Investing in Regenerative Agriculture and Food
Investing in Regenerative Agriculture and Food
282 Joachim Ewechu and Hannes Van den Eeckhout - Why Uganda is the best place for a locally owned regenerative agriculture revolution
A conversation with Joachim Ewechu and Hannes Van den Eeckhout, co-founders of Rootical, a start-up studio that enables purpose-driven entrepreneurs in Uganda to build and own their regenerative agri-food companies. We talk about why Uganda is the place to launch and build agroecology, regenerative agriculture, and food companies, why Uganda enjoys political support for agroecology, the importance of different steward ownership models, the importance of different investment models, and more.
Join a journey where we discuss why the biggest impact in regenerative agriculture can be made on the African continent, unpack the key differences between a startup studio and an incubator or accelerator, and why the start-up studio model is so exciting.
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We had serious internet issues while recording this interview, so bear with us. The quality is lower than what you are used to, but I think that the region's stories from Uganda are worth it. Why is Uganda the place if you want to launch and build an agriculture and regenerative agriculture and food company? Join me on a journey which led one of our guests of today from tasting how agriculture practices have changed and let him focus on agriculture. We discussed why Uganda enjoins political support for agriculture and the importance of different stewardship ownership models and the importance of different investment models and why the biggest impact in Region A can actually be made on the African continent. And we unpack the key differences of a startup studio versus an incubator or an accelerator, and why the startup studio model is so exciting.
Speaker 1:This is the investing in regenerative agriculture and food podcast investing as if the planet mattered, where we talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems, while making an appropriate and fair return. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land and our sea, grow our food, what we eat, 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, and if our work created value for you and if you have the means and only if you have the means consider joining us. Find out more on comroadcom slash investing in Regen Ag that is, comroadcom slash investing in Regen Ag or find the link below Welcome to another episode.
Speaker 1:Today, we're the co-founders of Rutical, a startup studio that enables purpose-driven entrepreneurs in Uganda to build and own their regenerative agri-food companies. Welcome, joachim and Hannes. To start with a personal question to both of you, but I'm going to start with Joachim. What brought you to like, from all the different career paths you could have chosen or you could have fallen into, how did you end up focusing on soil?
Speaker 2:I think you know I love for not that agriculture is a backbone of the African continent. About 70% of Uganda's working population alone is employed in agriculture, and, of course, you know my own family, all the way from my great grandparents up to me right now, as farmers, and farming has provided livelihood and the food that nourishes us. In my lifetime as well, I've seen how farming has generally gone from being a bit obvious, producing delicious foods, to needing a lot of external inputs and producing food that is not that delicious. In a way, farming has become unreliable over time, and the additives we're making have made food also less tasty. And one thing that's interesting is farmers that have interacted with that have seen even man and family are aware of and have seen the dangers of what is happening with chemicals being added to boost growth and the dangers that it brings both to the soil, to crops and also to health. But many, many continue to do this because they don't have many alternatives, and so regenerative agriculture and ecology provide this alternative and give us the opportunity to farm while building back soils, producing healthy and nutritious foods and restoring our biodiversity. And I came across these two concepts when I met Harness, actually a few years ago in Kampala and we're collaborating on a new program, and this fit quite well with what we're doing at Shona.
Speaker 2:Our work at Shona is about building good businesses. We believe business is a force for good and the ultimate purpose of business is to benefit society, and this is why we call these businesses good businesses. And when I came across these ideas of regenerative agriculture and agriculture, we saw this at Shona, as we saw the potential for regenerative agriculture as the best way of practicing good business in agriculture, because the power of regenerative agriculture to build back soils and ecosystems while providing social benefits, creating competitive business value, decent jobs and filling the growth of local and regional markets and economies makes regenerative agriculture enterprises a world investment for our community future and for a sustainable food system. So I'm personally excited about this opportunity to build regenerative agriculture businesses, and Routico is just one of our initiatives now in this area and our growing program that we now call the AgriFood Founders Program at Shona.
Speaker 1:Okay, so thank you so much for that and so many follow-ups, but let's first welcome our second guest of today to the show, hannes. I don't think we ever even met in person Maybe now you're going to tell me we did but I know a bit about your journey and, of course, I followed you on LinkedIn. I highly recommend everybody to do that. I'll put the link below, but welcome on the podcast. And for you, the same question as for Joachim, and maybe a different journey, but very curious about what led you to focus on agriecology, to focus on regenerative agriculture and, of course, to focus on soil.
Speaker 3:Yeah, thanks, kun, nice to be here. I'm really honored to be part of this show. We didn't meet yet in person, but it feels like we're friends for so many years listening to your podcast. So really thanks for that.
Speaker 3:Yeah, hannes, I'm from Belgium, I live in Uganda now, and actually my uncle, my late uncle, the brother to my grandma he had a mixed farm as usual back in the days, all large Belgian families had a priest, a farmer and some local entrepreneurs in their offspring, and so I really remember being on that farm of my grand uncle to enjoying the ride on the tractor to feed the cows, and actually once a year we would gather with the whole family to participate in harvesting the beets manually with 40, 50 people in the field, and so those are my first memories related to farming. In addition, I've really been taught justice, fairness and international solidarity from a very young age, with both my parents in social jobs, my father in international cooperation Latin America, west Africa and so I remember vaguely a visit to Bolivia when I was seven years old and would visit farmers in the Altiplano, and I think based on that visit, I was really determined to do something related to water and agriculture, so fast forward. When I left university with a commercial degree in business engineering, I was still set to do something with water or agriculture or both, and so right after leaving university I moved to Peru where I've lived and worked five years as part of the agri-ecology movement, and I really appreciated the strong Cosmo vision, the whole and one vision of the cosmos and the universe we're part of, deeply embedded in Quechua and Indian culture and also agriculture actually and I really came to see agri-ecology as a motor for rural development and really was keen on spending probably the rest of my life on that idea. So in Peru I've worked with the National Organic Farmers Association, smallholder farmers in the mountains, the Costa, the coast areas and the Selva, the rainforest, and we've worked on all things from training in agri-ecology, production, capacity building, mapping, genetic biodiversity of roots and tubers, organizational strengthening, market access, business development and also advocacy on the regional and national levels.
