117 Paul Pizzala from a London city private bank to the biggest regenerative farm in the UK

How a London city private banker took a permaculture course and now applies his finance knowledge to build the biggest regenerative farm of the UK.

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Definitely stay until the end to hear from Mark Drewell, exe chair how investors are responding to the new equity offer compared to debt of New Foundation Farms.

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Transcript

SPEAKER_01 0:00

how a London city private banker took a permaculture course and now applies his finance knowledge to build the biggest regenerative farm of the UK. Definitely stay until the end to hear from Mark Drewel, the executive chair, how investors are responding to the new equity offer compared to debt of new foundation farms. Welcome to another episode of In March last year, we launched our membership community to make it easy for fans to support our work. And so many of you have joined as a member. We've launched different types of benefits, exclusive content, Q&A webinars with former guests, ask me anything sessions, plus so much more to come in the future. For more information on the different tiers, benefits and how to become a member, check gumroad.com slash investing region. an egg or find the link below thank you Welcome to another episode, this time where we peel new foundation farms even further. This time we have Paul Pizzala, the Chief Investment Officer on why a good business model is key and carbon credits are a distraction. Welcome, Paul. Hello, Kuhn. To start with your personal story, how did you end up at New Foundation Farms and going so deep literally in soil business models and all of that?

SPEAKER_02 1:47

The short answer is the global financial crisis in 2008, 2009. prompted a lot of questions about what is the purpose of finance. So I can give you the sort of the plain vanilla story about...

SPEAKER_01 2:02

No, we want a long

SPEAKER_02 2:03

one. Okay. Well, that took me to, you know, doing a lot of research into the whole area of climate change. But if I wind the clock back, you know, it was watching David Attenborough documentaries about the natural world. And then there's always that kind of bit at the end where the forests were getting you know sawn down by the loggers and there was always a bit of a sting in the tail and that was kind of you know we'd sit there in the TV room with mum and my grandfather at the time and my brother and you know my mother would always say well you know she'd sort of gloss over that bit at the end and pretend it wasn't happening so you just focus on all the nice bits but somehow or the other that was the bit that kind of stuck with me and yeah so So, you know, I've always been into things like climbing, getting into the outdoors. And it's been a real kind of, you know, being in nature has been a real source of joy and solace and connection in a very crazy, complicated, fast-paced world. So I've always been very– had that sort of deep joy and wonder of nature. And what sort of happened during the global financial crisis, I asked myself, you know, what is finance doing to solve these issues? that we're facing. And on the back of that, I started doing some courses. I did a permaculture course back in, I think it was 2008, 2009. And it just completely opened up my, changed my perspective in terms of the direction of travel and industrial society, particularly from the perspective of agricultural permaculture and systems change and sort of understanding how industrial agriculture got to the state of where it is today. In some ways, it's a quirk of fate. You know, post the Second World War, there was a lot of nitrates and potassium for munitions to be used and you know somebody had a great idea of using it as fertilizer and hey presto Noda already knew that fertilizer was sort of destroying soil biology that was one side of it you know the other side of it was learning about soil and we had this really cool guy called Rod Everett who was leading the course and I would sort of describe him as the Doctor Who of permaculture a real kind of cool interesting character with his farm up in I think it was Lancashire up in the Dales. And he basically kind of demonstrated every aspect of permaculture on his farm, you know, from companion planting, how to use sort of passive heating through solar masses, you know, rainwater collection, kind of all these different sorts of technologies on his farm. So it's like a sense of alternative technology, but in real time. But the big thing that really sort of blew my mind were these, you know, concepts that if you do permaculture, permaculture or horticulture the right way, the yield is infinite. And it was just a real kind of concept that stuck in my mind, which seems to completely blow conventional

SPEAKER_01 5:14

logic out of the water. I know many people that did a permaculture course and then actually didn't, and maybe they changed their garden or they, but let's say professionally, they haven't put that to work as much as you're doing now. So what happened after that? Like, how did you, you could have gone back to banking like after the week or two weeks or whatever the number was. And you could have been back in the normal between brackets financial world, but you didn't. And you find yourself at a new foundation farms, which is really ambitious in terms of bringing permaculture and the whole principle of regenerative principles of regenerative agriculture to scale. So what happened in between that? Like what made that shift from this is great. I now see that infinite yields are potentially possible and everything I thought about ag is different, but then you actually start, okay, I need to work in this space. I mean, Monday to Friday or to Saturday, my block of time that I use my financial brain and needs to be put to work in this space. So what was that journey like?

