in the first and now we'll see how soft the soft circle was and what has happened over the years.Speaker 1:
But it's a good sign. At least it seems feasible, although the world has changed significantly.Speaker 2:
Well, it's interesting because when we Part of your question was is 250 acres, divide by four and divide the amount by four? Fascinatingly no, the answer is the process was bottom up. So, having gone on this journey and concluded that we could do this on a much smaller acreage, we then said, okay, well, based on that smaller acreage, what is the capital requirement? Because a lot of other things had changed as well. It was the level of detail in our analysis, and business design was another quantum beyond where we had been previously, and therefore, if you were to dig into the Carow-Howell model, what you'll see is a much more sophisticated understanding of the value chain between the field and the fork than perhaps we had at the beginning, which in turn, allows us to be much more precise about the quantum of capital we require. We should also say that the actual total capital requirement is 7.5 million over four years, and so 5 million is the equity side and over time, we see the balance of the funding coming from. Essentially, we've modeled it as debt finance and explored the modeling that we've done and said if we were to come to market with a million pound debt instrument raised in two years time, we won't need it in the first year how does that look? And it received a very warm and positive response. So there's a lot under the numbers that are a lot more than simply, oh, it's just the original number divided by four. It's actually bottom up and very detailed in its planning. The other thing that's changed is that we are Well. Two other things have changed. First thing is we're a much bigger team. We touched on that a little bit earlier, but there's 10 of us now and with the funding it would have been, let's put it. Let me just say that again. So two other things have changed, if you like, within our own landscape, in addition to the refinement in the modeling and the direction of travel. The one is that the team is a whole lot bigger and stronger and we've found ourselves being able to attract really talented people across the spectrum of the expertise that we need to execute this field of approach. And secondly, we have now been through an external funding round and that process of going to market, which we did last September, october, for a convertible loan note, was, for us, a wonderful expression of confidence and that, as you know, of course, in any new enterprise there's a quantum leap in the journey between being a bunch of people with a nice idea, and a bunch of people with a nice idea that has now received funding.Speaker 1:
And the money in the back which we were very lucky and happy to participate in personally, with a few thousand and through a small syndicate we have been running. So we're part of this journey and definitely biased in this case. And so that shift, the fact that you've raised some money oversubscribed, I think, leave it up to you to release how much the conversation with other investors, the fact that you have raised some real cash in the bank and not, like you said, some people with a nice set of spreadsheets.Speaker 2:
There's no question it changes the quality of the conversations, especially when and people can look at our website. We've asked a number of the funders to if they'd be willing to become visible and it's, from our point of view, a very impressive list of people who are at the forefront of building this new regenerative food system. And so, yes, it absolutely does change things, because we're essentially saying we're now at the stage where we're saying we're inviting more people to come on this journey with us and for us, we see this isn't just about putting some money to work. It's an invitation to co-student with us the future of a new food system. It's much more profound for us. It dedicated our lives to this and a growing number of people are doing it, and it is a passion that we also look for in the people that we are pleased to see come to the table to fund us as well, because this is a journey of them, in a sense, a journey of belief about something that's possible, that could be completely different from the world we live in today, and that's really exciting to be part of.Speaker 1:
Yeah, my reasoning to invest is as well. We cannot afford not to try. Am I convinced it's going to work? I don't know, but do I want to see this happen? And I'm sure there are quite a few people who actually want to see you fail, but I definitely want to see you succeed and I want to see if this is possible, the stacking, all the pieces that require some money and that require skin in the game. So that's the reasoning behind that and I want to double click a bit on the journey piece as well with you, mark, as we talked a lot about in the first interview, the regenerative business piece. Has that thinking understanding changed as well over the last years and, if so, how has it been deepening? On the deeper generation piece, we can definitely click on that as well. But also there's a role of the enterprise, the role of your dimension, the role of human beings in as a keystone species and a potential positive impact or net positive. Has your thoughts and your understanding of the potential net positive role of enterprises and companies also changed?Speaker 3:
It's gained in depth and detail a huge amount If you want a really practical and almost feels a bit superficial. But if we go back to the model Calhau Mark's just referred to it, there was a. We've had these seven versions that I've referred to and it's now got what Mark referred to as a bottom-up approach. What that means is that we can actually say, based on reliable farm data and assuming a worst or normal case development, we can tell you how much will grow on that side and we use for each individual thing. So what? In our first fundraise one of the questions was well, how many pork chops are you going to sell? And we weren't able to answer that time because the approach Worked on budgets rather than on the bottom up detail. So in that level of clarity and fine tuning, honing in on to that Is very inspiring because it connects with other things I've done in the past where I've often been confronted in my career with people who wanted to see things fail or who only supported it because they somehow had a A pre shard and froid that they wanted. This isn't possible and it's. It is possible and one of the things this is. So this is where technology can be really helpful in computers can help us process. In a way. We can't think in the detail but we can think in terms of the vision and so the that's making me really hopeful. So what I think I talked a lot about ESG and the cynicism behind ESG in my in my in my previous interview. I think this idea of Basing an economy not just within the planetary boundaries but actually building so that's still old world thinking. I'm trying to be within the planet boundaries. That's polluting less or polluting.Speaker 2:
We don't actually have to yeah, it's, it's that.Speaker 3:
That's that sort of trying to have it both ways and then you have it neither way. It's possible. And I'm absolutely confident, and in fact there is a large organization in Brazil that farms 60,000 hectares and is known to the outside world as a sugar manufacturer, but inside has a biodiversity that is more than 50% of the nearby Sao Paulo National Park. This is the Balbo group, and they they are organization organizations like that demonstrate that you can do this at scale, and they demonstrate something else to. They demonstrate this idea that we are in a competitive world and that evolution is driven by competition is total bogus. If it's driven by collaboration, if you, if it's based on compete competition, you compete yourself out of the planet, which is what we've just done. It's the collaboration piece that really makes a difference. Does competition happen within the collaboration? Totally. Is competition for the best ideas important? Absolutely. But the ultimate piece is a collaborative piece and that's where, also, joy is at home, and I've worked for so many people who, who are just bitter because their whole world view is somehow based on.Speaker 1:
The market is one of them right yeah, yeah, yeah, I mean no. Oh, he's still on the court here, sorry, sorry. So the fun and joy piece I'm making a joke, but the fun and joy piece is is fundamental, like it's like how I was this going to be a marathon If the first meters are already horrible?Speaker 2:
it's. One of the amazing things actually about our journey is that you know people would say three years and three and a half, four years into building new foundation farms and you're going to go you're only going operational now. You know you must be exhausted, and actually we're not. We're more excited because you haven't been farming would be that. Well, don't forget that in the team we've all done lots of farming, so it's not that we're unaware of the challenges.Speaker 3:
That old hat. You know when people used to say I mean, we're so glad that Claire Hill has joined us as director of farming operations and she's such, a, such a gem. But you see them the above, the knowledge, the deep understanding of farming and especially regenerative farming. Claire is also one of those beautiful people who's capable of connecting to people and motivating people and recognizing the talent and skill that they bring along, as opposed to expecting a job sheet To be ticked off by the end of the day. And another example of how regeneration is first and foremost about collaboration. The mindset shift Is about recognizing the collaborative opportunities and how, in a way, what we have to go through that process of unknowing the control and recognizing the collaborative opportunity. And so these are all things, but what it, what it amounts to, is abundance, what all layers, it's the abundance below the soil. It's the abundance in my soul, the joy of recognizing how we can collaborate with each other, other humans, but also step back and have a little Humility and see that we can collaborate with water cycles and bees and that we don't have to use invasive foreign bees, but we can work with our local bees that live In our woodlands and we can bring them onto our farms and that a farm becomes, you know, a wellspring of life rather than Essentially a death sentence for the natural world. So I'm very, very positive that business is a is a suitable organizational structure that can bring together capital, organizational capacity, technology, equipment and land in order to bring about the much needed rural regeneration that we've all been waiting for.Speaker 1:
So it's safe to say we are. We are in an iPhone moment.Speaker 3:
That is, yeah, the new foundation farms is simply about just taking bits and pieces that have been proven all around the world. Nothing in what we do is fundamentally new. It's the way we put it together into a very sound business plan with a very competent team, and we're going to execute that Then and then, as in. For us, the iPhone moment is already happened, because we know it and we're just gonna demonstrate you have shown things, yeah go ahead?Speaker 2:
Yeah, couldn't it? As I was listening to this part of our conversation, I was picking up on on something that sits very Profoundly in in a lot of our really good conversations with funders, which is not, you know, could this work? Does it work? You know, show me the detail, because I mean anybody who looks at the that you know the detail and looks at the quality of the team it's hard not to reach conclusion. We got the expertise to do this. It's it's a different thing. It's what if we're right? What if we are right? Because if we are right, then we are talking about A future food system that is so much better than the one we've got and you know, we can have rewilding and regeneration because we'll need a fraction of the lens for food that we currently currently use. We can have local food. We can have resilience is so much we can have that that comes with this iPhone moment and and so for met many of the people who we talk to her excited about this. It's that thought. It's what if we're right? What if we are right? Because if we are, we're all on a different journey to the one we've been on for the last Possibly nine thousand years, depends how far back you want to go since the day we first put a plow into the ground and started Buggering up the ecology and creating deserts. We're at the moment of change.Speaker 1:
It's such a profound ending, but I wanted to ask a question about accessibility and prices, but it just doesn't feel really the right bridge, let's say but I'm going to do it anyway. For those 2,000 people, just what, if you're right, what does it mean? We talked about what they would get, apart from the fact that we get a neighbor nearby that is farming profoundly different than anything else probably in their vicinity. But also, is this accessible? Whatever you've modeled, you've gone deep into the cost structure. You've gone deep into what is needed to keep this company alive, to keep it profitable, of course, with the investors, etc. Etc. But also, what does it mean for, apart from the quality, which is probably way different than what you can actually get now in the supermarket. But let's leave that at that. Nutri-density research will come, is coming and all that. But if we just look at tomato, tomato, apple, apple, a piece of beef, etc. How do you make sure it is accessible? Or is it because you're cutting out everything by definition, or actually in a position that it is accessible for almost everyone? What is the accessibility piece? I'm just asking the devils. I've got a question that some funders might ask.Speaker 2:
There are so many layers to answer that question about accessibility, but let's deal with the big picture first. I was asked this by a bunch of people from Nestle and Unilever and they were saying, yeah, but isn't the farming going to be more expensive? And I said, well, actually, in our view, the total delivered cost of food doesn't need to be more expensive. If any, we think it will probably go down. The total cost of delivered food and the total cost of delivered food represents a highly profitable supply chain, just not currently for the people who produce it, but very profitable if you're a big supermarket or a big wholesaler or a supplier of industrial chemicals. It's great, lovely business. So, and guess, who's telling us that these other systems are not going to work? It's the same story as we get in the energy system, where you get engineers who spend their lives with big power stations telling us oh, we can't have an energy system unless we have big base load power stations. Yes, we can, we can have a distributed system and every house can be energy efficient. We just have chosen not to do it yet, partly because of the fob created by those who have a vested interest. In the current way the system works, and not with bad will, just because you know, when all you've got is a hammer, everything looks like a nail, and that's the same in the food system. Our view is, in the long run, there is nothing in this approach that suggests that food needs to be more expensive and therefore, if it doesn't need to be more expensive, accessibility is not a problem. Accessibility is not a problem and it is a combination of many things that makes that a statement. True in terms of relative costs and, yes, the benefit of the whole value chain, but also loss of inefficiency, For example. You know, we know that 40% of the food that's grown is wasted in the supply chain, and just produce that by half and you've got a completely different set of numbers in the delivered cost of food. So there's so much in this, but the thing to stick in the head is that, fundamentally, we don't need some super premium at the point where we, the citizens, buy the food in order to make this kind of alternative food system work.Speaker 1:
Mark, is there something to add?Speaker 3:
Yeah, it's definitely one of those multi-dimensional questions. There's lots of accessibility. There's accessibility to land, for example. There's access to health. Access to health through food is something that our current healthcare system is not particularly good at. We spend millions on fertilizer and then farming subsidies, and then we spend millions on obesity, and the two can be married up. We are essentially all eating nutrient-poor diets. We focus on the calorie and then at the expense of the nutrient and so forth. But I think the question you're asking ultimately is of the social nature is this food more expensive? Is it, like organic, more expensive? I would say at this point in time it's a little bit difficult to see what's ahead, because new opportunities, like the software on your mobile phone, open a whole new possibility for conversation. But I think I'm going to hazard a macroeconomic guess, which is that food can, on average, be produced in these ways for the same or less, or sold for the same or less, while at the same time removing vast externalities. We talk about cheap food, but that's obviously not a truth. It's cheap at the point of sale and very costly in terms of the environmental impact. So I see a world in a few years' time when the immediate pressure to demonstrate a profitable business to the current and future funders recedes a little where we can talk about other social models of pricing where maybe people in the immediate vicinity pay different amounts for their food according to what they think it's worth and according to what they can afford. We have to develop the systems. We have to engage in that kind of conversation. But I think people take it back to something Mark said earlier. Supermarkets only came about in the way they are today between the two world wars. They were based on the commodification and the emergence of brands. Until the 1920s you didn't pay a uniform price in a supermarket. Even when there was a grocer you would pay based on a negotiation on price Before a grocer became a store, in the sense that you would go there, food was home delivered. In a certain way we are talking about things that have. We've had a brief blip where food was concentrated to the benefit of brands and the logistics provided by supermarkets, and by taking that out of it, food becomes more affordable for more people.Speaker 1:
It's fascinating the price piece, the delivery piece, and we see it in many cases. Of course we were so used to the supermarkets that we sort of take it for granted. They've always been there since the invention of the plow and of course that's not the case, but that holds any innovation. We've been used to landlines, centralized power, the great landscapes, and we cannot imagine in many cases what it could look like, which I think is a good way to bring this conversation to a hold, or a temporary one, Because for sure you'll be back. I will be following this journey as it unfolds further. I wish you all the best with the fundraise and hopefully we'll be following the farming piece and you'll be in the market soon for a farm, which means this spreadsheet is going to land somewhere with roots, somewhere with deep roots and probably not with the plow passing by every now and then. So I'm looking forward to that moment and let's see if the naysayers are wrong and we'll see how abundant these systems can be.Speaker 3:
Thank you, kuhn. Thank you, kuhn. Thank you for being part of a subspecies of humankind, beneficial, keystone species in the making.Speaker 1:
Thank you so much. Thank you so much for listening all the way to the end. For the show notes and links we discussed in this episode, check out our website investing in RegenderEcologycom. Forward slash posts. If you liked this episode, why not share it with a friend or give us a rating on Apple Podcasts? That really helps. Thanks again and see you next time.