Speaker 3:Back in Europe, after those five years, I've joined La Ruechke-Dewi, or the food assembly in English, probably Europe's largest short food supply chain network, a French e-commerce startup that's gathered or for which I've developed a business in Belgium and the Netherlands under the name of Bourne and Bourne farmers and neighbors, translated in English, and in those two countries we've gathered 1000 producers, set up 120 local food communities and basically connected them connected neighbors directly to their farmers in their surroundings via that web application, and in the last years, that platform reached up to 12 million in annual sales after I started it back in 2015. And so, working with the food assembly, I've really come to love the power of social entrepreneurship and how it aligns and also simplifies incentives. Basically, the more revenues you make as a business, the more impact you'll have, and that last experience also showed me what it does to a business to have unrealistic growth ambitions because of the way they are financed, short-term financial pressures taking over at some point, and that also moved me to look at ownership as part of the rootical principles. So, in short, and to come back to your question, I think I'm more about people than soils per se, but, of course, reviving soils is also a way of reviving our communities, our landscapes and the people that live on them, so that's why I'm so passionate about soils, regenerative agriculture and agriculture. So maybe to add on that, after three months in Uganda, we moved here in 2020.
Speaker 3:I basically came along with my wife to support her career. She's working on innovation and education, and after three months I was doing some consultancy but it was really itching to build a company again and so I was asking myself what am I going to do? Can I be a business developer for some agri-food venture? And when I asked myself, I've noticed a lot of successful agri-food businesses in Uganda are white-owned and there's always some white, usually male, person involved, and many of them actually are Dutch, like Yukun. So I was thinking about this deeply and I said like let's… I'm sorry. Yeah, let me try to use my privilege and my position and access to funding to help Ugandan to build the businesses they see fit for the Ugandan food system.
Speaker 1:And Joachim, do you remember when you met this guy from Belgium, but it also lived in Peru and I built this, I helped build this startup in Belgium. You remember the first time you met him and what did you think? You can share anything here.
Speaker 2:Yeah, I think we met in 2021. Yeah, I think I actually didn't have many expectations at the time. We were collaborating on another initiative that he was part of and leading a generation food program, which we now implement here. But I think one of the things that drew me and asked our team because, you know, johannes met with me and my co-founder, ivan, and so it's not just Joachim, it's really Sean and what drew us to Johannes was his passion, the passion and enthusiasm for regional, to public culture, for fairness, and so that naturally infected us. And I would say, you know, I credit all our work in this area now to that meeting, to meeting Johannes, and you know he's packed a lot of work there that is now going to go and lose.
Speaker 1:And what then led to to Routical? Because I think it could have taken many different routes and many different directions. It could have, I mean, a few consultancy things together and sort of stop there, like what, what gave birth or what seeds were planted to stay in the theme to that led at the end or not the end, actually, where you are now, and then we'll unpack the startup studio and unpack Routical further. But what led to that? Why was it a logical, or maybe it wasn't a logical path?
Speaker 3:I well, I think we, when we when I've met Joachim and Ivan we've been working on a generation food, an incubator program. We've also worked on an accelerator, nature, which is also currently run by Shona and we should also mention it later, and my initial thoughts were actually about a kind of incubating. How can we better support agroecological entrepreneurs to emerge, grow their business and thrive? No, but then I came across the startup studio model, thanks to your podcast, actually, coon, and to and with Fresh Ventures Studio. No, they're, they're basically doing the same that we are doing, but they do it in Europe. They're older than us, we call them our European sister and we work closely together. So for me there were three founding principles, of which eventually Routical as a startup studio emerged.
Speaker 3:No, the first one is agroecology, organic agriculture and regenerative agriculture as the best paradigms of our food system, for our future food systems, and there's a huge debate there about the similarities and differences between those three terms. But Hans Herren, a biophagian's president, once said regenerative agriculture is agroecology if done right, and I really closely adhere to that, to that statement. No, and I've also really loved climate farmers on the podcast saying that an investment that enhances the life holding capacity of a system and the ability of that system to act according to its purpose is what it makes, what makes it regenerative Right. So that's, those two are really, are really important when, when discussing definitions or differences. The second pillar is purpose driven entrepreneurship. So looking at inclusive, inclusive business models and really building businesses that are commercially viable, scalable and impactful at the same time, and also a bit moving away from the niche export focus for organic, really trying to make a agroecological, healthy food available for all Ugandans, rather than focused on those elite markets.
Speaker 3:And then the third principle is about alternative ownership models. Know, how can we change the way our agri-food businesses are financed, managed and owned? And that's where Stuart ownership comes in. So, yeah, how did we get there? Basically, I first the last piece for me was Stuart ownership, then I heard about Fresh and the startup studio model, and then we ran into our first financial partners, the Dune Foundation, and so Joachim, for you and the work you were already doing, because that is already a lot like.
Speaker 1:How did this startup studio puzzle piece, let's say how did that fit into the bigger puzzle that you are building and why did you decide to add another layer to, let's say, probably already quite a full week and a full year?
