Investing in Regenerative Agriculture and Food
Investing in Regenerative Agriculture and Food podcast features the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Hosted by Koen van Seijen.
Investing in Regenerative Agriculture and Food
362 Mike Velings - VC & PE won’t deliver regeneration — €250M evergreen proves it
A conversation with Mike Velings, co-founder of Aqua-Spark, a global investment fund for sustainable aquaculture, about how an invite he should have never received lead to the creation of the largest aquaculture fund in history, with over $250 million in assets under management (AUM) and ambitious plans to grow to $2 billion or more. This conversation goes beyond the billion dollar question—it’s already been answered. We explore why focusing on long- term investments is essential for transforming an industry and why current venture capital and private equity fund models might cause more harm than good. How can we bring institutional investors into agriculture and food, and what financial mechanisms can facilitate this? We also dive into the key drivers in aquaculture and discover why Mike is so enthusiastic about the future.
This episode is special—it’s not every day we discuss billions and institutional investment strategies with someone who has a real chance to raise the funds and put them to work.
DISCLAIMER: This conversation was recorded on Nov 21st, 2024. A month later Aqua-Spark learned about a fraud in the numbers of eFishery, an Aqua-Tech startup they have invested in. After a thoughtfully evaluation, we decided that- regardless of the news around eFishery and the effect that has had on Aqua-Spark as a fund- the story of Aqua Spark is extremely relevant and interesting to anyone working in food, agriculture, aquaculture, and for that matter, impact investing. It should be shared and heard. Excluding eFishery, Aqua-Spark has a strong portfolio, and their journey towards disrupting a whole industry with an evergreen fund and attracting institutional capital is worth putting a spotlight on.
More about this episode on https://investinginregenerativeagriculture.com/mike-velings.
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In Investing in Regenerative Agriculture and Food podcast show 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. Hosted by Koen van Seijen.
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How an invite he should have never gotten led to the biggest aquaculture fund in history, with over 500 million under management, plus serious plans to go much, much bigger soon, in the range of 2 billion or more. This is one of those conversations where the $1 billion question feels too small and already answered. So how did they go about building the biggest aquaculture fund in history, and why is it so fundamental to focus on long-term investments when you want to change an industry? Why do the current venture capital and private equity fund models maybe do more harm than good? And how do we get institutional investors on board in agriculture and food and what are the financial mechanisms to do so? We talk about the fundamental drivers in aquaculture and why Mike is so excited about the future. This is a special one. We rarely talk about billions and institutional investors with someone who actually has a good shot at raising it and putting it to work. Enjoy, hey, this is Koen.
Speaker 1:Before we get started, just a bit more background. We recorded this conversation on November 21st 2024, and a month later, AquaSpark learned about the fraud in the numbers of eFishery. We decided that, regardless of the news around eFishery and the effect that it has had on AquaSpark as a fund. The story of AquaSpark is extremely relevant and interesting to anyone working in food agriculture, aquaculture and, for that matter, impact investing. It should be shared and heard, Excluding in fishery. Aquaspark has a strong portfolio and the journey towards disrupting a whole industry with an evergreen fund and attracting institutional capital is worth putting a spotlight on. So enjoy, Take a deep breath.
Speaker 1:Take a deep breath and another one. Every second breath we take comes from the oceans, and over half of the fish we eat is farmed. That's why we dedicate a series to explore the potential of regeneration. Underwater Oceans and other water bodies cover most of our planet and have stored most of the excess heat so far and, at the same time, have some of the best opportunities to produce healthy food, mostly protein, store carbon, create materials, fuel, biostimulants and much, much more Plus, create a lot of jobs in coastal communities.
Speaker 1:We have largely ignored the water-based farming aquaculture industry in this podcast until now. In these conversations, we explore why aquaculture is so important for the future of our planet. If we get this wrong, we have a serious problem. What are the risks and challenges with feed, the reliance on soy pests yes, there are pests underwater antibiotics, microplastics, etc. What does it mean when you apply regenerative principles to aquaculture? What can soil-based agriculture learn from aquaculture and vice versa? And what should investors really know about water-based farming and what the potential is of regenerative aquaculture? A series of interviews with the people putting money to work, entrepreneurs and investors in this crucial and often overlooked sector.
Speaker 1:We're grateful for the support of the Nest family office in order to make this series. The Nest is a family office dedicated to building a more resilient food system through supporting natural solutions and innovative technologies that change the way we produce food. You can find out more on thenestfocom or in the links below. Welcome to another episode Today, a very special one.
Speaker 1:We're here in the office of AquaSpark in Utrecht, which is an historic place. I mean, I never was in this specific office, but I definitely have been in the offices of AquaSpark in the beginning. This is a very nice way of coming full circle. I used to work at AquaSpark I lost track of time, I think 10, years ago, something like that in not so far from here. Like you, haven't moved that far with the office, um, and of course, mike hasn't changed my community, who founded and co-founded aquaspark.
Speaker 1:We're going to dive deep into the regen side of things into aquaculture, which is part of the aquaculture series we've been running, and also we're going to try to cover a bit of systemic investing and systems change within a sector that is booming, that needs to change, that needs to grow and has all these fascinating issues and needs capital but the right type of capital to do so. So first of all, Mike, thank you so much for sitting down here in your office in your soundproof booth, which is a first. I've done many recordings in different places, but one of these booths looked always good as an idea and I'm very happy to do it now and to be here to record this. So, first of all, welcome to the podcast podcast and thank you so much for being here.
Speaker 2:Well, thanks for the opportunity. It's nice to see you again and reconnect.
Speaker 1:It's been a while since we were directly collaborating every day, but it's been a journey and you've been part of the syndicate from the very beginning which we've been collaborating, but mostly email and contracts and things over the last years which have been really, really, really fun. But we're not going to talk about that necessarily. We're going to dive deep into AquaSpark.
Speaker 1:And, just for people that haven't followed that journey, I think most people have heard at some point especially if you're in the investing space of this Evergreen Fund a focus on aquaculture and the sustainability side of things, based in Utrecht. But just to give a short like, how did you roll into or dive into that's a pun intended into the fish farming side of things and why do you spend most of your awake and non-awake hours? Because in this case, you're building something massive at the moment, so I don't think there are a lot of non-awake hours, but how come aquaculture got on your radar? And, as an entrepreneur, you said I have to dive deep into this it was a bit of a coincidence, so I like most good stories, yeah um, I was doing something completely different.
Speaker 2:um and um, I've been an entrepreneur all my life, and the first building an hr business, which has nothing to do with this, and then started investing in all kinds of stuff across the globe, because I became an entrepreneur to do stuff like this. And somehow I got an accidental invite that I was never supposed to get, to go on a National Geographic expedition in the Pacific and to this remote island group called Southern Line Islands, which is a spec right between Tahiti and Hawaii. It's really in the middle of nowhere and it takes you six days to get there, like it's, but it's.
Speaker 1:It's a random invite that changes lives, yeah, and I really wasn't supposed to get there, like, uh, it's it's it, but it's it's a random invite that changes lives, yeah and I really wasn't supposed to get it.
Speaker 2:It was. It was really um a coincidence, and they called me to throw away the whole trip when they realized that, that I wasn't supposed to be there you're never diver, so it's not completely random that I mean.