SPEAKER_02 6:11

Yeah, great question. And it wasn't a logical sequence of events at all. So I heard about a place called Schumacher College when I was on this permaculture course. And it sounded like a very interesting place to learn about these alternative narratives and ecology. And I looked up, I was working in the city at the time and private banking and you know i went back to private banking but i i did my research on schumacher college and i had a chat with some folks about it and i said oh schumacher he's the guy who wrote small is beautiful and looked at the curriculum you know complexity science deep ecology you know all sorts of really interesting stuff but also a completely different way of learning as well much more embodied way of learning as well as an analytical way of learning. And that was when I jumped ship from the city in 2012 to take this... deep dive into ecology. I mean, I've always been a bit of a risk taker, you know, coming from a financial background. So I was quite comfortable doing that. And I'd always wanted to be an entrepreneur in some shape or form. So it felt like the right thing to do. And of course, at Schumacher College, they have a horticulture program. They have the holistic science program, which is what I did. They have what they call regenerative economics program now, which is they're going to launch a regenerative agriculture program in September this year. So some really exciting and fantastic things happening there. And that's kind of really opened up a whole new level of understanding in terms of the challenges that we face. You know, what I found really interesting about Schumacher College is that the narrative was very much about a local economy transition-based change to addressing climate change and the other, if you like, planetary boundaries that are, whether it's deforestation ocean acidification so on and so forth the solutions are very much presented through the lens of transition and local change and i did follow that route for a while like i got involved in local renewable energy and raising finance for hydro and solar projects but it sort of struck me that Those projects, whilst very useful and important at a local level, weren't going to shift the needle at an industrial macro scale. So on the back of that, I went back to the city and I ended up getting a job with an impact fund manager in public equity markets. who had their own theory of change and way of dividing up the market into positive impact, let's say neutral and negative impact companies. And kind of what you end up with is quite a small bucket of investable companies that are doing something positive in the world. And it sort of struck me that that's brilliant, but there's this other 95% capital that needs to make the shift. And what really sparked my interest was to find the entrepreneurs that were the disruptive entrepreneurs that were putting these solutions into practice on the ground and you know on the back of that that's really you know I've known Mark for about four or five years and we talked about various different projects we talked about launching a fund you know on the back of his book The Meaningful Economy but that didn't really speak to me but when he came to my office with Marcus and pitched the idea of new foundation farms, it was just so obvious to me that the soil is the core asset of humanity, not just agriculture. And so that's kind of when I literally sort of leapt out of my chair and said, yes, this is for me.

SPEAKER_01 10:07

But they like pitched it to you to join or they pitched because they were looking for money?

SPEAKER_02 10:11

Yeah, they pitched to me because they were looking for money. And I was super excited in the process of working with them and looking at strategies been... Going through pitch decks, we formed a very trusted, close relationship and eventually sort of six months ago joined as chief investment officer.

SPEAKER_01 10:30

And which is actually an excellent bridge to what we already discussed in the previous interviews, obviously the fundraising process and what has changed over the last weeks because you were, and obviously please walk me through the process, you are still really ambitious, but raising 20 million pounds sterling in depth and we uncovered that and We also discussed the differences or the unusual way of doing that, or the fact that you raise such a large depth instead of equity or instead of a mix, et cetera. Obviously, everything about new foundation farms is quite unusual, but you have made some changes in the last couple of weeks. Can you speak a bit about what you've learned and the why of these changes in the offering, basically? Obviously, very clearly, this is not investment advice, but I'm very interested in how these mechanisms work and obviously learning or pitching to so many people and having so conversations has changed something within the organization and you've now adjusted, let's say, the offerings. I'm very curious about that process.

SPEAKER_02 11:29

Yeah, it's a great question. So the initial offer was to have a preference share, which is in effect a securitized investment that has the collateral of the company's assets as security. So it gives the investor a good feeling of comfort because there's a strong asset backing. And that comes with a fixed return, say something like a 4% coupon, which in the world of government bonds and corporate bonds looks quite attractive. In the world of venture capital, impact investing and private equity, it's not going to really excite anybody. So there's the sort of the naked ambition of financial capital seeking return. That's definitely one aspect that came back to us in terms of having a better balance of risk, return and impact. The impact story has never been an issue. That's a real driver in terms of interest. And that's the hook. What was causing some investors to fall off the hook was the financial return on offer. But it wasn't just that it's only 4%. It's, well, hang on a second. We want to be in the journey with you, boots and all. And to be fully participating as a risk taker, that means we want the upside as well as the risk and as well as the impact. So that was really that side of the story. And then we took that feedback and we looked at it more closely ourselves, in order for everybody to be aligned and motivated and sharing risk equally, when you sort of step back and take a look at it, it does make sense for investors and the founders to be equally on the line in terms of risk and reward. So it's just a much better alignment of interests at the end of the day.