Speaker 2:Yeah, I think the biggest part of the project is that we have a lot of people who are. The biggest puzzle for us was how how agri-ecology, the business behind agriculture and new generative agriculture fit well with our values and thinking and belief system. I think there was that alignment initially right, because it's so that alignment between kind of our values and how we think about business. Right, when you look at our ecology and this idea of you know how you produce in quality products and services for customers. How are you creating value that is shared by you, know, by the majority and not the few? Right? How are you spreading wealth? How are you building a business while protecting the environment? Right? All this, all this, all this you know. How are you building a business at tech scale with employees?
Speaker 2:All these ideas are enshrined in the principles of agri-ecology and new generative agriculture and for us, you know agriculture is one of the key sectors that we've been kind of working in. We've worked with a couple of agribusinesses. The values of agri-ecology and new generative agriculture fit quite well with our thinking around good business and so for us, you know that alignment and fit made a lot of sense, which has gotten us to adopt agri-ecology and new generative agriculture as our thinking of how you build a good business in the agriculture sector, and so it's now a core part of how we think. And so when that you know when that alignment happened for us, the part of you know the way of doing it, which is a studio model, was just an additional, a smaller piece to add to this bigger story.
Speaker 1:And can you walk us through the studio model for people? I mean, of course we'll link the interviews we've done with with Thresh below, but I'm also assuming not everybody listened to that you should, but still, Can you walk us through what a studio model looks like, as I'm imagining most people haven't maybe heard about it but don't really know what a startup studio actually actually is and, more importantly, also what it isn't.
Speaker 3:Yeah, a startup studio basically brings together people, talent, financial resources and ideas no mind breaking or very innovative ideas, ideally. So that's what we're all about, and we're really trying to, as you said in the introduction, to power your Ghana entrepreneurs to identify which problems need to be addressed in the Ugandan food systems, which business solutions can they build to address those problems and how can we better equip them with mentorship and financial resources, or, as Shona likes to put it, capacity building, connections and capital. And so that's what we do we build businesses and at some point spin them, want to spin them out of the studio and then also expect certain returns in the future that will allow us to reinvest in the growth of our startup studio and pay out our stakeholders. So for us, the studio model is really a fantastic way to work towards place-based investing and to de-risk and mobilize investing in food systems transformation, especially in agriculture, especially in a region like East Africa, which is often perceived high risk, which is also, yeah, a myth we want to start debunking, and so our theory of change basically revolves around the idea of building a portfolio of regenerative agri-food businesses that then contribute to the organic agriculture movement and strengthening that entire momentum from agriculture in the country and in the region. Routical is, I would say, a first in its kind, because we do not have the right to do that, because we start with a participatory food system analysis In August we're now in our first cohort, by the way, so in August we've spent 10 days with 40 people, training them in regenerative agriculture, purpose-driven entrepreneurship, and we've conducted a deep analysis of the food system to then build businesses to address the key challenges we have identified together, and this we call it systemic venture building, right, and what's key here is that it's Ugandan entrepreneurs choosing what to build, building it and, in the end, also owning it and benefiting from the businesses once they scale and become successful.
Speaker 3:So, yeah, our goal is to bring solid business development support in agriculture, and we've seen the agriculture movement around the world. It's really strong, but we've seen that gap and that urge to bring more purpose-driven businesses in agriculture. On top of that, in Uganda, we've seen a lot of short-term, light-touch and generic business development support programs that often don't offer access to finance, and one of our golden rules is don't do business development without access to finance. And so we're looking at the studio as an active co-founder long-term, very hands-on and also with skinning the game. We can only benefit if our businesses do well. So yeah, let me stop there for now.
Speaker 1:Yeah, and maybe I'll just go at please.
Speaker 2:Yeah, I'll chime in here. You know you asked about the differences between the studio model and other models, right? So you have been implementing a few other models here, so I'm in this space. So you know we have the incubator that Hanna has talked about at their own generation food Uganda. That is now evolving to another wider program called Afri food links. So that's an incubator. It takes, you know, it takes existing ideas and helps incubate them and help grow. And then they have the accelerator model. That focuses on where we focus on already existing ideas that have a lot of traction by helping them, helping accelerate their growth.
Speaker 2:With the studio model so with the other two models you have existing ideas. You're working with already existing ideas. With the studio model, You're working with pre idea. You're focusing on the entrepreneurs who have managed to come up with an idea that they come up with. We help them create, come up with their own ideas during the studio process. That Hanna's referenced at first bootcamp is where we work with them to identify the problem and then fall in love with the problem and then, following that, come up with the idea that they want to work on. But what is exciting, you know, among all these models, I think for me, what excites us about Routico and the studio model is this opportunity to build the purest forms of the community of agriculture businesses from the beginning. So that's the advantage we have with a model like Routico.
Speaker 1:Yeah, because you don't have to. I think it's interesting because the startup studio or venture studio model sounds a bit counter intuitive to the story we like to tell each other of the entrepreneur in the garage that has a dream for the last 20 years and then build something, etc. Etc. And in reality that's often very different and studios around the world in other sectors have shown and fresh as well, and you're showing in this first cohort that there is actually the root to entrepreneurship and to specific companies can can be different in a sense that people with entrepreneurial experience, if they are exposed to the systemic issues and opportunities in a food system or in a system in this case food system and they're there helped well and coached and assisted, they will end up building very interesting, very pure as you say you're looking businesses that are needed. Because I think that's a frustration.
