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
370 Thomas Hogenhaven – The €22M regen fund that said no to €7M
After three years, Thomas Hogenhaven, founder and managing partner of Planetary Impact Ventures, is back on the podcast. Thomas and his team just turned down a $7 million investment in their fund. That’s right—said no to $7 million. And this wasn’t some shady source of capital either. This was a serious, institutional investor, fully compliant with KYC requirements. So… why walk away?
More about this episode on https://investinginregenerativeagriculture.com/thomas-hogenhaven.
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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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We actually just said no to almost 7 million euros because we didn't really agree on the purpose of what we were doing. We want to be in service of life first and in service of money secondary. So we created an evergreen fund. We still have a no-carry model, so we don't have any economic bonus, no matter how much or how little money we make, because we don't think we will be motivated by that. I'm motivated by way more serious stuff than money right now. So basically all our fundraising is inbound, so we don't spend that much time on it. We don't have a lead list or anything like that. It's people that hear about us, that reach out and are curious to learn about us, and we talk to them. We don't really try to do any selling, because if they're not aligned, I don't think they should be here, because it will implode sooner or later.
Speaker 2:This is the Investing in Regenerative Agriculture and Food podcast, where we learn more on how to put money to work to regenerate soil, people, local communities and ecosystems, while making an appropriate and fair return. Welcome you to a very I keep saying it very, very special. They cannot be all very special, but this is a very special one. We have a guest back in the show, thomas, in person. We never met before, only online, so it's much better than zoom, and we're in a studio, which also rarely happens in in copenhagen, and a very nice location. Thank you again, rasmus. If you're listening to this, a shout out and we're going to check in.
Speaker 2:The last time we talked was in May. We were released in June 22. That means April May. Maybe we're recorded.
Speaker 2:It feels like a different world, although Ukraine were already started, obviously, so in food and ag, we were already getting exposed to immense shocks. We've seen many other immense shocks since then and, guessing that it's not going to be the last time, we're recording now in June 25. And, of course, depending on when you listen to this, we might be in a calmer world. Let's hope so, but it might also not be that case. So I want to welcome you back, thomas, we have a lot of things to catch up on, and usually what happens in person is that we go down we also do that, not in person All kinds of rabbit holes, and usually what happens in person is that we go down we also do that, not in person All kinds of rabbit holes, all kinds of left and right roads, which I'm very much looking forward to. So thank you first of all for making the trip I think 30 minutes up into the city in a very rainy day, and for agreeing to come on the podcast again.
Speaker 1:Thank you so much for having me, and I'm looking at a lot of system maps. Right now'll I don't have an overview about what holes or roads we'll take, but I'm looking much forward to it.
Speaker 2:Yeah, and as in any roads and any maps, it's. The world is better with maps, but all maps are wrong and some are useful. I think I don't remember who said that. For sure, every quote is always pushed to Churchill or something. But we're going to talk about some maps. Definitely, but just as a refresh for people that haven't listened to the other one, I will definitely link it below what brings you here and what is Planetary Ventures, and just as a I'm not saying elevator pitch we're not in an elevator, we're not pitching but just as a small reminder of what keeps you busy during most of your waking hours, except for your children.
Speaker 1:Yeah, that takes some time, but also the good time. So we created a fund four years ago because I had been out talking to a lot of entrepreneurs within sustainability broadly and asked them what do you need in order to succeed? And there were two questions that kept coming back. The first one was that they wanted people around them who, yes, they should understand customer acquisition costs and EBITDA margins, but they should also care about planetary boundaries and rebounds effect and scope one, two, three and Givens paradox. And they actually wanted to be better in terms of their impacts, not worse, or feel they have to hide it. So they felt they needed different people in the boardrooms and investor rooms to succeed. And the other part was that some of those who had taken in money from a traditional VC, they were quite demotivated by it because all of a sudden there was an exit date in the shareholders agreement or investment agreement.
Speaker 2:There was an investor and date in the agreement already built in, which is not really sounds like a long-term marriage, but with the divorce date.
Speaker 1:Right, yeah. And the other problem was that those who had taken in investment from a VC they all of a sudden had an exit date in the shareholders agreement or investment agreement with drag along, so it was basically the investor could force a sale to whomever they thought was the right one. And some of those founders said, look, we have this narrow window of time to do something. This is my honest contribution. But if I can get sold to a bad actor or someone who doesn't really want this transition, I can be used for greenwashing or legitimize continuing as it is. And then I have not done anything good. Quite contrary, there is a risk of me contributing to the bad side of this, and that risk was so demotivating to them that they could as well quit now.
Speaker 2:Wow, okay, so the much more and we talked about it last time as well the radical founders like radical in terms of systems change and we're going to get to that recognized some maybe after the fact when they got this money in and probably some that had experience before the fact that the wrong type of capital or not aligned capital with the best intentions, but just like the terms are what the terms are, because that's what on paper it's signed could really push them to do certain things and then actually have a potentially negative yeah, exactly, and I think it must be horrible because most people in this space are in it because they want to be in this space to have an impact.