SPEAKER_01 13:35

And so can you walk us through what you're currently, so what has changed from that 20 million of preferred shares with a 4% return? What are you currently looking for? What are you currently talking to, talking about to investors?

SPEAKER_02 13:50

Sure. Okay. So it's still 20 million and broadly speaking, 16 million of that is in farmland acquisition, 1,000-acre farm with some capital expenditure for retail and processing on the farm. And then roughly 4 million for what we would call enterprise development, so for the executive team, for the systems, consulting, so on and so forth, ready to develop the enterprise platform to be able to scale the business well above and beyond 1,000 acres. So what's on offer for investors? Well, it's 25% of the profits of the company. So effectively, what you would be getting is a 25% share of the profits of the company. And you would be getting the security of the asset. So in a way, what we've done is we've said, look, the mission, the impact, the business model, all of that stays exactly the same. There's no change there. What we're doing is recognizing that investors want, they want more upside that comes with the risk. And we're also saying, you know, to make this a really good deal for you, we're making sure that providers of capital are first in line in the capital structure. So their money is capitalized by the assets of the company, i.e. the farmlands, the capex, you know, cash on the balance sheet. So in those terms, I mean, if I was looking at it, I would be going, wow, that's a really good deal.

SPEAKER_01 15:31

Of course, with a different risk structure, because it could be less than 4%. What's the duration like it's a buying back equity with the profit like a profit sharing well how long am i potentially as an investor like how long am i part of the journey in this case and where's the cap

SPEAKER_02 15:46

okay so a good benchmark would be to think in terms of venture capital or private equity in terms of risk basically yeah in terms of risk but also in terms of how long do i need to think what was my time horizon as an investor so your time horizon has got to be really at least 10 years So it's going to take four years to get to a point where we're demonstrating profitability. At that stage of the game, when we've proven out the business model, the ecology, the economics, the processing, the brand, the customer satisfaction, the ability to add parliamentary enterprises on the farm, it's at that stage then we can go out to the market and talk to other landholders or other farmers and start to plan for the next 2,000, 3,000 acres regionally. And that will take some time to do that. So realistically, in 10 years, could we be at 10,000 acres? Absolutely, yes. That's the next milestone. In terms of our modeling, what does that look like to investors? That's something like a two to three times return, very conservatively, because we're not baking in any of the complementary actions. We're not baking in carbon offsets. The whole carbon offset story, for us, that's dropped straight to the bottom line and that can really supercharge returns. The big story is when you get to 60,000 acres, you get a lot of leverage and economies of scale and a lot of learning, of course, in the business. So we will learn a lot in terms of what we can do, what we can't do, how we can optimize the business. how we can optimize revenue streams, so on and so forth. And you could be looking at 10, 20 times your money on a 60,000 acre scale. So that's where the patient money really gets its return. But also, that's where it really gets its impact, because at that sort of scale, then you've got a big voice in terms of being able to demonstrate that, yes, regenerative agriculture does exactly what it said we would do. And it probably does a host of other things that we didn't even know it was capable of too. So that's why you need to have a long-term

SPEAKER_01 18:11

horizon. So does it mean, let's say I invest, does it mean that there's a fixed time or a fixed return in a sense? Is there 10 years and then whatever came back from the 25% profit, that's great. And then we close the deal and I'm no longer part of the company or is there like in some other, let's say revenue share, revenue-based one, okay, until 3X and then we close the deal. is there no end to the deal? It just continues to flow also after 10 years. Yeah,

SPEAKER_02 19:14

no, absolutely. I mean, personally, I would love investors to stay for the whole journey. That could be 10 years, 20 years, 30 years, 50 years. I'm hoping that regenerative agriculture in the UK is going to be around for the next few hundred years. So, you know, you could imagine a scenario where as an investor, you hold onto this and you pass onto the next generation. Absolutely. You could also imagine a scenario where an investor, they want to exit in 10 years time or 15 years time or wherever it happens to be, and they can sell their shares. Absolutely. And we would help to facilitate

SPEAKER_01 19:53

that type of transaction. And I'm imagining there's some kind of, I wouldn't say lock up, but as there's a longer, I mean, you will have that discussion with every investor. Like, look, this is a long-term thing. Don't come after two years and say, please find somewhere to sell my shares. Is there any... commitment they have to commit to, like at least five years or at least seven years to be part of the journey? Or do you leave that to the investor to do that? Like, is there any signed, like, okay, I know this is long term, so at least I'm on board for five years, then we'll see. What have you done there?