Speaker 1:It's not that you, you, you weren't interested in water at all, but yeah no, but it was you.
Speaker 2:You might have heard of it because last week they were actually in the news. There was a news item that somebody found the largest coral on the planet. Blah, blah, blah, blah. And this was the Pristine Seas Program of National Geographic and this was the first inaugural Pristine Seas expedition and they were only taking six tourists. Pristine seas expedition and they were only taking six tourists. And one of those tourists was actually going to be Sven Limblot, the owner of Limblot Expeditions, the travel agency that collaborates closely with National Geographic. And Sven, because of the financial crisis and he had ordered new ships and the steel price was going up just couldn't make it and he told his assistant to send the invite for his spot to his 20 best clients with a diving profile. And I had registered with them but I'd never been a client, so I was really not supposed to get that invite.
Speaker 1:So, thanks to the assistant of Sven. You were in this booth.
Speaker 2:I think she I'm not sure, but I think Pamela is now like 93 or something still works with Sven. Amazing, amazing woman. But I said yes straight away. So we had a contract. I went not really the point, but we got off the boat. I went not really to the point, but we got off the boat and National Geographic said well, you know, we have all these purposes for this trip science, an article for the magazine, a documentary for National Geographic World, blah, blah, blah, blah. We also are trying to get somebody crazy enough to try and turn this into a marine protected area.
Speaker 2:And I was thinking you know, I've always, as a kid, dreamt about starting land was thinking, you know, I've always, as a kid, dreamt about starting land-based reservations, et cetera. And I've come to the conclusion that you need to be very, very wealthy to do that and I probably will never be a person like that. Plus, a lot of people are already doing that. But in the ocean I started to realize I knew nothing about that beforehand. Very few people are doing it Now more, but back in the day, no one. And I saw an opportunity to, instead of doing that with grant funding, maybe design a small business case high-end tourism to finance this MPA, so the country wouldn't have to give up a lot of economics et cetera. Maybe actually it would be beneficial for them.
Speaker 2:This country is called Kiribati and then became friends with Sven, became friends with people at Conservation International et cetera, and started working with this whole group of people and trying to convince them to turn this into a marine protected area, which it is now, but not thanks, thanks to me, thanks to one of our investors. But a year later I was still working at that, um, at that and um, and and and, just discussing it with people like how should we do this, how should we design this? Who can I find to help do some initial funding, etc. And then, um, the other people on the boat. I went to New York, saw them, we were drinking cocktails and I said well, you know, there's this floating ocean conference coming up in the Galapagos 100 people on a boat and the president of Kiwibas, anoti Tong, is going to be part of this trip and you'll have 10 days to corner him. He has nowhere to go. So this might be a very beneficial trip.
Speaker 2:Well, he didn't show up, okay, but I met him afterwards, an incredibly nice guy. But I went on the trip and this was a floating TED conference on behalf of Sylvia Earle in the Galapagos, which was organized because Sylvia Earle had gotten the Tad Price and Amy Novogratz, my partner, was at the time the director of the Tad Price and she was organizing this trip and she had invited with her team she had invited 100 people to the boat. I was the only person she didn't know and some of the people had pushed for me to come. I think, yeah, you know, yeah, you know, all right, all right, okay, if we really have to, let's do that.
Speaker 2:So again, a stowaway, basically yeah again a bit of a stowaway and then, um, um, we met. Um, nothing really happened, but I already knew I was going to meet her again. Um, and then we started meeting each other over and over again in a very short amount of time, across plastic pollution in the ocean, et cetera. Ted, in Oxford I started working with Acumen, which is run by a sister, and well, we fell in love pretty quickly. And then we had this joint ocean network and I started thinking you know, maybe we can do something together around, because I met Amy and I thought well, you know, if there's ever any person I would like to partner up with in terms of building something, then it's Amy. And we started looking around oceans.
Speaker 2:And then, a couple of months later, I was invited to this small gathering by CI in Chicago at Bo Wigley's office, the chewing gum company. There were 15 people in the room, all diehard conservationists, including the guy that's now one of our largest investors and the guy that caused the marine protected area in Kiwibas. He does great ocean work, but we're talking about the Ocean Health Index et cetera, and I was basically a fly on the wall. And Steve Hall, who is now on our board, who at the time was the Director General of World Fish, an NGO in Malaysia focusing on using aquaculture to get people out of poverty since the 60s Really great organization and he started talking about aquaculture and the only thing I knew was horror stories from the newspapers on fish farming. This is wrong, that's wrong, et cetera, and thinking you know, in this room nobody's going to take this seriously, but they're all polite people, they'll listen to it, totally, ignore it and go back to handy order of the day. But the opposite happened. We had a very interesting conversation, blah, blah, blah, blah and it really spiked my interest and then I forgot about it.
Speaker 2:And then, two months later, this guy sends an email out of the blue and says well, hey, we have funding issues. It's a peak of the financial crisis. Can I come by to discuss? And I think you know you get money from the EU, kfw, the World Bank what am I going to do? And the largest funders? My $5,000 is not going to help you, so waste of your time, please don't. Well, not, please don't. But you know it's okay. Steve came anyway. We had a great time, started discussing. I went to Egypt for some other business. He heard about that Said well, you know we have a big facility in the Delta. Will you go and look at it? Maybe you see something with an entrepreneurial eye that we can monetize.
Speaker 1:I know shit about fish. Egypt is a massive aquaculture.
Speaker 2:It's a nice adventure I'll go look at it, but I don't expect anything. Um came back, had some ideas. None of them worked. Um, we did a debrief and in that conversation he mentioned that there was no investment activity in aquaculture globally. It was almost as large as global fisheries. Thinking, really that can't be true.
Speaker 2:And then at the time we had a really small well, you can hardly call it a family office, but a small investment entity with a small team working for my house because I wanted to have a close connection with it. And I told them can you please investigate online if you can find any aquaculture investors? And they found some investments, like Bain Capital investing in some publicly listed companies in Norway, etc. But that was kind of it. I'm thinking what? How is that possible?
Speaker 2:And we started thinking, you know, maybe we can help WorldFish, just with a small group of friends and to make some of the projects that they have that are all grant funded. There must be some of those projects that have a bit more economic viability. Maybe we can help them become a bit more financially stable so they don't need grant funding and they're not in such a risky position. I think, you know, we'll get a small group of people together we'll make a, we'll all chip in a small pot of money and select a few projects and do this. We have no idea how to do this.
Speaker 2:So I said to the team can you send out some, some invites and ask some people to come and help, and let's organize a few days in Utrecht and see if somebody can come and explain to us what we should do here and how we should select these programs and what would work and what doesn't work, because these people have been working in this industry for a long time and we have no clue. And then all of a sudden we had 45 people sitting on a doorstep for three days on their own dime here in Utrecht. Google came, stanford, wageningen, sterling University, entrepreneurs from the space, the Walton family sent somebody it was an amazing. And then World Fish CI, ci sent a fax saying you know we'll support this initiative at $1 million.
Speaker 1:Cis and the FACS saying you know we'll support this initiative at $1 million Never actually came to fruition, but it's interesting that from the notion of there's nothing in the space on the investment side to sending that invite and apparently getting 40, 50 people to show up, meaning that others saw the same need. Otherwise, like there was something there Others have been asking the same question like such a massive industry exploding since the last 12 years even more, but let's say already then it was as big or almost as big as fisheries and no dedicated investment fund or investment structure, even we were really surprised by it, and pleasantly surprised, but also got a little nervous, thinking well, you know, asking for a little bit of help, this creates a really big responsibility all of a sudden, like now we can't really back out.