Speaker 2:Not because we always ask that question why soil and why such a difficult topic of changing the food system. It's not because you did an analysis of, oh, what's the easiest career path, farmers, especially next generation, coming in. Of course, in many cases they have a choice, but like more of a clear one. But many people around the space are in it because they want to be here and they want to have an impact. Not because of the money, because it's not the easiest for returns. There's definitely money, but there's easier places to make fortunes, if that's what you're after, and so that must be hugely demotivating. And then you were like, okay, how do we unlock that or how do we fix that?
Speaker 1:Yeah, exactly. And then I found a lot of people who understood much more about farming and organic food than I did. So I've been trained now for five years by very smart people. So I feel I'm getting there, but it is obviously very complex to understand soil, health and living systems. And then we created a different type of investment vehicle. So we created an evergreen fund and it's not that we invented that, but not a lot of other funds are doing that right now and we tried. Also, we still have a no-carry model, so we don't have any economic bonus, no matter how much or how little money we make, because we don't think we will be motivated by that. It will be something that will keep instructing what we should do. But we want to be in service of life first and in service of money secondary. And then the second question was well, could we make that carry tied to an impact goal? But luckily we were smart enough to recognize earlier that it's so complex. We could measure CO2, or maybe not even.
Speaker 2:It's CO2 equivalent. It sounds smart. You're right. I just come from an impact investing gathering as well. We tied our carry to the impact. Then, immediately the question which impact? What impact? How are you going to measure the impact? Is that going to guide you then? Because you know the frameworks you're going to use for that. You're going to maybe do a deal that has massive CO2 equivalent impact but actually doesn't make too much. Yeah, it's a no carry whatsoever. We're taking salary and that's it.
Speaker 1:Yeah, and we have defined wealth holistically. So it's not only economic capital but also ecological and social and human capital. In this and we also have in our management company we have the board must be able to represent other species and next generation. So we have our chairperson is a biologist by education and we also have a fairly young member to make sure we have that perspective as well. So we have tried to really listen to what the most progressive founders wanted and keep working on our structure Walk and talk the talk. Structure, walk the talk.
Speaker 2:And has that, because we talked about it last time as well. You were clearly saying the most radical founders that we absolutely need in these transitions and I'm saying plural, because it's not only Food and Ag, you're looking at other things as well. They're not going to take traditional capital if they don't have to. Of course it's always easy to say oh, don't have to, because of course it's always easy to say, oh, don't take capital. But if you want to grow your company, you might need money not everyone. Have they been seeking you? Or has that theory of change that the most radical founders want the most radical capital as well we're going to talk about if the capital found you as well, or you found the capital, which you did, you went from 6 million to 22. But has that theory panned out of?
Speaker 1:the most radical founders want to be here in this room with this kind of capital, with this kind of people. Yeah, so I think when you are able to invest money, people will always say you're special and I really want you.
Speaker 2:So I think I want to add that caveat that, no matter what, it's true, we're running with a syndicate and, like the moment, you have the sort of asterisk and we don't have any money. I invest a few thousand per deal and we try to find enough with friends to 50 to 100. So they're very small. But suddenly you have this asterisk of investing and you get the people look at it rightfully so it creates a really weird power dynamic yeah, exactly so.
Speaker 1:So, yeah, I just want to recognize that there is this power dynamic and that holds true for all investors, I do believe. But I think that what tells me that this is true still is, whenever we talk to new founders, which we do many times a week, it almost always happens after the first call that they say OK, you actually are very different from the other investors we talk to. You do ask questions, you actually do care about the impact positive and negative of what we do and care about what happens if we succeed. Will that be good or bad, or what is our theory of change? And we want to listen to that part. And we also get to the financials and the business models and the legal and all that stuff.
Speaker 2:It has to be there, don't worry.
Speaker 1:Team legal, all right, but the first meeting is always about understanding. Is that company, is that vision part of the sort of system change that we think we should do? That we think we should do? And if yes, then we'll proceed, and if no, not.
Speaker 1:And I think a lot of the founders we talk to also say okay, but we ask, like, why are you not more progressive on this? Or like, why haven't you closed that door to I don't know factory farm side stream, something like that? And they're like well, then we thought that our total addressable market would be smaller. And investors would say, no, it looks bad on the side. Yeah, exactly. And I say, but what do you want to do? I don't want to touch this, but I'm afraid to say that I don't want to touch it.
Speaker 1:So I think that having us and other funds like us saying that we actually want you to solve problems or contribute to system change, even though we close some doors and maybe make the market smaller, that's what we want to do. So, for example, we wanted to help some of the organic farmers with more automation in the field and have been looking a lot for autonomous robots in that, but most of the robots they can spray and yes, you can also spray microbial liquids out but odds are that they'll also be used to spray chemicals out, so we actually didn't want to be part of that. So we found someone who is doing weeding with lights that can't use any pesticides and we chose them because they closed all the doors for bad use of it, right?
Speaker 2:Yes, but let me push back. How did you do your due diligence on the technology itself, in a sense of maybe the microbial sprays would be more effective than weeding with life? How do you make sure you don't get ideologic about it? I don't want to be a platform for pesticides, which obviously you don't. How did you make sure you pick the right technology, in that sense, for the farmer and for the agriculture system you want to see and not just close the door to spraying?