Speaker 1:If you're on an incubator and accelerator, you have to work with what, what is there already and you cannot really steer. I mean you can steer bit probably, but not too much. And in the venture studio model you can actually really actively steer towards what's needed and where the biggest potential impact and also opportunities may may lay and hopefully I don't know if there's a term for that, but they have a lot less waste of talent, of people working on something that, at the end, might not be successful or a very impactful, and let's say so. That makes it makes it interesting. And now, as you're in the first and the first cohort, what we're recording this is beginning of 2024. What are they going through? Where are you now? If you have to take, like a picture or have to take stock of what, what currently is happening in in a cohort, like how long is it, how many, how many months, and where? Where is the group currently at? What are they? What are they going through as we're recording this?
Speaker 3:Let's share a bit about the roller coaster we've been going through the last half year or so.
Speaker 1:I've seen it from inside at fresh, from the outside story and I can imagine, but I would love to hear the roller coaster diversion, the East Africa version, yeah, yeah.
Speaker 3:So to what you said cool, the venture studio, startup studio, really tries to turn business building into a repeatable process, right? So we, we talk about the playbook a lot. We, or some people call it the flywheel and the more we go through building those ventures and to those systemic venture building cycles, the more we learn, know. So this is really an opportunity also for for Routical to become an expert in regenerative venture building here in Uganda and East Africa, and, and, and it will automatically lead to us becoming better in attracting and nurturing talent in that space, but also to turn into a fundraising platform and also that's part of the, let's say, the bigger dream we are about and, and and the startup studio, or startup studio argument for, for leading to higher success rates.
Speaker 3:Know, startup studios are known to show 30 to 50% success rates, shorter build times and so on, and so we don't want to do that To your question. So we've we started recruiting. In May last year. We had in. In a bit more than a month we had 750 applicants wanting to join the studio. Wow, we've called 100 of them after screening.
Speaker 3:Yeah, yeah it's what luckily we automated a huge part of the screening with, with an entrepreneur selection platform used by, developed by I'm cup, to decide on their funding. And so we we've we've called the 100 most promising candidates, had a deep interview with them and then finally selected 40 to join our boot camp 10 days to become trained food system change makers know. And so in those 10 days we've conducted that analysis of the food system, identified key challenges and opportunities and we really did what they call problem loving. So that was in August, and then from out of those 40, we've selected 24 to join us half September on a three months systemic venture building journey in which we moved from problem validation to ideation, prototyping, business modeling and also rapid testing. So here the focus is really on human center design and designing always with that food systems lens in mind. Out of that we emerged.
Speaker 3:We came out with eight businesses being led by 16 founders in residence at Routical, and in December we had our first pitch day and we represented those eight businesses will be having a great time with us and we'll be happy to share the link as well. And now we're at the stage of deciding which will be the businesses that we will invite into our studio to incorporate, launch and funds five or six of those businesses in in 2024, and then we'll work with them on a weekly basis and we really help them to to get the basics rights to get up and running, to keep on focusing on customers, working in that human centric way, testing, questioning all their assumptions and building all the way to product market fit and beyond. And so at some point next year, in 25, we're expecting our first businesses to spin out of the studio, which is when they will reach a certain level significant levels of sales and revenues, or when they will manage to get some follow on the business, and so that's the plan for now and ideally dependent on fundraising.
Speaker 3:We also want to launch a second cohort in Uganda by the end of this year, and we would love to replicate in another East African country sometime 2025 or 2026.
Speaker 1:What is your biggest surprise? Positive, negative or what? What is that really you wouldn't have expected, let's say in August, when you started this journey with with the 40 people and the 10 days deep dive?
Speaker 3:I think what comes out strongly to me is that our methodology, that the playbook we've been implementing since August, really worked out very well. We've really managed to move from from deeply understanding the key challenges to it, ideating, defining solutions that might address those challenges, and we've also seen quite some complementarity between the businesses. Know, which is a, of course, an added advantages that we have as a business builder is that we were learning five times at fast, as fast if we're building five businesses this year, and we already see that among the different businesses, let's say, developed over the last months, we also had so much opportunity for collaboration and that's that. Again, it comes very close to the basic or the principles of our ecology right.
Speaker 1:And now turning it to to you, kim. What, what is your biggest surprise you've seen over the last month?
Speaker 2:I think I mentioned this, I mentioned this to the, to the, to the entrepreneurs themselves, right, but just how quickly, how quickly they were to go from having no idea to having ideas and even, you know, having physical products for those that are building products and testing them with a market and having customers in such a short period of time we talked about three months period was quite. You know, we've seen entrepreneurs work with them about all you know. That was surprising, right, meeting a group of individuals at the beginning with no idea, who didn't know each other, and after three months period, now our team is working close together and build products and services that have actually tested, and a setting was quite humbling. Yeah, from this process.
Speaker 1:And and actually a follow up question on on the region and Uganda, specifically to your, your team why I mean you mentioned at the beginning the challenges and issues with agriculture in your home country, what you've seen and tasted, and why is it such a perfect place? I mean, I know investors always ask why now and why here in this case, and why this team? Why is it such a perfect place for an agro ecology region focused studio like what? What makes the for people that haven't been or haven't been in a long time? Why is Uganda such an interesting place for the agro ecology revolution?
Speaker 2:There's a lot of people that are practicing agriculture for their livelihood. I think that's the first. The second, when you think about, when you think about the degradation of soil, actually, while we're doing badly, we're not doing so, so, so badly. So there's an opportunity to arrest what has already happened right now and kind of return us back yeah, return us back and rebuild our by diversity and soil. So I think that's the other moment we're in right now.