SPEAKER_02 20:22

Yeah, I mean, I think that it's more implicit than explicit. So if you look at the financial model, and you look at the pitch, you know, the first thousand acres, which we get to profitability in, say, four years, That's just the start of the journey. So really, as a bare minimum, you have to be thinking in terms of four to five years. If you're a foundation and you're granting money, that's kind of the first big milestone that you want to see us achieve. And yet that's a different type of money, obviously. As an investor, that's obviously the first milestone you want to see us achieve. And then you want to see us achieve the next milestone, which is 10,000 acres. And is that five years, six years, seven years? It

SPEAKER_01 21:10

depends.

SPEAKER_02 21:11

Yeah, it depends how fast things move and how well we execute. So as an investor, you've got to have a 10-year time horizon if you want to maximize both your financial return and the impact of the business. And we've had some amazing introductions from doing these podcasts with you, Jun. Shout out to the community.

SPEAKER_01 21:35

Thank you for

SPEAKER_02 21:35

responding. Yeah, big shout out to the community. When impact investors get this stuff who come from a private equity or a venture capital background, their insightfulness and the quality of their questions into the business model and also the way that we're structuring the business, that is exactly the type of investor that we want on board. super smart, commercially, highly intelligent, highly creative, and actually really, really supportive. So you're not getting into an argument about does your business model work or does regenerative agricultural work? You're getting really smart, supportive questions to help you kind of do a much better job. And let's kind of step back, look at the big picture here, right? Okay, so agriculture is a big contributor to climate change deforestation, biodiversity loss. water runoff, eutrophication in oceans. So if you really get that stuff, you want to see us succeed big time so we can replicate this model 20 times in the UK, 1,000 times in Europe, 1,000 times in America, 10,000 times in Asia. So that's the kind of level of commitment that personally I'm looking for from investors. You know, so many people that... yeah, let's make a whole load of money and create a whole load of wealth, but let's also completely change the whole story about ecological capital creation

SPEAKER_01 23:15

in the UK, Europe, US, and Asia. Yeah, I think it's fascinating. For anybody obviously interested, reach out, but I had the pleasure to go through the deal room or the data room, and there's a lot of information in there if you're interested in the discussion, animal versus non-animal and region ag on Enough is Enough, which we obviously discussed with Marcus, like the commitment and the level of thought, not just on the ag piece, and we discussed it a lot with the interview with Marcus, but also on the enterprise piece, like how to structure this for the long run as well. And you automatically select the type of investors that are interested in that because If you go through all of that and if you're not interested in this, you would have stopped reading a long time ago or stopped listening to this interview as well. So it's interesting how that's self-selecting and how much thought and work you have put in this on the non-farming piece before. And I'm not even talking about the processing. I'm just talking about the enterprise structures. And we have discussed that, obviously, how to keep the purpose of the company and the steering wheel focused on the long term, which is my follow-up question. We've discussed it often with the guys and girls of Purpose Capital, Purpose ventures and others, like how to make sure that not a majority of the equity shareholders after six years, because they changed their mind or they donated, they inherited the shares from whoever or got it and suddenly say, no, actually let's sell all this land and build a lot of villas because development is maybe easier. So as you have pivoted partly to more equity and profit share model, has that purpose piece changed? And how is that? I'm imagining not so implicit, but more explicit like making sure this is a 20, 30 plus year thing and not if you change your mind in six years or Mark changes his mind or some of the shareholders say, okay, let's build a really big amusement park and let's copy Disneyland in the UK. Has that changed or not with this new raising?