Speaker 2:But we walked into the room I forget what day of the week it was, but I could say Monday morning into the building that we rented around the corner and there were people in the room that had been studying one species of tilapia for 25 years, that have been looked at as if they were doing the devil's work for all of their life because it had a really bad reputation. And you could really feel a sigh of relief in the room, like finally we got some positive attention. And then we started listening to these people over the three days and Amy and I were looking at each other and thinking you know, we're thinking about this all wrong, which was mostly Amy, who has really a neck and a nose for global opportunities and global collaborations, which is what she did at that and some things beforehand. And we started thinking you know, maybe we're thinking about this the wrong way. We shouldn't be thinking about a small pot of money to help a few world fish projects. There's actually an opportunity here to really drive something for global change, and we started to realize that aquaculture, which we didn't know before.
Speaker 2:It's a sector with 700 different species being farmed. Hundreds of those species have a resource footprint that's comparable to chicken. All the way to net positive, it has the potential to be our healthiest, most resource efficient food system. There's a lot wrong with it today. To net positive, it has the potential to be our healthiest, most resource-efficient food system. There's a lot wrong with it today. Again, there's a lot of stuff that you think well, you know we shouldn't be wanting this, like mangrove destruction, antibiotics, ingredients that are not sustainable in the feed.
Speaker 1:There's a long list, but it has the potential and the speed I think that's something people underestimate of recovery and the need because the oceans are under massive I forget what year exactly, but in 2017 or something, this industry passed um wild caught fisheries.
Speaker 2:it passed beef in in volume, globally um and in the 80s. This sector it's been around for thousands of years, but in terms of volume it was non-existent, it was tinier than a pink nail, and now it's one of the biggest protein sectors on the planet.
Speaker 1:So if we don't fix this one, it has to be fixed. There's no escaping Like. This is one of the big protein elephants in the room.
Speaker 2:Well, it has to be fixed's. No, escaping Like this is one of the big protein elephants in the room. Well, it has to be fixed. But the point is actually bigger. If you do this right and we started to realize that if you want to do this right and you look at increase in protein demand in the future, et cetera, we think it's much better to do that with fish that has, or shellfish that even has, a positive footprint, for example, than to do that with cows, and I'm not saying and nothing's black and white and everything is a lot more great.
Speaker 1:That's what I'm saying to health people.
Speaker 2:You shouldn't like.
Speaker 1:But fish has a number of.
Speaker 2:Really big advantages.
Speaker 1:Advantages being weightless, like none of you like there's.
Speaker 2:There's just some physics in it that makes it just way easier than many other things and it's healthy for you and a lot of countries where we have the biggest population growths, are much more into fish and other people. And we started to think, and we were. We started to like we had this session, we started to think bigger. And then we started to you know, there might be an opportunity for real global change here and we started to try and learn. But we started to.
Speaker 2:We were part of a work group at the World Bank, fao, rockefeller, a bunch of other groups thinking about like hey, what should the future actually look like beyond what's in the official reports that the FAO publishes today, saying well, you know, based on current trajectory, this is where we will end up in 2030 and 2040, et cetera. But what would be an ideal situation? And in that discussion we actually came to the conclusion that aquaculture should actually triple by 2050, being bigger than beef today. Triple by 2050 means that two-thirds of this industry doesn't exist. It's very capital intensive. It's typically very long-term. It takes at least 10 years to build a medium-sized farm.
Speaker 1:What is the capital structure? That money wasn't there at all. Nobody was even thinking about.
Speaker 2:No and it's not just money, but it's also knowledge. Again, we started to also realize that most of the problems in this sector and it's not everybody, but most of this sector is really open to sustainability um, not the word sustainability per se, but they realize that they're building something in water. If you throw in a toaster and this side in the water, everything else on the other side will also die, because it's a very sensitive environment. So all of these farmers know that they have an interest in doing things right, because they will destroy their own.
Speaker 1:Which is more interesting or more visible or more present than air quality or like we know it, but we don't really see like water quality is more in your face as a farmer, even almost more than soil. Like we, many farmers sort of or land-based farmers know or know that the soil quality is fundamental to their yields and their production, but probably less so compared to if you're farming in water but it flows away so you're in it together, literally.
Speaker 2:You're absolutely right. But the problem here that we saw was everybody's open to it but nobody knows how to do it, and it's been going so fast with very archaic techniques. Take Indonesia there's 14 million fish ponds or something and people in the West don't even understand what that means. But people are throwing stuff in the water, thinking they do the right thing, but nobody knows what's actually the right thing Other than based on experience. It's also a conservative industry, but it grew so fast with all the technological insights et cetera. Most of the things that go wrong in this industry are just because of lack of insight and lack of proper funding. And that also means that if you are now building a medium-sized business which 10 years ago were very few and most of this was either small and then the top 5% of this industry was very, very large, like the Norwegian salmon industry, et cetera, but there was very little in between but people that would start something in between if you build a medium-sized I don't know barramundi farm in Vietnam, it will take you $40 million, 10 years of your life, before you can go to a bank. If you are going to do that and find that money from friends, family and investors or build it step by step. You are going to go out and see what the latest insights are. You're going to go to conferences and learn and then think you know, this is the latest technology, latest insights, this is maybe what I should use for this and for that. What are the economics? And you try to figure out how to build the next one better than the one before. And I think you know this is all new behavior, which is very different from changing existing behavior. And we're thinking, you know, and all these people know that they don't know, and so we're thinking, you know, if we can build a large global example that's relevant for everybody, of a group of companies that together show that sustainability and a new way of working, a better way of working, is actually bringing better financial returns with less risk for that same farmer, we have a potential for global change. Because if people go out and this is public and everybody in the industry knows about it and you have two examples in front of you, one is how you always did it and the other one is like, oh, this is another way and it's actually better how you always did it. And the other one is like, oh, this is another way, but it's like, and it's actually better, um, and then there should be a reason for you to choose this new way. And then we started thinking, you know, maybe there's a big economic opportunity here, with an impact opportunity that's really unique compared to other sectors.
Speaker 2:And we had no affinity with aquaculture or fish, aside from diving and being and really caring about the environment and oceans. And we started looking at this from when we got off the boat with Sylvia. We had a lot of conversations about overfishing. We had a lot of conversations about fishing for feed, which is mostly going into fish, and that was our initial angle, why we started looking at aquaculture, thinking what can we do about fish meal, for example? But we started to realize that this is actually a much bigger story.
Speaker 2:It's environmental impact, it's climate impact, it's biodiversity, but it's also food security. It's a sturdy food system that's resistant to global climate change. It's healthy food, it's food for people. Well, it's a way to make regions and countries independent from global trade. There's, there's um. There's so much possibility here, that's um, that we started to think you know, um, even though we have nothing with aquaculture, this is a great opportunistic opportunity where we can actually really build something that can last, that can stand on its own two feet and if we do it right, we can build something that way, after we are no longer here whether we have got gotten under a bus or we'll be building something else at some point we can build something here that's really sturdy and that can last a long long time and potentially have an effect for the next hundred years, and I'm thinking you know why not, and then after that seeing the potential systems change, like the system that needs change doesn't have maybe the right puzzle pieces in terms of finance and funding.