Speaker 1:Yeah, no, and I think that might be used for both technologies. To be fair, we went out to talk to a lot of farmers. The founder is a farmer himself, so we know that they hadn't tried it and used it, so it comes with some credibility. But those we talked to, they were not ready to put in the shareholders agreement that they would never. We wanted them to close the door that they shouldn't.
Speaker 2:Yeah, because you're going to close the door like technically closed the door with machinery, and if they didn't want to do it legally, then you wouldn't invest Exactly and then we won't confirm. But immediately it puts you on an interesting page, on the same page or not, if you say, also to understand their theory of change. Yeah, exactly, so we can spray a bit less. Or Also important, but not for.
Speaker 1:Yeah, but that's not our role. That is to create an organic, regenerative food system. So we don't want to spray any pesticides or fungicide in this.
Speaker 2:Interesting that nobody out of fear probably was willing to put that in a potential investment agreement.
Speaker 1:Yeah, because they were afraid to scare away other investors. Right, and I think that's actually probably our biggest challenge right now is that, yes, we have a 22 million euro fund and we can fund them some of the way, but not all the way. So we'll need additional capital. And they look at us and they know that we don't have that deep pockets, but how many value aligned investors are there to carry them all the way? And that's also a problem for our theory of change, because, yes, we can protect them for some years and do follow onon funding, but eventually we might need a very large investment and that might come from a closed-end fund right Most likely, Most likely.
Speaker 2:yes, Not because we want, but that's the current status quo in fund. Land is closed.
Speaker 1:Yeah, and that's also why we are so. We try to do a lot ourselves and I think we have succeeded in a lot of things, and probably also a lot of things we didn't succeed in. But back in my mind, I had a visit from John Fullerton, I think three years ago from Capital Institute, and he said I like what I think he listens sometimes.
Speaker 2:So shout out to John Hi John, I would like to do that, because we're two people who have no clue who's listening, and then there are two and a half, three thousand of you somewhere and yeah, just a shout out if John or you are John, yeah.
Speaker 1:So John told me that I really like what you're doing. You're planting a beautiful tree, but you're planting it in a desert right now, and guess what will happen to that tree eventually? So what you need to go out and do is to help build an ecosystem around that so it's no longer a desert your tree is living in, right.
Speaker 2:Because you can get it to a certain extent, the compost you give it, but at some point you're going to need rain. You're going to need a much more climate for the tree to flourish.
Speaker 1:Yes, and I felt it was a very annoying analysis of the time. But it stayed with me and over the past six months I have been taking it in more and been ready to sort of us working more and more on creating other good conditions around us that we can be part of, because that's what ultimately will increase the likelihood of doing that system change later on and yeah, especially on all the companies.
Speaker 2:But many of these will need if you make light weeding robots, that's, you can spend 22 million just on that over the next year, which are not, obviously, because that would jeopardize the fund. So how do you create a good? You can bring them to the next stage and of course, that's where a lot of VCs let's say the Silicon Valley funding model became really good. How do you bring them to the next funding round and the next? You have them lined up and the calls, et cetera.
Speaker 2:But of course you don't want to close those doors but at the same time because then the company doesn't reach its full potential, but at the same time you don't want to be sold to a spraying robot company or something like that. So how have you been approaching that after you got annoyed for two and a half years with what John said? Do we need to build a massive or bigger growth fund with institutional capital in this, or do we need to enable somebody to do that? What was your analysis six months ago? We said, okay, we need to create the conditions for our companies to keep raising and growing, but with aligned capital and not just the general one or like what's out there in the market at the moment.
Speaker 1:Yeah, I don't think we have any inspirations to do it all ourselves. I think the more beautiful and more regenerative yeah, regenerative and is by a solution is to help create that ecosystem. So we have spent quite a lot of time talking to other European-based investors who have an evergreen fund or are value aligned, and we are starting to see such a coalition. They are there. They are there Not that many, but more are coming and I think we can look at each other and agree on maybe not having a carry is a good idea. They can point to us and say that it works, and so I think it is starting to happen, happening that more investors are coming along, and one of the initiatives I'm very happy about right now is called the Co-Funding Alliance. We're just a member of it. We didn't really we didn't do any of the hard work to make it happen. I know you played a role in that.
Speaker 2:More but, yeah, very happy. Part of the consortium comes out of Climate Farmers. We've had Ivo and Philippe on the show more on the commercial side of Climate Farmers, which is now closed, but the non-profit side is doing fundamental work. They gave birth or they enabled and facilitated EADA, the European Alliance for Regenerative Agriculture, and now this consortium that then mapped the agri-food space in Europe. Like, where are the nodal points? Where are the really hard barriers? What are the positive feedback loop, the negative ones?
Speaker 2:I'll put the links in the show notes if you're interested in mapping and understanding the system. Side Warning of course all maps are wrong, but some are useful. But then the most important piece and I have talked to Ivo about it a lot Okay, what do we do then? We've mapped the space, great, we're like oh, super depressing. We're in an extractor, spiral down and there are some intervention points. But then what do we do with that? And then they said, yeah, we're building actually a co-founder alliance next to it so we can actually fund these things or invest in the things, whatever capital is needed. And that became actually quite 22 now or 20? Yeah, I think something like that.