SPEAKER_02 25:08

Very good question. I think we've really sharpened up on the governance and how the different stakeholders in the business, in the enterprise are represented. So So effectively, you've got investors, founders, employees, community. So we really think it's very important that the community of shoppers have a voice in the business, not just from the point of view of it's a good marketing tactic, but from the point of view of really helping to create a close connection to where does my food come from and how is it made and how is the land affected. And just really helping to bring the shoppers into the whole equation of, you know, how do we grow food and what does it mean to run the business? And of course, the employees is the other stakeholder. So the purpose lock of the business being, you know, a regenerative enterprise that grows nutrient dense food and fiber and regenerating soils that stays the same. And that is enshrined in the articles of association. So So you'd have to have nothing short of a revolution with pitchforks and guns to change the purpose of the organization. So that would be an extremely unlikely event that the purpose of the organization would change because, A, it's the culture of the organization that is incredibly important. At the end of the day, governance is incredibly important as a check and a balance in order to steer the ship. But in my view... in the organizations that I've worked in, it's the culture that you create that really means that the purpose lives and flourishes in the people in the company. And, you know, part of that is there's a reason why Kirsty, Wayne and myself, alongside Marcus and Mark are together. And that's because it's not a textbook exercise for us. It's a real embodiment of values. And it's the embodiment of values that we really gives the quality assurance to the business in terms of its purpose so you know you can think of it as a calling and you know more than a vocation it's a calling it's something that we feel very strongly about and that's what really guides the purpose of the organization as well as having you know the governance structures in place in the articles of association and in the structure of the business and in the way the different stakeholders get to vote to ensure that that purpose And

SPEAKER_01 27:54

just to push back a bit, because the calling obviously is great and the culture is amazing, but those things can change, especially we're talking about a 10, 20, 30 year movement almost. And we've seen that in the past, like companies that started great. And at some point things change, especially when there's a lot of money at stake. So I think unless the documents of association cannot be changed to a non-regenerative or to a de-regenerative, or extractive way, unless there is a stop at the end. Like, okay, this is the bare minimum that this should do for 100 years at least. Things always change, unfortunately or fortunately. I mean, things shift and this is long-term stuff. So unless there's a legal backstop, I think that's what Purpose has been pushing for, like making sure that even if somebody comes and puts a billion on the table, stuff still didn't change because there is a golden share or there is a vote that makes sure that, okay, we can never go to development of this one thousand acres like that's at least it should always be farmed regeneratively and these are the things that we consider regeneratively whatever else you want to do things change maybe in 10 years we have a very different outlook on animals or very different outlook on processing or very different outlook on etc etc but that's that core needs to be preserved but it's something we challenge with because of course we can say at the moment okay this is the equity shares this is the votes but also that changes over time and things shift and especially as we're looking long term and many have experienced that i think that culture shifts and at some point suddenly you are against the 51 vote and things things that never would be able to change are suddenly changed and that would be a shame so just to push back a bit on that like it's we need to really think the long term here and make sure it's even goes beyond us like it goes beyond you guys the team it goes beyond like that not I don't know if you have children with your children at some point inherit the shares and say yeah we don't care but they probably do but we just want to develop it because somebody comes with a lot of money and it's changes lives so it's that making sure that even in the rarest cases of the opportunity of course pitchforks and guns that we cannot work on that but all the other legal loopholes should be at least closed

SPEAKER_02 30:02

yeah I mean as far as I know there is a purpose lock in the business which enshrines the purpose of the business as far as we possibly can in terms of what a legal document looks like so you know you need to have a talk with the lawyers on this one in order to fully explore and investigate all the potential loopholes and mechanisms for applying pressure to change because you can never 100%

SPEAKER_01 30:37

guarantee something. That's impossible. No, no, of course. We just have to rule out all the known knowns that, okay, the rest we'll see.

SPEAKER_02 30:45

Yeah, so I mean, you know, take your scenario of, hang on a sec, We've got all this 60,000 acres of prime agricultural land, which is suddenly there's an influx of 10 million people projected to come to the UK because of climate chaos, right? And suddenly that regenerative land looks very exciting to build on in sort of 50 years' time or something like that. You'd have to have a two-third majority of all stakeholders to change the purpose of the organisation. So that's a very high

SPEAKER_01 31:23

bar to get over. Is there a reason why it's not 100%? Or that just was impossible? Like a unanimous vote for change of the purpose?

SPEAKER_03 31:33

If you have

SPEAKER_01 31:34

to have 100% vote for everything, then you're never going to do anything. No, no, just for the core purpose. Like it can never be built on or something. I'm curious about it. I mean, it's a very geeky subject probably, but very curious about that purpose lock. And two-thirds is a lot, but still. sometimes possible. I mean, you see it with our organization, but let's be conscious of time as well. And I want to ask some follow-up questions on the carbon piece, actually, that you have a, I wouldn't say strong opinion, but quite a strong opinion on. Like, why do you say it's an interesting distraction, but a good business model is key?