Speaker 1:And we're at an interesting point also in the aqua, in the aqua spark history, you started building very deliberately an evergreen fund, very deliberately, a system of a lot of science, a lot of different companies that feed into each other literally, but also very different than, okay, we only take the technology approach, we only take farming approach. You know, from the moment which didn't make your life easier, specifically from the fundraising perspective, but you said this needs to be an ecosystem of companies and does. It needs to have another type of investment vehicle.
Speaker 2:If we would have known how complicated it was going to be, we might never have started, but now we are where we are.
Speaker 1:Looking back, would you have done a different? Mean there's a whole different conversation. But would you have done a closed-end fund just because it was easier, and a series of them no, no, absolutely not.
Speaker 2:But um, we might not have done it in the first place because it's cost it's. It's cost so many sleepless nights over time. Okay, I don't know if we still would have made the same choices, because it's been a bit of a rough journey, even though it's also very gratifying it's all-consuming.
Speaker 1:Yeah, 520 million under management now a team, a portfolio of very interesting companies, a number of clear or semi-clear winners in it. It's there, not at the size and impact and scale you want it to be, but you definitely built something.
Speaker 2:To get here was difficult. Now, building a company is always difficult and this is not my first rodeo and this is not my first rodeo but I noticed that in my mind. I make the beginning of all of these companies always a lot. In hindsight it's always a lot more rosy than it is in real life, but anyway, we can talk about that later.
Speaker 2:But this meeting happened in 2011, end of November, beginning of December, and then in 2012 and 2013,. We started talking because we had this idea and I thought you know, let's figure out how to do this, and by that time we've made a lot of investments in all kinds of things, from bicycle rickshaws in India to financial infrastructure in Northern Africa for the unbanked organic trade and cattle feed from Eastern Europe, software startups in the US but we'd never run a fund. We did some syndications, like you are doing now, and sometimes 5,000 bucks and sometimes a million different things, but no fund and we didn't know enough about aquaculture, so we needed to learn as quickly as possible. So we started going to conferences, asked people around you were helping with, looking at what were the latest trends and looking at new things developing. I remember our first insect story and looking at the vegetarian butcher and a whole bunch of things interesting things were happening.
Speaker 1:I was working, I think on fish replacement at the time as well.
Speaker 2:Yeah, and we also started talking to people that had been investing in this space.
Speaker 2:And then we talked to a fund that was mostly on the marketing side, that was run by a few NGOs in San Francisco. We talked to Aquacopia, which was run by David Tse, who is now running Novo Nutrients. He did also aquaculture investments with a closed-end venture fund. Basically, we talked to a bunch of people that invested in farming in shrimp farming, some other fish farming and we saw that almost everybody lost their shirt Almost nobody. We saw that almost everybody lost their shirt Almost nobody.
Speaker 2:Well, at the time I don't think we met anybody that had a decent financial return, except for the people that invested in Selman and big public companies and Bain made a bundle.
Speaker 2:But we started to realize that it was very difficult to do. We saw some examples of, for example, a farm in uh in the us that um had really a really great sustainability story but the end product was so expensive that you could only sell it to rich people in san francisco, thinking, you know, also not going to work. And and we started talking to, for example, david. We said, well, you know, we did really interesting stuff and I still really like the companies that they had in their portfolio. But it was maybe too early and we started to realize that a lot of these things really take a copious amount of capital and really a long period of time, and that the venture model, private equity, et cetera all the existing investment models are not working for this space and the people in the space itself farmers in particularly are incredibly afraid of taking money from investors like that, because they realize the same thing and they know that it might ruin their business. Um, aside from the fact that there were no, well, that that's a farming investors anyway.
Speaker 2:But no, there's a.
Speaker 1:I think it's similar to the soil side as well. Like these time the, the money needed is enormous, the time frames are long and most of the structures we have just don't fit.
Speaker 2:So at the time we said you know, so what is going to work? And then we said you know, if we have, we need longevity and we need a structure where we can keep attracting capital, because we are not going to be able to start a really large fund Because we don't have the reputation. We're in a new sector where there's no comparables, there's no data on what a good investment looks like. The farmer doesn't even know what a good investment looks like. Nobody knows. We're not going to be able to do this in a traditional way. So we started to think you know, if we start to operate more like a holding company or an open-ended fund where we can keep attracting capital, we can start small, which is more attainable for us than starting with a really large amount, because then it's never going to work. But it will also allow us to really support these companies over a much longer period of time, which scares investors usually, because where do you stop supporting and where not? And we can talk about that for a long time later on.
Speaker 2:But we started to think you know, if we want to do this successfully, then this is the only way. So normally, I mean, you start a fund and you start fundraising and you look for an anchor investor. The anchor investor says, ok, I'll help you invest, and this is how the financial industry works. That anchor investor says, well, talk to my lawyer. The lawyer takes a cookie cutter template for a venture fund off the shelf these are the terms that everybody has and then, based on that, you start fundraising and then maybe you get there, maybe you don't, and only five percent of people that say that they're going to raise a fund will ever be successful.
Speaker 2:At the other 95 percent typically fail. We said you know we're not going to do that because life's just too short. I'm investing is not. That is not that fun of a business, um, and there's much better things to do with your life aside from the financial returns and much more fun stuff to do with your life. We're not going to spend 10 or 20 years of our life doing this, knowing that we're pulling on a dead horse. It's just not going to work and we might make some money, but that's not the point or maybe not or maybe not.
Speaker 2:so we said you know, we're going to do this in an open-ended structure or not at all. So we then went to a bunch of people and saying, well, you know how should we do this? And then most people said, well, you know, never going to work because you're a first-time fund manager, it's open-ended, you're in a new sector, there's no comparables. Why would anybody ever invest? So we put in everything that we had ourselves to create maximum alignment and a bit more actually. And then we talked to, I think, 450 people or something had 18 people say yes in the end, one-eighth. I'm talking One-eighth. This shows how brutal fundraising is.
Speaker 2:And those were 450 real conversations. That's not the. It's not a CRM. We approached way more people than that, but most people didn't even respond. They had them or immediately said no. Eighteen people said yes Friends, family, some people that really believed in it.
Speaker 2:Frank, who started Pim Wemmick, played a pivotal role in calling DUNE participations at the postcode lottery. It was a real investment arm, not just a grant-making arm. So you know, you guys, you have to do this and he somehow convinced them to get in and we had 8.3 million in commitments, 6.9 million in the bank, and started. We had a 1% management fee to pay for all costs, which was 69 000 euros, which didn't really cut anything. So that's where we we so we had to put in money in the management company for almost the first 10 years to subsidize management fees, to make sure this could be managed properly.
Speaker 2:But it also created maximum alignment and it made sure that we could invest way more money than in a typical fund, because a typical venture fund and not a lot of people realize this but if you give a venture fund 25 million or 50 million in the beginning and you have a 2% management fee and you have a 10-year lifespan, that means that the manager needs to set aside 20% for the management fee. And you have a 10-year lifespan. That means that the manager needs to set aside 20% for the management fee. On day one, the management fee pays for salaries and then the rest of the costs come out of the body of capital, which could easily be another 10% to 15%, which is 35% already, and then maybe you have to pay some fundraising fees. So before you know it, a venture funder can only invest 50 to 60 cents of every dollar, which means if you don't find Facebook, you're not going to get a great result, and it means that you need to come up with a really great result for your investors.