Speaker 2:Very diverse, very yeah, to look at things that emerge out of this mapping exercise and emerge out of the consortium that is built around it. So you joined recently. I'm happy that I saw your name popping up yesterday, actually because we need a coordinated approach. Everybody's just basically spraying and praying and doing a lot of initiatives, all super not relevant. All super important, but not necessarily part of a bigger plan or at least a bigger coordinated approach, which is still messy. None of this is straight and have you have those conversations there that you see, okay, these could be partners in some shape or form. Some of these for later developments of the company's Weback.
Speaker 1:Yeah, exactly, and I think that's what we need. So we'll regularly share investment opportunities and deal flow and all investors commit to do at least one co-investment a year, and so I really hope something will come within our investment mandate. What we want to do, I'm not sure how to handle it. If not, you'll be kicked out. Yeah, no, but I think actually having that sort of willingness to co-invest is what we need right now, because what we need to do is to create a sort of clear path for those progressive founders and companies to actually know that there will be funding all along if they take the right in my mind, radical path in this and because they won't need the closed-end regular VC funds, because there actually is an alternative, and I really hope that we, together with a lot of other funds, can prove that over the coming years, that there is enough capital to take them all the way here.
Speaker 2:All the way, yeah, to profitability to being an organism that continues to flourish. We're not talking about IPOs here and exits necessarily If there's a very aligned company or very aligned exit, yes, but many of these I think would be great if they continue to be flourishing ecosystems by themselves and start paying dividends.
Speaker 1:Yeah, and I really like the way when we pitch those investment opportunities. We have to start with what is the theory of change and how do the company fit into that? So I think that's how we should look at investments together in that, because there will be lots of different theories of change from different investors. There will be different ideas of what does good look like, and that's okay. We have one very clearly articulated. But I respect that other people come to different conclusions and want to do other stuff. But just to know when are we aligned and who's working on the soil part, who's working on the plant-based food part, who's working on the microbial part, all this stuff and know who they are. So when we are out fundraising we can find them quicker, because we can also spend a lot of time talking to all sorts of funds we might not really like anyways.
Speaker 2:Yeah. And then the other side of the coin, meaning the investors, the LPs coin, meaning the investors, the LPs. Have you found enough? You found 22 million of them, radical investors that are ready. It's easy to talk and say, oh, this sounds amazing, et cetera, but I don't get it through an investment committee, or I don't get it through, or this will be very difficult to fly through. This and this and et cetera, et cetera. And I think, partly for the founders, it's important to know that this money continues to be there along the road, and also for funds that may say, oh, planetary, looks very interesting, let's set up an evergreen growth fund in Germany for Europe, but you need to have the aligned LPs because it's quite a radical shift also for them, not only for the founders, but also for the LPs. So, being in the middle as you are, how has that journey been in the last almost three years, basically three years in terms of finding aligned LPs that also let go of the close ends, part of the control, part of systems like carry, et cetera.
Speaker 1:I think it's been. I actually really enjoy that part of my work now. I didn't last time we talked about it. I think there has been. I actually really enjoy that part of my work now. I didn't last time we talked about it. I think there has been a shift. Maybe I just found the line people now and I didn't before.
Speaker 1:But three years ago I really had to defend the no carry structure and the evergreen structure, because how could we be motivated? And if it's not for money, yeah, if it's not for money like I don't believe you'll get up to work in two years I'm motivated by way more serious stuff than money right now. It must be so depressing having those conversations. Yeah, it was quite. I was being called naive all the time, but I haven't been called that at least the last year, maybe the last two years now. And people start the people I've talked to start seeing the evergreen structure as it gives us credibility. The no carry structure gives us credibility that, oh, we actually mean what we're saying. We're not just trying to make a lot of money from ourself and investing in something that doesn't really matter out here. So basically all our fundraising is inbound and so we don't spend that much time on it. We don't have a lead list or anything like that. It's people that hear about us, that reach out and are curious to learn about us and we talk to them, but we don't really try to do any selling because if they're not aligned, I don't think they should be here because it will implode sooner or later. And sometimes they come back after a year. Okay, now I've talked to 15 other impact funds and so basically all the investor requests we're getting are inbound.
Speaker 1:People hear about us from some of our other investors and they want to know more and we talk to them about what interests them. Why are they interested in not just making more money? What sort of is inside them right now? Because everyone who comes to us they feel something is. It could be a reaction to climate changes, biodiversity loss, or maybe some of their family members are not feeling well anymore. There can be many impulses that make them realize that we need some sort of system change and can money be part of that? And I tell them what we do and what we want to do. I tell them all that we don't get up in the morning to make them more money. There are a lot of other people who can do that for them. We get up in the morning to try to invest their money wisely in this system.
Speaker 1:Change we're trying to do and we do believe that the companies we invest in right now will be essential later on and they will be worth more than we invest. Right, but that's the order of things for us to do, and if they don't like that, that is totally fine with us. Maybe they do want it in a year or two years or three years, we'll see, and if not, no harm done. So I think what we have been discussing so much internally is what is our theory of change?