SPEAKER_02 32:08

Well, I mean, if you sort of take, you know, why is there a, first question, why is there a carbon price and what is the carbon price? So it's a subsidy. So, okay, A carbon price is basically a subsidy to enable entrepreneurs to take risk or to force corporates to change the way they do business and offset their carbon taxes. So it's a quota subsidy tax incentive framework and mechanism. So sort of at the margin, it's intended to incentivize change, but it's not a strategy. Carbon tax is not a strategy. We're putting something like 50 billion tonnes of carbon dioxide into into the atmosphere every year. So a subsidy that might be$1,$5,$10,$70 per ton of carbon dioxide isn't fundamentally going to change anything. You have to have an industrial strategy and businesses that are doing the work intrinsically that the ecological benefits or the creation of ecological capital is built into the business model without a reliance on subsidies. That is the driver of change. So the subsidies are really nice thing to have at the margin, you know, brilliant for our business, but we never designed a business that needed to rely on subsidies in order to be effective

SPEAKER_01 33:51

economically and ecologically. But if you look at the renewable energy space until recently in some places, in some places still, we're reliant on some kind of direct or indirect subsidies to get going and created this industry that now is competing head to head. Obviously, there are a lot of subsidies for the fossil fuel industry and a lot of subsidies for the agriculture industry. So maybe we should just take them away. I mean, that could be an answer to my follow-up question. But so there is in that transition phase, as we get going and people start doing things at scale, do you see a role for it? Or is it a, I wouldn't say waste of time, but I mean, to build a market in that place, to do the research, do the measurement it's a lot of folk. I mean, it's a lot of distraction potentially as well. Like, do you think it's a distraction even in a transition phase or is there a role for it to kickstart a lot of hectares to get going or acres? Yeah.

SPEAKER_02 34:41

Well, okay. So from the point of view of New Foundation Farms, you know, Steve Jobs didn't invent the iPhone by thinking about BlackBerry, right? So my belief is that we need to focus on what we're doing and not worry about pollen to see carbon prices other business models you know that that's good stuff to know and it'll become more important in the future but right now our focus is on having a successful capital raise and executing on the first five years of our business plan regardless I'm not the best person to talk about carbon taxes and subsidies and things like that because you know I'm an economist I've got a master's in finance and investment I'm a holistic scientist and you know I started in the NGO in the States called the Climate Map, which kind of looks at a lot of these issues about how do you scale impactful projects that are, you know, going to draw down gigatons. So, you know, we could do a whole new kind of community platform on that and suck up a lot of their time. Now, look, it really is super important, but it's got to be joined up. It's got to be holistic. There has to be an ecosystem. There's got to be big corporates making the change, you know, like Microsoft, Bill Gates' breakthrough venture all the stuff that Jeremy Grantham is doing. There's extraordinary activity at the venture capital level going on in the States at the moment. You know, there's Joe Biden's Green Deal. There's a vast universe of things happening. So really just to kind of focus on the carbon price, it's just a piece in the puzzle. Yeah, it's a really important piece in the puzzle as a subsidy in order to incentivize capital to take risk and generate new business models for sure. There's no doubt about that. But in terms of new foundation farms the regenerative agriculture piece is so strong on its own in terms of its ability to regenerate soil and ecosystems and the business model that we've created in terms of cutting out all the middlemen and going direct to consumer that really bumps the margins of the business right up we don't need to think about do we draw down eight tons per acre at$20 or is it three tons per acre at$100? We will do that piece of work in a year's time and we'll work with who we think are the best people to really push the whole agenda forward for sure. Absolutely. That's really super exciting, but it's not our focus right now.

SPEAKER_01 37:17

And to be conscious of your time and end with a few questions I always like to ask. I wouldn't say that I wouldn't call them fire questions, but definitely sort of rapid. What do you believe to be true about regenerative agriculture that others don't? Where are you contrarian? Definitely inspired by John Kempf that usually asks this question in a slightly different form.

SPEAKER_02 37:37

Yeah, I would say my belief is that you can produce a much higher yield than

SPEAKER_01 37:44

conventional agriculture. And when you say yield, is that like weight or are you looking at calories or nutrients? How do you define yield?

SPEAKER_02 37:52

The whole bushel. So nutrient density, vitamins, weight, protein, whatever it is that you need to kind of feed the world. My belief is that regenerative agriculture is superior across all dimensions compared to conventional

SPEAKER_01 38:12

agriculture. And if you could change one thing, so you have a magic wand, you can change one thing in agriculture, in the food industry as well. I mean, you can choose what would that be?