Speaker 2:But then there are also other things that are going on, including things, like you know, organic agriculture has been organic agriculture and organic farming has been very popular here. We have the highest number of organics, organically certified farmers yeah, uganda. And then I think the most important part is the political goodwill that ideas like the college and the agriculture enjoy right now. In this moment, there's a lot of alignment with the president, with the ministers and the minister of agriculture, in the principles of our college and the energy of agriculture. To the extent that, you know, organizations like most of them kept out ideas like, ideas like I guess what is it called? Ideas like, what's what's it called?
Speaker 1:genetically modified GMO.
Speaker 2:GMOs yes, ideas like GMOs are still being fought. While chemicals are being used, they're still shunned upon. So we have the right political right now to broadly advance these ideas of agriculture and the agriculture. So I think it's such a wonderful moment to be building a studio and advancing agriculture and the agriculture right now in Uganda.
Speaker 1:I think a lot of people are very jealous at the moment to hear that you have political support for agriculture in general. I think many places wish that it was, let's say, any understanding of agriculture in general, let alone agriculture principles and regenerative agriculture. So how did that happen? Or why is that now that you have? Is it the angle of food security with COVID? Was it already before, like how, or has it been because of the success of organic until now? What makes why do you think I mean it's a difficult question, but that you have an administer and a president that are listening or at least understanding to a certain extent what you're working on?
Speaker 2:I had this. Feel free to dive in here, but I think for me it's a combination of having a president so one there's, you know, food security that's important but also, secondly, there's having a president that believes in the traditional methods of doing things, that Pan-African at heart, who believes in traditional methods of doing things sometimes the detriment of progress, but also, in this case, has saved us a lot from going the route of GMOs and the large agriculture companies. Yeah, so I think that's the main one. You see that. You know Kenya was the same until recently when they when they changed their present to the current president, who mainly came in and signed a bill that allowed GMOs into the country, which is a big departure. So I don't know how much of us we can protect after our president is gone, because you know there's a lot of pressure from different angles, as you know, the big, larger agriculture companies, but this is one of the areas that you know that he has been stubborn about or that he has been very slow to move on, if that's the right word.
Speaker 1:I'm curious about Hannah's perspective from the outset as well, but it might help we actually interviewed him recently that the president of Slow Food, the international movement for good, clean and fair food, actually comes from Uganda and lives there and is very active, eddie, in the local space as well. But what do you see as an outsider from? Lived on two other different continents. Eddie is a friend of Routical Eddie is a friend of.
Speaker 3:Routical what I see. I think Uganda is located about 1000 meters above sea level and has quite a lush green environment overall, very favorable agroecological conditions in general, abundant water resources. However, also we see you can really observe quickly degrading environments, soils, water resources and so on. I think we're really getting close to a tipping point. Maybe this provides a huge opportunity to regenerate those watersheds, to regenerate those communities and soils and to also build or improve livelihoods of those millions of smallholder farmers. That's a parallel that I've seen from Peru to India to Uganda is that in rural economies, agriculture and the regenerative kinds preferably is really a key to unlock livelihood improvements for millions of smaller farmers in Uganda in this case.
Speaker 1:I've heard, but absolutely correct me if I'm wrong. Obviously I've never been to Uganda, but I think take Latinas who we've interviewed many times, who are definitely working on the cash crop side but doing fascinating things on the South African side, also East Africa now said, funny enough, if I compare to farmers that I know here in Northern Europe etc. It's almost easier to make the jump because especially Uganda but other places haven't been so addicted yet to the chemical input side. With amazing compost and with amazing inputs you can make yourself or get quite high quality and easy steps. You can make enormous jumps very quickly. The input act is quite quick and it's almost quicker than if you would take a potato farmer in the Netherlands and have him or her go through a transition. It's a lot longer than some of the work they're doing or they're seeing the soil response quicker and the input side is easier. It's almost easier to do. Plus, you have no subsidies, but also no subsidies on the other side of things to keep the current system going, which might help the impact on the soil.
Speaker 1:Of course you're focusing on companies that are not always, you're not building farms, but the impact on soil could be even quicker in many of the places you operate In, the companies you've seen or the companies that you would like to see. What does this do? To give us a flavor. Of course, you cannot tell who you're going to invite yet, but just give us a flavor of the eight that presented, and we'll put a link below as well, if you want to see the pitch day. Just give us a flavor of the kind of companies that are potentially going to be built or are going to be invited into the studio, just to have an idea of what we're talking about concretely here.
Speaker 3:Yeah, so I'll highlight two out of the eight. The first one is called Eden Seeds, which is going to be a farmer owned indigenous seed company. So what we're basically working on is access to affordable, resilient, locally fit, indigenous seeds and putting them in the markets as a real and viable alternative to the hybrid seeds that are being promoted as well. And so, yeah, we know seeds it's the basis of agriculture. It's also a big opportunity of fostering more climate resilient crops and improving livelihoods for farmers. In the end, how do they want to do this? They basically want to be the connecting agents between seed producers, individuals, community seed banks and other groups that will supply those indigenous seeds and then making them available for sale directly to organized farmer groups, farmer cooperatives, but also by selling them via local input dealers. So, again, putting the regenerative, the agroecological alternative right next to the hybrid and maybe also GMO seeds you might find. So that's Eden Seeds. Yeah, really, really enthusiastic about this. We're partnering with organizations like Oxfam who've worked on community seed banks and really trying to unlock that access to a larger seed market for seed producers in Uganda.