Speaker 1:Is it to get the biggest fund possible and invest as much money as possible into the progressive portfolio companies, money as possible into the progressive portfolio companies? That could be one theory of change, where it's basically down to assets under management is what indicates how much of an impact we have. And the other one is to dare to be the most radical and try to be honest and work with our integrity and only invest in those companies we actually believe are part of the future we want to live in and insist on that, and that means also working on the structure sometimes and spending time on our community and regulation sometimes, and that's what we came to, that we prefer to be that, even though we'll be smaller, because that's ultimately what makes people invest. And we do believe that other investors or other funds can point to us and say, oh, but they are so radical, we're not quite as radical, so you can just for the less progressive investors, they can invest with them.
Speaker 1:Yeah, so we don't need to control all the capital that's important for us.
Speaker 2:Yes, and it does signal, or seems to suggest, that there's only so many radical founders out there, in a sense. So I think it comes back to the question what's the choke point, what's the missing piece here? Is it the capital? Is it the founders? Or both? Because if you had 30 amazing founders lined up now saying that you were absolutely convinced and convicted by all of them that you might need 200 million but is that what is? Would you be able to if you had 200 million aligned capital, like magically I don't know magically after this podcast, every single one, every single one, the person listening with a significant portfolio is enlightened and suddenly steps in. Would it be a problem for that to work? Or you say, actually we have more founders than we currently can back, or what's the shortage? Or where's the limiting factor at the moment?
Speaker 1:I definitely think it is, on the founder side, those who dare to go far enough and actually have a holistic enough understanding of the problem they're trying to, but it's of course, taking a neck, because if you had more money, you might be able to trigger more founders. Yeah.
Speaker 2:It would be more daring. Yeah, but you say it's more to fund. The first thing is you have the founders.
Speaker 1:Yeah, that is where I see the bottleneck right now. But also because we try to operate in a way where we are not more reliant on fossil fuels than we need to be and I guess we all are in every second of our life but we decided that we don't want to fly in our operations, so we can't get too far away. We can be in train distance, right. So if an investment manager really likes something in I don't know Brussels, for example, he can take the train. But he must really like it for him or her to make it worth it, right. So I think we have that constraint that we are not global. So, again, I would rather have someone copying us in Italy or Spain, and they can be the local hub. They understand the community and the ecosystems better. So I believe more in scale by replication than just this You're saying for our region.
Speaker 2:have you done some modeling like 50 million, 60 million or 30, or 100? What's a size you feel comfortable with?
Speaker 1:No, we will raise more money and I think we can, of course, deploy more money in a good way Within training.
Speaker 1:Yeah, we can double the fund and do it, but I think it also takes time to grow an investment team within this, because there aren't that many that have that background and must understand living ecosystems and really try to understand the consequences. So there are also limits to how fast can we scale ourselves and keep making decisions that we believe are wise in this. So of course we can scale and grow, but I think it's better that we do it a bit more slow than the regular fund where you all of a sudden have 100 million or 500 million you have to deploy in three years, and that would surely compromise the quality, you have to deploy it in three years and that would surely compromise the quality.
Speaker 2:Yeah, suddenly, then there's pressure to shovel the money out of the door and of course you make decisions that might not have been, like in hindsight, that impactful, and so always looking for more founders within train distance from Copenhagen. Let's say yes, that are values, aligned and radical enough.
Speaker 1:Yeah, and we just did three investments in the UK, so it's not that it has to be the local S train from Copenhagen. We can go further. High speed gets beyond Hamburg. High speed gets yeah, getting to Hamburg is a tricky part from here, but I just did Munich back and forth, and the five hours to Hamburg is the slowest.
Speaker 2:Yeah, definitely, but then you're unlocked to a lot of places. Exactly, yeah, depending on Deutsche Bahn getting you there without delay they're getting better. And so, and you've seen like the inbound from investors is enough to like for you because you have targets as well, like you need as an evergreen. You always are fundraising, you're always raising continuously. Yes, that thick or that flow is enough to not needing to go to big investor conferences and things like that.
Speaker 1:Yeah, we haven't done that and to be honest, I don't know if anything particular good would come out of it, people will find you.
Speaker 2:So it's different and special and I'm not in dead years of the word, but that if people are looking like, people talk and it's not a deal and they will find you.
Speaker 1:Yeah, and yeah, we actually just said no to almost 7 million euros from a larger investment because we felt we didn't really A vast store yeah, one investor, because we didn't really agree on the purpose of what we were doing and I think they were coming from more of a classical impact investor perspective where impact and return go hand in hand and grow a big fund. They were more in that sort of get as much money as possible, it doesn't really matter from where they come. They were more in that sort of get as much money as possible, it doesn't really matter from where they come. But our analysis of that was that we would lose ourselves by doing this and lose our motivation for the long term, and so we would rather go slower and have the most aligned investors who we believe have the same long time horizon as we do in this.
Speaker 2:And it's, of course, very brave to say no to 7 million, which is almost a third of the fund. Would you have been able? It's difficult speculation, but three years ago when you were at 6 million, then it would have doubled basically the fund. Like, how tempting was this?