Speaker 2:You have a starting point, that's 50 cents. You first need to make up to the one euro. 50 cents you first need to make up to the one euro and in our case, we could invest 90 cents or even more of a euro, because we continually kept raising funds, which is also a risky strategy, because if you don't raise additional funds, what the F is going to happen, you know, sorry, and you need to attract additional capital, also to support your portfolio, et cetera. The model that we chose is way more stressful than raising capital on day one For 18 months or two years. Close it, you deploy it and then you go for the next one and then lean back and go for the next fund and then say well, you know, some will work and the rest it will just write off but it doesn't have systemic impact.
Speaker 1:Because I think that's what often people underestimate if you cannot keep, because they say, yeah, we keep some for follow-ons, but especially in in high, like in industry, where, where a lot of money needs to go in to create real change, you need to be able to double down in year five, but also maybe year 10, maybe year 15, to really get returns. And returns are there, but the structure of a VC fund or even private equity is just not made for.
Speaker 2:No, and a lot of these companies, ed, need money in what we call the valley of debt, in a period that's beyond the timeline of a venture fund, for example, and the venture fund then doesn't have any money anymore and then you're dependent on somebody else and nobody else steps in. You have a difficult period and these companies never grow in a straight line up and we think that in a venture fund or private equity you actually write off too much, and there's quite a few that actually could have made it if you had the money.
Speaker 2:Our portfolio today and we have six winners like eFish, we will do more than a billion dollars in revenue this year. They wouldn't have been around if we would have been a venture fund. They wouldn't have made it, and now it's one of the biggest successes in aquaculture globally. But I'm almost forgetting one of the most important points. When we started to talk to all of these people in the industry because in the beginning we were thinking, you know, we're going to invest in farms and make them more sustainable, which is easier said than done and then we started to realize, you know, there's no way that we are going to be able to do that without looking at the rest of the value chain. If you don't look at the inputs of the feed, for example, you can never talk about sustainability. It's all going to be bullshit and greenwashing and you can't hope that somebody else will do it. No, and we were also seeing that these farmers have an incredibly hard time and they're squeezed by the suppliers and they're squeezed by the offtakers and not having a good grip on the value chain is not going to be able to. We won't be able to build that demonstration. So and we started and, and and we won't have effect on the system or it's going to take like 300 years instead of uh. So we started.
Speaker 2:We started to realize that this would only work if we would start to build a system where these companies would work together and have synergies from each other. And that sounds very logical, and it is. But if you then start to think about the consequences, you start to say holy shit. And you invest in a feed ingredient. Okay, take Calista. We invested in January 3rd, 2015. We're now in November 2014. 24, sorry, different decade. Yeah, 10 years in, and we have a 20,000 ton plant running in China, which is huge. It's the largest fermentation.
Speaker 2:our gasiest fermentation plant on the planet running in China, which is huge. That's the largest fermentation, our gas use fermentation plant on the planet. We need 160 million tons of ingredients for the future of aquaculture alone. If this growth is going to come to pass estimate, it could be 40 million tons less or more, but 160 million tons, this is 20,000 tons. It's nothing. We're going to need billions, if not trillions, to make this work. But the point is, over 10 years in before we see meaningful synergies and have a couple of hundred thousand tons of production from Callista, it's going to be 2027, if not 2028. That's 13, 14 years in. Then we have synergies and we have an agreement with this company that we can use these ingredients at very favorable conditions in all of our portfolio, which will really benefit all of our farming operations. By the time we get there, it's 2030, that's 15 years in, and then all of these farms will triple their bottom line because they're using this Calista product. It's just an example.
Speaker 1:But they would have never been there if you were to any kind of traditional funding mechanism.
Speaker 2:No. But also, if we have a traditional fund where, seven or eight years in, you have to sell wherever you invested in, then we've sold the feed ingredient. We finally have some farming operations that could really use this feed ingredient and then we don't have it, I mean it makes no sense for us to exit. And if you just think about it, you're building something really valuable that can last, that can stand on its own two feet. You're building a business and then you have to sell it, because that's the meme that we have with each other, that that's the only way you can show success. I mean, it is a destructive concept in our society that causes, well, a whole host of problems, in my opinion. But in aquaculture, no matter how you put it, that doesn't really work. And now, 10 years in, there's a lot more activity. Back in the day, we were the only investment fund on the planet that was focusing on aquaculture and let alone sustainable aquaculture. Now there's a couple of hundred blue economy funds that have aquaculture as some of their focus. Now you can look at it maybe in a bit more traditional way, because there are a few technology ploys where you maybe can get out within 10 years. But in general, if you want to build this system, that will never, ever work. And, yeah, we said you know we're either gonna do it this way or not at all, or we're gonna do it not at all and we'll do something else. Okay, we don't want to waste our time on something that's not going to work. Um and 6.9 million, as you said earlier, and now we're at 520 um. We've come a long way, um, and it's grown into something quite significant. But if you talk about global change in the sector, we've had a lot of impact, but the real impact and the real building is still ahead of us.
Speaker 2:Back in the day when we were 6.9 million, we had a model that made this grow to 2.5 to 3 billion, which we didn't dare to talk about because we were thinking, well, everybody's going to laugh so hard that these people are idiots. And we sometimes talked about it and slowly we got a bit more confidence and talked about it, but still, people looked at us thinking, tweet, tweet. Along the way, we started to realize that the opportunity here is so much bigger than we ever dared to dream of, and one of the examples is we didn't realize what the impact actually is. And now, last August we came across this report published in Science what the impact actually is. Okay, and now last August we came across this report published in Science and it basically talked about the climate impact or the impact of industrial fishing on our oceans, and it's really opening our eyes that what we are doing is much, much bigger. And it's really opening our eyes that what we are doing is much, much bigger.
Speaker 2:That report talks about the impact of industrial fishing on our oceans versus the impact of climate change and it basically says that if you look at oceans, who are regulating our global weather, which is becoming more and more extreme, which is a consequence of our oceans being less able to absorb whatever we put in the atmosphere. It basically says that if you take a bucket with everything that causes climate change gas, oil, transport, like planes, trains and automobiles, the built environment, the global ag at transport, like airplanes, trains and automobiles, the built environment, the global ag you put it all in one bucket and you take another bucket and that's industrial fishing. Industrial fishing has a bigger impact on our oceans negative impact than all of climate change combined. That means that half of that absorbing capacity goes up in industrial fishing Industrial fishing 30% of that today is fishing for animal feed, and there are alternatives to doing that. It's massively distracting our oceans or affecting our oceans' ecosystems and biodiversity, and it's the impact of that is so large it's if we don't start to look at our portfolio and the companies that have the potential to replace fish meal in fish feed.
Speaker 2:I think you know that 30% of global fish meal could actually be replaced by our portfolio and that impact if we can make that more visible in terms of biodiversity impact and climate impact is going to be so huge it doesn't even fit in the spreadsheet. Going to be so huge it doesn't even fit in the spreadsheet and we knew it would have a large impact, but we didn't know it was this big, and neither did we know that we had just expanded our business model to 2040, and that we can actually turn this into something that's at 25 to 30 billion in AUM by 2040. With really substantial returns, impact, et cetera. We didn't dare to dream when we started this that it was going to be that big Beyond a billion and Beyond a billion. Yes, yes, but you didn't have to talk about it to most people.