Speaker 3:The second one is called Garden Fresh and they basically want to extend post harvest shelf life in fruits and vegetables with natural preservative solutions, and this one is. I think it's so important because of the huge health risks we are now running when consuming, for instance, tomatoes in Uganda. Nearly all tomatoes in Uganda are sprayed with Mancozep, which is a slow killer. It's forbidden for use in Europe because of its potential effects bird defects, reproductive system effects and also potentially being carcinogenic. And so this Mancozep is being applied before, during and after harvest because farmers have come to believe that Mancozep also extends post harvest shelf life, which it actually doesn't. But it's now kind of a quality seal to have the white powder on your tomatoes, which is basically an agrochemical you're buying with the tomatoes. And so, yeah, the health risks of consuming these tomatoes on a daily basis for Ugandan is, yeah, they're so huge, and being able to replace that agrochemical with a natural alternative that is affordable and doesn't cost more than the chemical substance, I think that's just a huge business and impact opportunity alike.
Speaker 1:Yeah, absolutely. And to move to a few questions, we always like to ask what? Let's say we're doing this live, or I mean you've done your first sort of pitch day, not demo day yet let's say live, and the room is full of investors. So from East Africa, they came to you to hear about this agroecology and business together, which might be two words they haven't naturally as most investors haven't naturally put together yet. If, at the end of the day of the evening, if there's one thing you want them to remember, what seed would you like to place in their head that they walk away? Of course they're going to be enthusiastic about soil, about agriculture, etc. If there's one thing you would like them to remember, what would you like to tell impact investors and investors in general? What would you like them to remember and hopefully start working on and maybe investing in?
Speaker 3:Well, I think part of what Routical tries to do is also moving away the attention from the West and Australia and really showing the world that you can invest in Africa. You can invest also in other continents in Asia, latin America and so on and so my main call to action would be investing in Africa. Two-thirds of agricultural lands on the continent are depleted. Three billion people, including three-quarters of all Africans, cannot afford a healthy diet, and in a country like Uganda, you have 400,000 job market entrants every year, against nearly 9,000 formally created jobs. So there is a huge job creation employment opportunity there as well. And, of course, as Joachim said before, agriculture is the backbone and about three-quarters of the active population are employed in agriculture, so that's where we can also achieve substantial impact. And so just one more figure by 2050, 1 in 4 people on the planet will be African, and even today already close to one billion Africans are younger than 35 years old. So there is a huge opportunity also for job creation towards the future. And so, yeah, the impact opportunity is huge. And when I say impact, I mean impact by doing business.
Speaker 3:No, but business in regenerative agriculture, while holding the agricultural principles high. And if you're looking for specific topics to invest in. I'm really excited about water cycles, landscape permaculture on one hand, and then also the nutrient density piece and food as medicine part, on the other right. So, yeah, those topics are really keen to my heart and we're actually planning to launch an additional business this year, being built in-house, on that topic of, yeah, how can we improve the water harvesting capacity of the landscape by applying watershed level landscape permaculture principles and how can we build a business out of that right. So that's something we're going to look into Structurally. I would also invite investors to help us build the infrastructure to mobilize and de-risk investments in regenerative agriculture and food system transformation in Uganda and in East Africa overall. Yeah, joakim, over to you.
Speaker 2:I know. I think the only thing I want to add there is I think what is clear for all of us in the world is that we need to change how we farm right. We need to change how we grow and produce our food. Regenerative agriculture and agriculture offer the best opportunity to do that. So what is also clear, especially in this part of the world, to what Anna says mentioned, is there are businesses in regenerative agriculture that we are seeing through our accelerator, the incubator, through RUTICAL, that need financing and that we need to channel capital to advance these ideas of agriculture and regenerative agriculture.
Speaker 2:One of the challenges, though, is that the current traditional ways of financing, like the VC model, are not sufficient for, you know, like the VC model and Bank financing are not sufficient for these businesses. This is because of, you know, things like high minimum investment sizes PIN2 invests at least $100,000, high collateral demands, high interest rates, short log periods. Most of the investment that exists right now is geared towards conventional agriculture, which has little consideration for the longer term perspective by diversity and little respect for indigenous knowledge. So we need to channel more financing to this sector and we need new financing models that are tailored to the profile of regenerative agriculture businesses. So some of the work we're doing with RUTICAL, with the NHF. Third and find is to try and uncover some of these financing models that we can share with the world.
Speaker 3:Yeah, I just want to add to that that with Shona, we are really working on building the momentum, but also the ecosystem for agricultural entrepreneurship in East Africa and I think with our studio model we are capable we have our boots on the ground to invest five or 50,000 US dollars euros, whatever into those businesses. We can actually build those businesses, make sure they address key challenges in the food system and we can also make them investable and bring them up to the higher ticket sizes and typical fund structures. They need to look at smaller minimum tickets, while we as a studio, I think, really provide an opportunity of, as I said, no de-risking and mobilizing those investments into Region Ag.
Speaker 1:You mean higher minimum tickets, typical fund size.
Speaker 3:Yeah exactly.
Speaker 1:Sorry, yeah, I mean yeah, it's definitely. Yeah, the approach is fascinating to follow over time. Hence we're doing this interview, hence we're following fresh ventures etc. To see, like you said before, like you can turn it into a playbook and it doesn't mean that you're building a factory for companies, but it does mean a lot of the pieces of a company, of coming up and testing etc.
Speaker 1:Can be structured in a different way and can be sped up a lot, like you mentioned, joachim, like in three months you can do so much and the failure rate can go way down, which is also a waste of talent. Like you spend two years building something that doesn't go anywhere. And so we need way more people that are capable of building businesses, that are helped to build their businesses, to do those businesses in agroecology, with all the support and, of course, the ownership structures etc. We need to have different and a question we love to ask, coming from the deep agroecology and regenerate space, from John Kempf, that he asked us in a slightly different way, but we ask it what do you believe to be true about regenerative agriculture that others don't believe to be true? So where are you contrarian? Let's say, in your community or in your bubble?