Speaker 1:It is, of course, very tempting to do it, but, yeah, we also have a very good board of directors who were very wary about doing this because it would be a different investor segment than we have today and some of them have some experience working with that segment and they had seen it go wrong in other cases where there would be a mission drift and we would lose identity. So it was very interesting for me to see that. It was almost a physical reaction to them that they had could see this had gone wrong before and there was a risk there that they felt very strongly, I think, and intuitively. So I think we are confident enough. We can find the money elsewhere. It will be from different segments and more than one investor, but that's okay. And even if we don't, I think we have done a good job doing this and have been setting a new example. So I can't really know what our fundraising will look like in the future. It also depends a lot on markets and everything else.
Speaker 2:We don't have any indication there will be any new problems right now, but even if we don't do it, I think I'll be happy with that decision and are there ways of governance or criteria that a group like that like an institutional investor, I'm guessing we're not going to name names, obviously would be able to be part of it if they get into the same investor class in the same conditions? Why was this difficult? To fit a square thing in a round hole? Why was this difficult? Or why wasn't it not like all your other investors, even though you could, of course, argue if the whole institution is then aligned or not? Maybe they are. Maybe you want to put $7 million on the table in your conditions, but they started putting a lot of other conditions in that would jeopardize the rest.
Speaker 1:Yeah, so I think right now we have a very broad mandate to system change and impact and people they listen to what we say and what we do and we talk a lot about the complexity about the decisions we make. It's never binary right. It's never all good or all bad. There are always trade-offs and we will explain them our reasoning and they will understand why we did it. They might agree or disagree, but most of the time I feel they agree but they don't really care about how many tons of CO2 can we do in an impact report. That's not really the point. But from that investor, they only saw impact as what's in the spreadsheet or in the impact report and I felt that would not be good for us to have to try to measure everything, because we have a very strong conviction that system change and impact it can't really be measured in any sort of short-term way, or maybe never at all.
Speaker 2:Right, and you might have. Okay, we now need to make investments to look good in their impact report.
Speaker 1:Exactly, exactly, yeah and that was not really in the rest of the LP's interest, because no one is really asking for any sort of very quantitative impact report on that. I think they want to see what we are seeing and learn from those experiences. But that's different from putting in a very close report that we saved you this amount of nitrogen and this amount of carbon. And one thing that's quite interesting I read a study that if you quantify the impact and say, if I say to you, oh, you invested in my fund and you saved or avoided I don't know, 20 tons of CO2 this year, then you will be into sort of a more cost-benefit mindset and you're like, oh, I can fly a lot because I just reduced or avoided 20 tons of CO2. So actually the research said that it gets negated Because of the wow, right.
Speaker 1:but if you do it more story-based and identity-based, you're like, oh, we are working on this world you are part of. Of that actually has a positive spillover, because now you are like, oh, I'm working for a system change in agriculture. That means that I better not do a lot with pesticides or buy more organic or buy from my local farm, you become part of the story. Yeah exactly.
Speaker 2:You might double down on your investment and put more in.
Speaker 1:Exactly.
Speaker 2:Let's see if, hopefully. So do you do a lot with storytelling, then we're trying to.
Speaker 1:I find it challenging to do it, and there needs to be some data in it as well, of course.
Speaker 2:Not to sound too whooshy-whooshy, yeah, but there needs to be, of course. You only invest in real, functioning, financially sound companies, because otherwise also because you're evergreen they're never going to be around. You can't be the typical I'm doing air quotes that nobody sees, typical vc software investment where you just need to get them to the next funding round bit, regardless of if they're ever going to be profitable. Right? You can't do that because they're going to be around for quite a while in your fund.
Speaker 2:so you can't make good financial investments, because you're going to be punished otherwise or it's going to be a long, a long journey to get them to any kind of. So just to be very clear on that, this is definitely sound companies because, yeah, they're going to be there for a while. I remember at AquaSpark one of the first screening docs screening documents we did also Nevergreen Fund sorry, mike Fadings we had on the show Recently. They're in a lot of very annoying things that happen with companies, sometimes in fraud because of numbers. Look into that, but it's a fascinating story.
Speaker 2:On Evergreen Instruction, I remember one of the first questions they always had. We always asked I wrote one of the first screening docs there is are they nice people? Is it nice to have a beer or whatever drink definitely not the alcohol side with them, because we're going to be with them for quite a while. Exactly, do we like the family, even if it's the best aligned and the best impact? But if you don't like the people and you need to work with them for potentially 20 years, that's in some cases more than a marriage, and so be very careful on that.
Speaker 2:And, of course, are they financially sound? Because again, you need to, otherwise it's going to take all your nights, et cetera, to try to salvage some of these companies. So, just out of my, I'll stop the rant on good financial modeling. But you don't want to what we said before on this institutional investors in general, that completely run by spreadsheets. You don't want that to be your okay. Co2 equivalent is now okay. Then you're basically only going to focus on methane, because that's the biggest lever there. Or water, okay, what's the okay, we're going to drip it. Like you're immediately going to be guided by yes, those two, three or whatever numbers they have, instead of saying, okay, how do we put the seven million to the best use in the long term? Exactly. So if they would have come and said we don't have strict impact measurements and we don't know so much, are you still open to those kind of?