Speaker 1:No, no. And so being at that crossroad now of 10 years in or, I would say, significant, like half a billion under management, plus some very interesting winners, but also really still feels like the beginning, Do you now dare to talk about? Let's say, you can show the first graph, the first part of the graph which has been going up quite consistently. There are a lot of interesting companies in it. But if you draw that to 25 billion, that requires almost a whole different story. This is a much bigger impact story. Much bigger impact story financially biodiversity-wise, food, health, nutrition, inequality, et cetera, et cetera, et cetera. How does that change your storytelling and your narrative? And then we get to the practicalities of actually get there. But this is an important inflection point, potential inflection point. Let's see again in a couple of years if the, let's say, the spark in AquaSpark actually got the fire, significantly going or not, and maybe there are other routes.
Speaker 1:I mean, this is completely unpredictable, but do you now dare to draw that almost exponential line further and talk about it and say how do we get there?
Speaker 2:Yes, and we've been having this discussion with our investor base over the last couple of months saying you know, we've modeled this out to 2040. We have a potential to build something that's really really one of a kind in terms of scale, in terms of impact, in terms of building a system of things where all of these things are related and working together with each other. There's multiple holding companies across the planet that make really interesting investments, but there's nothing that does what we are doing today with the synergies between these companies, where one and one becomes two and a quarter with global system change and, we think, really outsized returns. We think for early investors, we can actually get to a 30 plus X money multiple. You have to be in it for 25 years. Not a lot of people will do that, but you know. And for people that get in today, in the next 15 years, we think you know, and this is all you know paper and expectation and we'll have to see, and there's a heck. We put really big disclaimers on it, but we think that somewhere between 10 and 14X is a real prediction. We're a typical over 15 years. We're a typical venture fund over a period of 10 years as a two to four x forecast.
Speaker 2:We have an existing portfolio. We're article nine um an existing portfolio and that's pretty much de-risked. This year for the first time, um about 60 percent of our well. This year, for the first time, our portfolio is actually overall making a profit instead of making a loss and 60% is actually late-stage AUM. Now it's a completely different story than when we started and a new venture investment of $3 million in a new solution is only what is it? Half a percent of our AUM. We're not a venture fund. We're really a long-term open-ended holding company actually, and we were modeling this out and seeing. You know, in an ideal scenario we need about well, sorry, we were talking to investors like how should we do this going forward, and also to outside parties, and we are in the middle of a process of getting approvals from our investor base on our next phase, say, you know, we've modeled this out to 2040. To optimally execute on our mission and vision and strategy, we need about 2 billion where we are going to be.
Speaker 1:Which was your original model pretty much.
Speaker 2:Yeah, 2 billion in addition to what we have today. Yeah, which is about 2.4.
Speaker 1:So we're like 100 and way enough.
Speaker 2:But then saying you know which is?
Speaker 1:a lot, but it's not a lot at the same time. Like if you consider capital markets, if you consider big holding structures, if you consider certain conglomerates, it's an insane amount of money, but it's not a lot of money actually.
Speaker 2:No, but we've been thinking, you know, how should we do this? And we've been looking at the model like what do we need for the next four to five years, and what do we need afterwards, et cetera. And I'm thinking how should we do this? And in the past we've continuously raised capital, basically drip by drip and step by step, relatively smaller tickets, which is quite stressful because you continuously try to balance influx with outflux and sometimes that goes well and sometimes that goes less well. I'm thinking how should we do this towards the future? And if we really want to do this in a proper way, we should really think about that.
Speaker 2:And one of the things that stood out for us is that we kind of started overtime or a bit automatically because we are so different. We would walk into a conversation and say and start the conversation saying sorry, we are different, and then talk to people and basically have an uphill battle from that moment that we would sometimes win and sometimes not. We won it quite a few times, otherwise we wouldn't have gotten here, but still it was an uphill road where we were thinking, you know, that should stop and we should really try to create a new category that's about longevity and concentration and a different investment model than just venture and private equity, which we are in the middle of thinking. You know, how should we describe this? But be proud.
Speaker 1:If you have any suggestions, email.
Speaker 2:And actually explain and put emphasis on the reasons why we are successful.
Speaker 2:That's concentration, that's longevity and building this system with synergies, et cetera. And saying you know that also means that we need to be much more pronounced about our strategy, where we say you know, we keep investing in the new solutions of the future that need to fit in this realistic picture of a system. Second bucket is follow-on investments, but really embracing the winners in our portfolio. You don't need to be a genius. If you have time and the longevity, you can see what is starting to work in your portfolio and when you are sure enough about that, instead of the traditional knee-jerk reaction of this is when we start to sell and cash in, we actually double down and embrace the concentration and say we double down, optimize for financial results, optimize for impact and optimize for synergies with the portfolio that trails behind, which we can then actually accelerate. And that doesn't mean that you shouldn't use your brain and continuously stress test these companies, because sometimes you do need to exit and sometimes it is wise to change your position and take some money off the table.
Speaker 1:There's a different. There's value in doubling down and having the capacity and time to do so.
Speaker 2:Well, if you look at Berkshire Hathaway or all the reports that Sequoia published a few years ago when they started to turn around their whole system into longevity investing, there is real value in time out the returns. If you take those uh, look up those sequoia reports online they would have a steep multiple of their results compared to the results that they had throughout um and throughout time. They would have had so much more results if they would have had length of life um and they and they didn't. Now they do and then hopefully that will work out.
Speaker 1:Repeat again.
Speaker 2:But we've always thought that that was the case, which also I saw in my other companies. You don't build really large things overnight. It takes time. And the other thing is if something really starts to work, it starts to create real synergy in the portfolio. And take e-fishery again in Indonesia. They now have become the largest feed distributor to all of these pond farmers that they work for in Indonesia, the largest feed distributor in aqua and I think probably in a few years from now there will be half a million tons of feed, something like that, if 10% of that is fish meal and we can replace that with a product from Pro-Dix or Callista or something else.
Speaker 2:Take Callista they can go to the bank, get a loan for 700 million and build a new plant Just purely on that, and then all of a sudden you have half a million ponds or a million ponds that are all um, um, incredibly more sustainable. Um. That's what I mean. With a system you can't do that. If you own one percent or no percent, you need to be a significant shareholder in those companies to make this work. And anyway, the, the, where was I? So we modeled this out and we're thinking, you know, if we want to do this in a proper way. We need to do this in a different way because we're not going to get there with incremental drip funding and we have um and we. We can sit way more in the driver's seat if we can have more capital and don't need to always wait for somebody else to join us. Um, but um, I was talking about the bucket, sorry. And we have new solutions, follow-on investments, embracing the winners in the portfolio.
Speaker 2:And then the third one and where we in the past say wouldn't it be nice if we ever could.