Speaker 3:So on my side, I would say that we can serve, we can feed the masses with organic food, and there's always this perception of organic food, certified or not, being more expensive, right or being for the niche in Kampala or export markets to Europe and the US. And I'm deeply convinced that regenerative, agro-logical food in countries like Uganda is not, and also should not be more expensive than what we can find on the market. Of course, pressure on prices are really high, but we need to stop hunting for price premiums. We need to stop building those niche and elite export markets for organic. We need to ask ourselves the question how can we feed all the Ugandan with healthy, nutritious and safe food? So that's what's really working on and throughout our venture-building process we've been really challenging our founders in residence continuously on that topic of yes, but how will you serve mainstream Ugandan consumers and not only the elite in Kampala or abroad? So that's really a key point for me.
Speaker 3:I'm not alone. I know Sylvia Kuria, who might be listening, an organic farmer champion in Kenya, deeply believes what I just said. And there's also Feeble the organic food, the organic research institute in Switzerland. They've launched a SISCOM study Systems Comparison Study in Kenya, bolivia and India a few years ago, and they basically found that both chemical and organic production at low intensity actually produce at loss, while high management organic farming is as performant as intensive chemical agriculture. The former needs more knowledge and labor but is less input dependent and less cost heavy in that sense. So yeah, organic food can save mainstream Ugandan consumers.
Speaker 1:And what about you, joachim? Where do you think different in that sense? Or what do you believe to be true that others don't, about regenerative agriculture?
Speaker 2:Yeah, I think I'll start with the obvious. If we don't change the way we produce our food, we're all going to die. We've seen a new flux of diseases here locally yeah, you know that are explainable, right? We've seen a new de-suffering locally. That's unexplainable. We need healthier and more nutritious food on the market for ourselves, right? So I think that's the first.
Speaker 2:And regenerative agriculture offers the opportunity to increase this access to health, to serve a nutritious food for our people, for our populations. So that's the first for me. The second that I see that may not be, maybe many people believe it, but farmers are badly made of more natural ways of farming. Like I said earlier on, they see the use of chemicals. They don't like it, but they go ahead and do it because they have very little alternatives. But regenerative agriculture and agriculture offer these options for them. So if you're able to show them, and show them that it works, then I believe that most farmers will transition towards regenerative agriculture and agriculture. And this is one of the things we're excited about building in our work, and that's what we call offering these options to them so that they can farm more naturally and farm more environmentally.
Speaker 1:Yeah, and a very, very good answer. I think the myth of production like Modhan has a yield and the myth of farmers like to put and spray and plow and destroy I think those two are some very big ones that us in the city or people that are not daily interacting with land should wrap their head around. And those are myths and we like to tell them and there are a lot of very strong incentives to keep telling those myths, but they are still myths and so let's stop telling them, maybe, or let's at least challenge them every time we hear them. And then to usually one of the final questions let's see, because they also lead to rabbit holes. But if you have a magic wand, or you had a magic wand and you could change one thing overnight, what would that be?
Speaker 3:Yeah. So what I would change overnight is to change the rule of the game called capitalism and, in particular, venture capitalism, and I believe Stuart ownership is a way to do that. No, so I would magically apply Stuart ownership to all existing and new businesses worldwide. So why would I do that? I think that we see the typical flaws of venture capitalism and overall growing and staggering levels of inequality. One percent of the world owns more than all the rest of us combined, and the way our businesses are financed, managed and owned also leads to these flaws of capitalism as I see them. One of them is short termism know that, hunting for unicorns. Extractive capitalism, expecting returns from companies until the end of times, while your initial maybe investment was also limited in the overall growth of that company over time, we could say, we could argue, we see absentee ownership, people at the other side of the world calling the shots of a company in Uganda or East Africa. And also that fact that more money leads to more ownership and typically founders initially purpose driven founders also tends to lose ownership fast as they raise more money and that also leads to the dilution of the values and ideas behind the startup initially, let alone selling to the highest bidder. So, in short, mission drift is really, I would say, a big threat to building purpose driven enterprises, and so we need a way to protect the purpose of a company, and this is what we do with Stuart ownership. I'll explain how it works in a minute.
Speaker 3:But the advantages are numerous of Stuart ownership. First of all, they allow us to have a long term perspective on the growth and impact of a business. We can act as a good ancestor, or we can apply what's called Cathedral thinking or intergenerational thinking. It allows for companies to self govern for the company that are in charge of the day to day operations of that company, for those people to allow them to steer the company towards its purpose. It allows for increase in productivity, profits and impact. A study in Denmark has shown that Stuart owned companies tend to live much longer. They are six times more likely to celebrate their 40th birthday. It allows to retain talent, to nurture talent, and it also allows for succession planning to leave the company from one generation to the next generation of capable and purpose driven stewards.
Speaker 3:And so, in short, it allows for a purpose lock in protecting the company from mission drifting, and it's quite simple, actually, in theory at least, stuart, ownership proposes a strict separation between the financial and the decision rights in a company, so investors can still invest, they can still expect a fair return on their investment. However, usually those returns are kept in time and we talk of predetermined exits. So if this happens, then that's the kind of exit modality we'll choose for. And so, because of that strict separation between financial and decision rights, the company is now or the decisions are made by the founders, the employees and other closely involved stakeholders, rather than absentee financial owners. And so this purpose lock happens with a golden shareholder, which is a third party, independent organization that holds certain veto rights in the company as a mission guarantor and is obliged to veto any changes to the company structures that would go against its initial purpose.