Speaker 1:things. Yeah, yeah, no, we definitely are, but they need to understand our priorities and that not everything can be put into a spreadsheet. And I think that's the hard thing about this, because those who work there, they have to report in a spreadsheet to someone else, right.
Speaker 1:So they need that data in the spreadsheet and I understand that. But I don't think I can, with my own integrity, deliver all that spreadsheet data. Also because these are very early stage companies and if there are two, four people like, how much time should we get them to report data? Because before we do the investment, like we do a lifecycle analysis, we do understand the theory of change and whether it fit into the systems and all this. So we don't really need any CO2e reporting for the first two or three years because we know they are also from the right trajectory.
Speaker 2:Sorry, we actually need to come back. We were talking about storytelling before.
Speaker 1:I got into my rant.
Speaker 2:You said there needs to be a bit of data, obviously, but you're not doing it enough. Yet. I asked you do you use the storytelling piece enough you feel on getting investors on that journey of what they're part of? Of course not that they park the money and then let's talk to each other in 15 years. How does that process work in terms of because people want to see, as you said the study showed, they want to feel that they're part of it, without being bombarded by impact reports?
Speaker 1:Yeah. So I think those LPs who live in Denmark and we do physical meetings, they can feel it's different. I think we do it at folk high school it's called so. It's where some young people go in their 20s and they don't have any grades. So it's six months where they can get off pressure and just learn and they have a songbook and we start when we. Our office is right next to one of those schools and we can borrow a room there and there is a piano. We start with a song and we don't dress as a regular investor and it's a nice place where young people are walking around.
Speaker 1:And I think people can feel that we're different right when they come to our place, which is I don't know a farm, half organic fields and half forest, and they see it, that it's different and they know it and they know they can trust us with that. So I think this story of us, of Planetary and me, people can feel that it's more from the portfolios coming inside. We need to be better at telling those stories and helping people share those stories, because I do believe that's what has moved people for centuries stories, right, that is how we change and learn and we need to tell those stories and we need to tell them with the right data, and they should be true stories, not something where just wrong or optimism or so. So it should be true. But I think we can do a lot more to help people tell those stories and tell them ourselves.
Speaker 2:I think that's something I want us to be much better at next 6, 12 months and how do you do that with investors, with LPs that come from elsewhere or don't come, maybe, because it's amazing if you come to your, we're hopefully going to visit in the next weeks, that's in person. Or do you say maybe, say actually we do it in person because of all the other benefits and you're in a forest, et cetera, and maybe it is who lives within travel distance, let's say, to easily get here, and then it needs to be replicated in Italy, in Spain, because it doesn't make sense for an LP from Spain.
Speaker 2:You can still train. Rasmus did that to Seth's place. Deep Respect, but not Deep Respect. It's more than doable. You can work a lot, but how is your theory there of how far investors could be? Or maybe someone care enough? They said we trust you, we come once every five years, but you also want to raise a bit more. Or is there enough Nordic money around that can easily travel Like? What's your theory of geography and distance there?
Speaker 1:In-person is always better. Yeah, exactly Like six podcasts, obviously. So sometimes people travel from all over the world for various reasons and they, as part of that, come to us not just for us that they see it and meet us, but there also are some good financial advisors out there impact advisors who do recognize us to their clients. So I think it is starting to happening and I think someone who has met us and been there and trusts our integrity and what we do, that's powerful enough at least to pass on to one link here. So I think, yeah, there is enough money in the Nordics. But I think what I also hear from progressive investors elsewhere is that there isn't that much good they can invest in if they want to invest in different funds. So I think in that way we don't have too much competition yet. I hope there will come a lot more, so they're welcome if they find us.
Speaker 2:Do you do that online storytelling piece? We do the podcast now, obviously. But trying to reach more, is that something you do? That online storytelling piece? We do the podcast now, obviously. But, like, on trying to reach more, is that something you do with the companies or you want to do? Is it in the next six to 12 months? We're not really doing it right now. No, it takes a lot of time. Like I said, as all these things, it takes time away from the investing investing piece and fundraising, which are the two core. Probably the investing piece is a bigger core piece, but at the same time, yeah, you have a role, Because for somebody to copy this in Spain, they need to know about it.
Speaker 1:Yeah, no, it's true, it's absolutely true, and I'm hearing that quite a lot.
Speaker 2:They need to think, oh, this is possible. There's not. Oh, there's some crazy people. Actually, people do, and then they need to talk to oh, this is a concept or this is a thing that works, takes time, but these are and, of course, as a pioneer, you always have that issue Like you're doing the stuff on the ground and you would be great for everyone to also communicate about it a lot.
Speaker 1:But of course, you only have 24 hours like everybody else. Yeah, and I think that the most powerful would be not just to tell about us. But there are other funds.
Speaker 2:You mentioned AquaSpark and they have been very generous to us in sharing their evergreen model, so I just want to recognize that Grounded Investment, who I think is based on, shout out to Gijs and Tekla, who is based on the same pieces, and of course, triodos. Yeah, and AgriFood. They changed the name Systems, change European fund thing. I'm an investor indirectly because I'm a customer of Triodos, and so there are a few now and there were a few and there seems to be a lot coming.