Speaker 2:We're going forward. We're going to say you know, this is part of our structure is investing in cash flow, positive, mature business, businesses that lift the whole tide. We will not do that often a few times only, in rare cases where we think we can invest in an existing aquaculture operation that's already mature and profitable large good growth potential, where we think with our portfolio, we can actually increase the profitability of these companies structurally by making them more sustainable, which is a double whammy and at the same time, it means that 60% of our portfolio can expand in their production capacity, et cetera. It will accelerate everything and that will become a mainstream part of our strategy going forward and we modeled this all out need $2 billion for that. And we started to think, you know, it would be really great if we could raise a really large chunk of money in one go 500 million plus um and I'm thinking you know that we will have to do with institutionals there's no way.
Speaker 2:I mean, there are few private, but there's yeah, some large family offices um, but they also basically became institutions.
Speaker 1:If you, yes, large offices a lot of people a lot offices, a lot of people, a lot of committees, a lot of processes.
Speaker 2:But ideally we have a combination of those and we think that would be incredibly powerful. And these large institutions have real trouble investing in open-ended structures, as you know, and there's very few successful evergreen funds et cetera, and our first choice is really to stay open-ended. We could, with a plan B, become a more traditional type of fund with continuation funds et cetera, but it will make things more complicated. You have a risk for diver, diverging interest etc. It's we don't want to go there if we don't have to. Um, we'd like to stay open-ended.
Speaker 2:But then you go to a pension fund and try to convince them. So one of those pension funds told us so you know, if you could agree that if there's no significant liquidity eight years after this close of 500 million, we turn this into a closed-end fund, and then you have four years to either divest or find a way to do a continuation fund or something else. That's our plan B, and then this becomes a more or less traditional investment for us, because then we're investing in a closed-end fund which gives you a way out With benefits, and so you know, if that's the case, would you then agree? If we do 500 million with you next year, we have eight years', time28 and 2030, ipo as a holding company you have your liquidity um as a holding company and um, um, um, raise an additional billion with going public, um, and would you be okay with that?
Speaker 2:And these pension funds that we owe? The devil's in the details. If we can sit down with you and to really talk about what the terms should look like and we're not saying that we're going to invest but the devil's in the details and we'll sit down with you and to work on the terms, without saying that we will invest, but we like the idea, not for everybody and some pension funds, um, I won't like the mix of public and private, but we think that there's plenty of people, based on the conversations that we had and that could be really interested in this. Um and then an ipo would allow us to stay open-ended. It would create liquidity for our investors, so we don't need to become open-ended. It would create liquidity for our investors, so we don't need to become closed-ended anymore. It would create a success because, weirdly enough, today success is selling and saying goodbye to what you built, but in the end, that's all about liquidity and if we IPO, we have the same type of success Along the way. In the next few years, a few of our companies that will go public and we have a few that are in full preparation mode already. So there's some really exciting stuff happening and we can do this on the back of that. We think we need to really time it right, but we think we can really do that. It would allow us to stay open-ended.
Speaker 2:As I said, it will put a massive spotlight on what we're doing. It would open this up to everybody, because then it becomes truly democratic. You can participate with 20 bucks in the stock market, you don't need really big tickets, and we can really build this out to something that's one of a kind, at a scale that's never done before, with really global, systematic impact. And that is not the easiest road. But we're in the middle of the process of getting approval from our investor base on the necessary changes to our members agreement, which we hope to acquire in the next three weeks or so, and then this is yeah, when this comes out, that will be behind us. So it might even it might be that it didn't work, but, and then we'll have to look for plan b or something else. But today, based on the conversations that we have, we are pretty confident that at least the majority of the changes that we need for this will come through and that we will get there. And so we're basically in full prep mode to get this done. We are going to need some time to really be ready to go out to these institutions, but then we hope to finalize that really big round sometime coming year. And then we are still in the process of getting our full license with the AFM, the Dutch financial regulator, because we're crossing the 500 million. We are at a gross AUM but not net AUM yet, but that's going to happen any day now.
Speaker 2:And people think you know, ipo complicated there's so much you need to do for that. Apo complicated there's so much you need to do for that. But people don't realize that one of the biggest things that you need to do is report an IFRS and put your books five years backwards in IFRS, et cetera. But we've been doing IFRS from day one. What?
Speaker 1:is IFRS.
Speaker 2:It's like International Finance it's the highest accounting standard that you need. That's mandatory when you go public. We already did that and all of our portfolio companies do that, so that's already in place.
Speaker 1:That doesn't mean that we don't need to stand to our organization, of course, but it's a whole and it's interesting from a long like, because the other option is to continue what you're doing now drip funding in and maybe push that with family offices, et cetera, funding in and maybe push that with family offices, et cetera. But you're basically saying that's not the way to. With the opportunities we see and the systemic change that is needed and is going to happen or needs to happen in the aquaculture space, you need something way bolder and bigger. Yeah, I think so.
Speaker 2:And we can still have a really great impact with much less funding. But the risk of that scenario is infinitely higher. You run the risk of not being able to support something really large because you don't have enough money to do it and you depend on others, which means that you might lose something along the way.
Speaker 2:That's actually maybe core to our impact picture in the end and financial picture and you know you don't want to do that and the more, not the more, but having a sufficient amount of capital to de-risk, that is really important in our view. Okay, you know, and it gets um. We think that this strategy would really allow us to optimize on that future and it will also help us balance our portfolio, because some of our large companies are now becoming really large in our portfolios and people say you know we have concentration risk. You know that's fine, concentration opportunity is another word.
Speaker 2:Yeah, these are the best companies in the business. You actually want to get behind this. If you have one restaurant in Amsterdam, it can be the best restaurant. If you have five restaurants, it can be the five best restaurants. If you have a thousand restaurants, they're all mediocre.
Speaker 2:By definition, diversification is for people that don't know what they're doing, and if you don't have the time to do this and if you're not a specialist, you should diversify, because the risk of losing everything is too high. But when you're a specialist, like you are in region, you're not going to invest in everything. You're going to invest in the best or what you think is the best, and we could be wrong. Um, most likely will be a few times, yeah, a few times, but uh, so it need to be diversified enough, but but we shouldn't be investing in every farm that we see or in every feed ingredient that we see, because then then something's not right here. But anyway, we'll go.
Speaker 2:If this fundraise will work, we'll be somewhere between a billion and 1.3 billion in AUM. We have a few transactions coming in our portfolio, including an IPO, in the next two years, which will probably add another half billion at a minimum to our AUM If we then raise a billion with going public. You're already talking about three, three and a half billion when we go public. It's a substantial.
Speaker 1:Yeah, yeah of course. In this case, our one billion question is not very relevant.
Speaker 2:We need to be big enough to do that and we also need to be mature enough so we can actually also have a real prospect on what is our dividend policy going to be, et cetera, which is not always necessary, by the way, Berkshire Hathaway hasn't paid a dividend in its whole existence and the value is from an increase in share price. But you know, we need to really it doesn't mean that they are demodeled.
Speaker 2:No, and what I'm trying to say is we need to mature more before we actually go public, we need to be able to really time it. Markets need to be favorable, which they haven't been the last few years. But all of these things in the market I've been an entrepreneur since 1989. There's a lot of ebb and flows.
Speaker 1:It's all cycles.
Speaker 2:It's all cycles. That's just a matter of patience, and we have patience with this structure.