Speaker 3:So it doesn't only protect the purpose of a company, it also protects its founders from losing ownership, and I think this is what somebody that really talks to our Ugandan or our first founders in residence is to to leave a legacy, to build an impactful business that gives back to the community, but also to protect their own involvement and say in the future of the business and avoid mission drift at all costs. So yeah, stuart, ownership it's a movement. It's decades old, in some cases even ages old, like ZAIS, since the 1800s. Some Stuart odd companies are publicly listed, like Kalsberg, ecosia my favorite search engine competing with Google on Stuart ownership principles, and then Patagonia that recently gave their company away to modern nature Now. They're all examples of very successful Stuart ownership companies and we're building a few more here in Uganda.
Speaker 1:And what about you? I'll put the interview we did with Armin, one of the founders of Purpose in Germany, that really pushed, let's say, the modern revival of Stuart ownership, in the show notes below. But what about you, joachim, if you had a magic wand, what would you change overnight?
Speaker 2:Yeah, I think of everything we are seeing and doing and promoting right now. How do we make region agriculture and agriculture the norm of farming for our world? How to produce health and nutrition food while farming in harmony with nature and providing a comfortable livelihood to our farmers? That's what I would wish for have a night.
Speaker 1:And then to ask a final question. I know we are coming up on time and I want to be conscious of both of your times as well. If you had a billion dollars or a billion euros you can pick the currency what would you do? I'm not looking for exact dollar amounts or euros amounts, but I'm looking for what you would focus on, what I'm asking to both. You can choose who takes the question, but what would you do if you had to put to work? So it is an investment a billion euros or dollars?
Speaker 3:I think I would try and scale and just continue what we are doing by taking it, of course, to the next level, with an iteration based approach, so always focusing on in-country ownership, very strong partnerships like the one we're having with Shona here in Uganda, and I would probably set up that infrastructure to invest in regenerative agriculture and agricultural businesses. I've been discussing this with Bart recently, bart from Fresh Ventures. Our shared dream is to create a network of regenerative startup studios that do what we do in Uganda, but across the world and across different geographies and in an economical conditions. So I would spend the first tranche of money in setting up 10, then 20, then 100 regenerative startup studios across the world, preferably, I would say, with a national focus. The second tranche I would use to kickstart funding for the businesses that come out of those startup studios, first of all to give them some startup capital to get some runway to go and build up to product market fits. We are investing $7,000 in the companies we will be co-founding here in Uganda in the coming months. Then I would also include a stipend for the founders to take off the financial pressure of those founders and allow them to really focus full time on building their business Because they have a lot of other things going and distractions, just as a risk diversification strategy. The founders in Uganda tend to have multiple revenue streams going, and rightly so. So I would try to balance that a bit with an Ashoka kind of fellowship for early day agricultural entrepreneurs, and then I would spend probably most of the money on establishing something like a revolving loan fund where we can first invest $50,000 and $150,000 and $500,000 and more into the businesses that come out of our studios and pipeline, but also opening these two other regenerative businesses out there.
Speaker 3:I know Grounded Investment Company has raised some funding too. I see a lot of like-minded initiatives all trying to raise their fund, and I think there would be a lot of value in an overarching funding structure to make that kind of investments. We could compare this to agroforestry. I would invest now, expect the first fruits to come in three to seven years from now and then the bigger returns coming after that. So we need patient, long-term capital and it's not all about the monetary value we'll be creating. We can multiply that one if we also factor in social benefits, biodiversity increase, the improvement in water holding capacity and so on. So all those other types of value should also be valued, and on top of that, I would save some money to invest in the wider ecosystem. I know where I've said the African Foods and Sovereignty Alliance and the Agroecology Funds. They're doing great work in funding the grassroots agroecology movement in Africa on the philanthropic and civil society levels, and I think we should also spend more money in knowledge work and advocacy for more agroecological and purpose-driven entrepreneurship.
Speaker 1:And then, joachim, I don't know. I know you prepared both for these questions. Do you have anything to add to that? I know you have to run to a next meeting and I want to wrap up as well and we're running out of time already a bit. Do you have anything to add to spending a billion, or investing a billion years or dollars?
Speaker 2:Yeah, in addition to what Hades has mentioned, how do we use this really quickly? First of all, like I mentioned, the traditional investing models may not work for these kinds of businesses, and the questions we've been asking ourselves as well is how do you structure the right investment into the unitive agroecological businesses to help them grow while uplifting farmers and helping farmers transition to agroecology? And so we'd use the first-initial challenge to ask these right-initial models that can then help us successfully catalyze the next standard billion or $1 trillion in capital to genital-refinancial businesses in this part of the world, but also globally.
Speaker 1:And with that I think it's a perfect end to this conversation. I'm very much looking forward to following a route to go over time and, of course, the businesses. They're going to be invited in the studio and then they're going to graduate from the studio at some point and then the next cohort and the next, and probably different countries as well. I think you've come an enormous way since I heard about the first ideas and, of course, building on the enormous work already done by Joachim and the team to get this. And then there's the speed. Suddenly it goes enormously fast. So thank you so much for both of you for joining here in a busy day and to share this part of the journey, and then we'll keep checking in on the journey that continues.
Speaker 3:Thank you Kun. Yeah, thanks Kun. I've spent countless hours on the road in Uganda listening to your podcast and learning from your community, so I really appreciate it.
Speaker 1: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 RegenerativeEgrCulturecom. 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.