SPEAKER_02 38:23

It would be mindset. Mindset is the biggest barrier to change. Absolutely. So if I could wave the magic wand and I could get people to think ecologically as well as economically, that is the change that I would make. The real estate between our ears. Yes, exactly. Absolutely. 100%. Once you've had a mindset shift and you have that ecological lens, you realize that is absolutely the highest order at which you can operate. You know, at least as we know, as far as we know as humans, I mean, I'm sure there are other levels of being able to operate. But I mean, effectively what it does is the question you've always got to ask yourself is, Am I generating ecological capital or am I destroying ecological capital? And like when we had a population of one or two billion on the earth, destroying ecological capital wasn't such a big deal because there was plenty of spare capacity for ecological systems to restore themselves. So we could get away with it. It's fine. With seven billion people on the planet and everybody wanting to have a meat-rich diet, two cars, foreign holidays, you can't not think in those terms anymore because the consequences are too dire.

SPEAKER_01 39:44

And a final question, I always say final, but it never is. If tomorrow you'll be, or actually this morning as well, in charge of a$1 billion or£1 billion sterling, I don't care about the currency, investment fund, you have a long-term view. You could have, you could be super short as well if you want to, but it is an investment fund, meaning we're looking not to grant, but to invest. Could be 0% return. I mean, you're free to choose. What would you focus on? What would be your prior to where and how to put that money to work.

SPEAKER_02 40:11

Do you know, I knew this question was coming and my first answer is like a billion pounds isn't that much these days. Can we sort of,

SPEAKER_01 40:22

can we look at it? I asked this question because I'm interested in priorities. Like what would you focus on? So let's, I mean, we've seen the inflation over the lifetime of this podcast. Apparently a billion is not that much anymore. So let's go for a hundred, a hundred billion. What would you do?

SPEAKER_02 40:36

Okay, so like if I had a hundred billion, I mean, I would do something like Breakthrough Ventures, which is Bill Gates's kind of answer to scaling... that are going to deal with drawing down carbon dioxide. And I would focus on regenerative entrepreneurs. So I would have a, you know, a hundred billion pound fund that is finding the regenerative entrepreneurs that are applying systems thinking to solving ecological value creation and human wealth creation.

SPEAKER_01 41:10

And I would throw a lot of money at that. Yeah, I think a perfect answer. I love the breakthrough ventures. I would definitely link it below. What I always miss is, I mean, for an engineer and technologist, it's like the place of man in nature, like our role in and the nature-based solutions, which is a horrible name. But if you see what they fund and if you see how Gates talks about agriculture, I think there's a lot to learn. I would love to discuss with him here on the podcast. If anybody has an intro, definitely let me know. But I think there is that kind of brain power we need in regenerative agriculture. And it seems like he's still very far, or at least the foundation and everything they do and the breakthrough adventures, et cetera, is very far from that. But that's from the outside. I've never had, obviously, that discussion with him. I'm looking forward to, like, the potential. He did tweet something a year ago, I think, on soil, et cetera. So there is some interest, but then the approach is always not very holistic, I think, to say the least.

SPEAKER_02 42:24

Yeah, I mean, I haven't dived really deeply into that side of... Bill Gates's life. So I haven't really got a strong answer. I mean, whenever you talk about billionaires and their agendas, it always becomes a very contentious issue. I think the direction of travel is good. The more people are talking about these conversations and diving deeper into what regenerative agriculture actually means and how you can pursue scaling strategies that are good for communities, Good for human health, good for gut health, good for soul health, good for biodiversity, good for equality of ownership, the better.

SPEAKER_01 43:11

Yeah, I'm looking forward to the discussion. At some point, we'll have that here. I want to thank you so much for now, Paul. We'll have Mark on in a second to dive a bit deeper into the investor reactions to, let's say, the broadening of focus, or I wouldn't call it a pivot because it's way too hard to talk about the funding piece. But for now, I want to thank you for your time, your sharing of your journey and your discussion. until here. Brilliant. A real pleasure. Thank you so much for the airtime. Really appreciate it. So we have Mark Drewel back on the show together with Paul, obviously, to just reflect a bit on the reaction of investors to this shift in fundraising to a more equity piece, more risk-taking and profit sharing. So Mark, welcome back and let's dive straight into that. What was the reaction on the floor on the fundraising roadshow that you've been doing, obviously from your home mostly, but what has been the reaction on Zoom basically? Hello,

SPEAKER_00 44:04

again couldn't yeah the reaction has been really interesting because what we've realized is fundamentally people who are investing for impact who are using their money to create change in the world are hardwired for risk so going from a preference share with a fixed return to an ordinary share with no guaranteed return but all of the excitement of a journey and the upside that's possible it just lands much more easily so it's much easier we're finding for people to say yes