Speaker 1:Yeah, and you've been around and to ask a few questions. We always like to ask, also considering time and making sure, because it's very, very busy times obviously here with these kind of movements and these kind of developments what would be your main message to investors in general, let's say, the investors that are managing their own money or other people's money and looking at the food space at large and not just aquaculture, so not just aquaculture. Like with the 10 years behind you and now getting ready for this inflection point, what is one thing you would like to plant, what is the seed I would like to ask you would like to plant in their minds, in their head or in their body, in their heart, that really they remember from this interview, this conversation?
Speaker 2:Well, I think a few things. One is, I think, for everyone, the opportunity is much larger than any of us realize today. I think it's if you want to invest. It's not an easy space and a lot of these spaces are relatively young, If you can look at region agriculture, even though you could argue that some of these practices have been millennia old the investment space around.
Speaker 1:It has been yeah so you know it's.
Speaker 2:It's not so easy to bet on one horse, so I would find a specialist that you can work with that you think. Have a relatively well. Have a focused but at the same time, diversified enough but not too diversified to be in the way of success. Have a really coherent strategy that you can follow and work with, learn from and maybe co-invest with along the way. But support that, because I think that's going to be much easier, and then the things that you can double down on in a bigger way will emerge along the way. Um, I think that's a much smarter approach than making direct investments that are much harder to fathom or to um, to diligence, um and um and what else was I going to say? And I would look at partners that you can work with that have thought about what's going to happen after the normal normal between brackets, venture or private equity investment period, because all of these things take a long time, which is totally fine. It actually is good for your returns and it also means that you don't need to worry so much about it and you don't need to find something new every couple of years. You can stick with this for a long time and make sure that it's well-proportioned in your portfolio, blah, blah, blah blah. But find somebody that has thought about how to support these companies on the longer term, whether that is with an open-ended structure or co-investment vehicles or fund two, three, four, five. But if you haven't thought about the longer term and what this is actually going to look like longer term and what the impact is of that, um, I think you should probably um and look for somebody else. Um.
Speaker 2:And because if you know beforehand that this is going to take a long, long time and people are only in it for the next four to six years, then I think the risk of any strategy is so large that it's just unlikely that it's going to work. So private equity, buy and build and all those teams, et cetera. They could work if there's mature companies in that sector and larger things. And in aquaculture, in salmon maybe, yes, but regen tomorrow. Or in sustainable aquaculture, in the SME section, not really. I think the opportunities are too small to do that and there's not that many. And that doesn't mean that nobody's going to be successful. Some will be, some are better than others. But I think the best bet is a longevity bet.
Speaker 1:And I'm not going to ask the one billion dollar question or euro question, because we've answered that times two, let's say, or even more. But I do want to ask the magic wand question, which means if there's anything you could change in the food and agriculture space, specifically maybe in aquaculture, but could even be beyond. But could even be beyond and we've had people talk very specifically about the common agriculture policy or very, um lofty goals of changing mindset, like everything in between is fine, it could be anything, but only one that is not an aladdin lamp where you get three. Um, what would that one thing be if you had the power to, to change something overnight?
Speaker 2:um across all the different Anything you want Exactly. Then my magic wand, would I want to change the footprint of our inputs, whether it's feed or inputs on land or whatever, and how we consequently look and how much we care about the nutritional value of the end product, because I think we don't. Well, you do.
Speaker 1:We as a broader, we don't.
Speaker 2:Yeah, and I think that's killing us and I think it's feeding into how we deal with the environment, because all of those things are closely connected and what we feed an animal or a plant affects our planet. It affects our biodiversity, our climate and, directly, our health. And I think our global cancer epidemic and obesity epidemic is, to a large extent, a consequence of how we've been building a monocrop food system across the globe. And I totally get the thinking in the 50s when you think you know, if we concentrate on a few things, we need to feed a lot of people. I totally get why you? Why in the 50s they would give a nobel prize for that.
Speaker 1:And now I think, well, you know, um, that was really a tragic mistake is that thinking of it's starting to bubble a bit more in, let's say, the land-based or soil-based um food and agriculture world of you are what your food ate. Is that at all a thing or becoming a thing in the aquaculture space, like what you put in the fish, how that's been grown, what, what it is? Of course there's fish meal optimization or meal feed. Optimization is an art and a job, obviously, but how that affects the health of the end consumer, is that becoming something of an attention point?
Speaker 2:It's still early days, but we see an increasing and we hear an increasing amount of consumers asking, like, what was actually the feed of my fish? But that's still early days. I do think farmers care. They might care for a different reason, because they might care about consistent supply and consistent pricing. Where fish meal like last year there was no fish meal because the fisher like last year there was no fish meal because the fishery was closed because there was no fish but the prices go up and down and this year it's abundant again. It's very difficult to deal with In terms of health. People do care, they do realize that, if you like, today salmon feed is 40% soy, which is all Brazil and Europe, because we can't use American soy because it's GMO. And then in Brazil you buy certified soy. The volume of soy is the same, and so last year somebody else bought that, but now you bid a bit more. So the other person is buying the bad soy but in the end you're all… You're not replacing any soy?
Speaker 1:yeah, it's total bullshit. But what does it do to the fish and to our health? I mean, we've known in research in, let's say, ruminants it changes an egg from being inflammatory to being healthy, depending on what the chicken ate.
Speaker 2:And it's kind of the same in fish. You know I've said this before, it's a bit of a bullshitty argument, because anything too much is not good. If you feed a fish just soy, it will explode, you know it's. And I think we need to move away from just looking at these things in a cost perspective and a volume perspective and think more strategically about what's good. But that does require a culture change and we've promoted culture globally for the last 70 to 80 years where we say you know a lot for a little is a good thing, where I would argue we don't need a kilo of meat every day. If we eat very high-quality meat a few times a week, we feel better, we're healthier, we spend the same amount of money and we will enjoy it way, way more.
Speaker 2:But if you grow up with that notion, that will be a very normal thing and if you grow up with the opposite, that's a very hard change to make and we see in countries where we have less Western marketing, like Mozambique for example, you see people making choices and buying their food that are very different from people that have been exposed to corporate global marketing and the culture that we have for a long time and they buy local fish because they think it's healthier, but it means they can eat less, instead of buying cheap imports from China, which is kind of the equivalent of a bad chicken here or a good chicken, and they do it when they have only 30 cents a day and to me that is incredibly telling. And because those are the people that cannot make a choice, you would think they do make this choice and that means that all of our notions around saying you know, people can't do that are not right and we are approaching it in the wrong way. And we are not going to be able to change that with AquaSpark because, again, this is global culture. Yeah, but there's a consciousness piece. You have to start somewhere. There's a consciousness piece there.
Speaker 1:And so much more to get into, but I want to start somewhere. There's a consciousness piece there and so much more to get into. But I want to be conscious of your time as well and have you go to your a few minutes for your next meeting. I want to thank you so much for agreeing to sit here with us on this pivotal moment to look back. Of course, there's 10,000 other things we can discuss and we will in in the future, but I really wanted to take this moment to see where you're at and where you're going and looking forward to following that and seeing, um, what unfolds in a year, in two years and three years and five and ten, all the way to 2040 and and beyond, because it's going to be. This was one of one hell of a ride until now, but I think the next chapter is not going to be any less rollercoaster Probably not.
Speaker 2:No, it was a joy speaking with you again and looking forward to next time.
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 investinginregenerativeagriculturecom. 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.