SPEAKER_01 44:34

And has the conversation then shift, like the energy of people being interested? Because of course, in the impact piece and the company piece, nothing changed and people are either excited or not. And I'm imagining if they're excited, they will continue talking. But actually a question to both of you, Paul and Mark, has that, have you seen like the last few weeks since you've been changing this and putting this into place, like a different kind of engagement or a different kind of leaning in? I'm actually doing that now, nobody can see it, but leaning in of investors or just like people self-select and the ones that are super excited about this are still the ones you talk to? Or have there been some people that were interested in the preferred shares and are now no longer interested? What has been the feeling around in terms of leaning in and getting to, let's say, the next phase of potentially commitments and obviously investments as

SPEAKER_00 45:21

well? I'd say, first of all, what's fascinating is that there hasn't been a single person who was interested in the fixed return preference shares who said, thanks, but now you want to give me a general share in the ordinary shares in the company and a full share of the upside there's been nobody who said no that's not interesting so it hasn't turned anyone off on the turning people on side from the beginning of our journey sort of eight ten weeks ago we had a number of people who said just look I love what you're doing but what I need you to do is if you want my money you're going to have to give me a share of the upside because that's what I do that's how I invest so what's happened is it's opened the door to a whole raft of people who had previously said I love it but you know you don't fit my investment profile.

SPEAKER_02 46:05

Yeah, absolutely. And I also think... not only has it released that extra amount of energy with investors, it's also galvanized the team at new foundation farms too. So in that sense, it's definitely a win-win. So there's more energy for the raise on

SPEAKER_01 46:24

all sides. And in terms of timeline, what has changed or has that changed at all?

SPEAKER_00 46:29

So the timeline, up until now, we have been talking to people on the basis of saying, this is the offer and we're talking to a wide range of different kinds of investor with a view to understanding what makes sense. The result of that, that cycle is now ending. And so our expectation is that within two weeks from now, the offer will change from draft to a document that says the offer opens on date X, which should be around the middle of May, and closes on date Y, which will have an initial close at the end of June. So we're to invest? Do you like what we're saying to write? This is now the journey. Are you in or out? And we are now filling the book. And the ambition is that that will allow us to acquiring land and be on the first thousand acres by the end of the summer.

SPEAKER_01 47:23

Very, very interesting. And just to wrap up, we discussed in the interview, if you're still here with us, you for sure heard it a lot on governance structure. And I was pushing a bit on the purpose led and how to make sure there's a purpose lock. And we just we discussed that quite extensively but I'm very interested in I didn't dive deeper into it so I can ask now again on the two-thirds so Paul mentioned there has to be a two-third vote majority vote of all stakeholders individually so all the pieces and I would love to know a bit more on that to change the purpose of the company but Mark you are deep into that as well what does that two-third mean and why is that two-third?

SPEAKER_00 48:00

Two-thirds is really important if you look at the the constitutions of most countries around the world most written constitutions they basically say for for For general decision-making, 50% vote of whoever's got to make the decision is fine. But if it's something big and fundamental, it requires a two-thirds majority of everybody. So in this case, the way we structured it, it basically says you need a two-thirds vote of the employees and to change any article in the company's articles, two-thirds vote of the employees and a two-thirds vote of the investors or the funders and a two-thirds vote of society. And for as long as the founders are around, a two-thirds vote of the founders and a two-thirds vote the board. Now, that's a very, very high bar. But it does mean that if in two generations time, people wake up and say, actually, this particular article or this statement of purpose isn't right, and we need to move it on, then you can. And so you don't hold society, you know, two generations time to an absolute specific that we thought was really clever right now.

SPEAKER_01 49:00

Yeah, it gives you the chances. Thank you so much for elaborating on that. And thank you both for coming on for allowing us to follow this journey. And And we sort of fly on the wall on some of these things. And looking forward to continue doing that, obviously, and wishing you a great day today and looking forward to the next one.

SPEAKER_00 49:18

And have a regenerative time,

SPEAKER_01 49:20

Kun. It's all

SPEAKER_00 49:21

going good. Thank you. Yeah. Thanks so much, Jun. Real pleasure to

SPEAKER_02 49:24

talk with you.

SPEAKER_01 49:26

If you would like to learn more on how to put money to work in regenerative food and agriculture, find our video course on investinginregenerativeagriculture.com slash course. This course will teach you to understand the opportunity Thank you very much. Thank you so much and see you at the next podcast.