Speaker 2:Because you for sure get calls from people saying love it. I want to do it in Austria.
Speaker 1:Yeah, exactly, and we try to take the time to help them on.
Speaker 1:But that's probably your biggest thing, like that's the lever, yeah, but what I hope is it will be someone else in the ecosystem that tells the story about us and the other funds doing this and the portfolio companies, because it's so hard to do that now you have a platform, it would be much harder for us to build a platform, and so, ideally, we are part of a bigger ecosystem, that where many different stories are being told, because it's not just about our stories Of course, perfect bridge.
Speaker 2:Thank you for supporting you. Came on as the first field builder, a part of the field builder circle, and one of the first supporters, which might be. There's a little. We do a little shout-out in the podcast somewhere, automatically by AI it's picked. The moment might be now, who knows, let us know, that would be funny but a shout-out to Planetary, obviously, slm and Fractal, to support our work and to bring us to or to try to reach the next level and keep inspiring others to build stuff in the space.
Speaker 2:I think that's what gives you hope in this space, with people from elsewhere like you that have experience elsewhere, have built things not just physical things, but organizations and raised money and learned a lot, and then say, okay, food and ag, what are we going to do?
Speaker 2:Then, hopefully, use the podcast for education, which is great. Reach out if you want any intros, because we try to do that as much as possible, and then come back at some point to talk about it. Then it's a nicer cycle that keeps us going and beyond that, I think there's a lot of other things we need to talk about, but you mentioned political actually somewhere in a side sentence half an hour ago and we of course talked about the co-founder alliance, like the time you spent beyond the core investing piece, like what are you doing there on the political side which is so important to drive the cup, to drive many other things in Europe, but to many other places as well. You can invest in great companies or great farms, but unless the political landscape changes around agriculture and food, which has been quite damaging, it's going to be difficult or say, let's say, fighting the tide, which is not an easy time, yeah, so in Denmark now it gets maybe a little bit local Danish, but we need a bit of context here.
Speaker 1:So we just had a very big political reform where we're going to convert 20% of farmland back to nature, and it's been I don't know, maybe it took a year and a half to get sort of interest from both the conventional factory farming side and nature side and politicians to try to create something here, and it's really not perfect, but at least it's a step in the right direction. And part of that is that they created sort of an economic growth team with 13 members under it. Who is to guide the government on what kind of food and agriculture system should we have seen from a commercial side? And it's some of the very large companies in Denmark that are there. But they also gave us a seat in that because there were people the government who had seen what we're doing, and so there is a different voice. It's commercial, but it actually wants Not an NGO's voice.
Speaker 2:Right, exactly.
Speaker 1:And we do invest and we have a lot of experience in this and we got one of those seats, and it does take some time for us to actually find out what are the right proposals we want to work for there and work with a lot of the NGOs around it to make sure that we're not just inventing something for ourselves, but we represent a sort of bigger movement and we obviously learn a lot from it.
Speaker 1:So I don't feel it's competing to what we do, but it is a way where we actually, because we built an institution, an investment company, we got invited into a political room that we never expected we would be invited into, to that, and I think that also shows that it's really hard to predict your impact.
Speaker 1:This is probably one of the highest impact things we can do in this fund's lifetime. We couldn't have put that in a pitch deck three or four years ago and I think if we were really tied up to impact measurement or carry, we might not have prioritized it, to be honest. But this will also move the conditions for the portfolio in the long term and we'll obviously talk to them about what do they need from a political side in this. So I think it's also about being open when opportunities arise in this and it's a testament, I believe, to being very clear about what do we think a good, fair, just life within planetary boundaries look like? And what is that food system? Because there are people out there who see themselves in that and not in the current factory farming system.
Speaker 2:Yeah, because, and what gave, like, what was the trigger here in Denmark to that enabled that? Let's say, 20%? Because, just out of context, denmark is, I think, one of the countries with the most acreage under farm management 76 or something high 70s and mostly very, very destructive animal protein CAFOs, insiders, a lot of discussion on the pig factory side, a lot of discussion, obviously, on the manure, a lot of discussion on the air quality. It all looks green but it's mostly a green desert.
Speaker 1:Just to summarize, it in a short.
Speaker 2:Very close to the Netherlands in that sense, Very known for its production, and the status globally is interesting in that sense. But if you have to live next to one of those it makes your life pretty miserable. But that's known for decades in that sense. So why? Now suddenly is there 20%, which is, if it's 76%, it's 15% of the country. Yeah, that's a lot.
Speaker 1:It is a lot.
Speaker 2:And back to nature is always a bit of a problematic term.
Speaker 1:Yeah, it's also a production for us, so's not.
Speaker 2:Problematic term like what is nature and how do we influence our beneficial keystone species and things like that. But the fact that it's there or that it's agreed on and didn't lead to massive farmer riots or NGO riots or whatever forest riots, just for other people in other political contexts what made that even happen? Because it's quite remarkable.
Speaker 1:Yeah. So I think our government we have a centrist government right now they have been telling the story for years that we should avoid the yellow western, the riots in Holland, or I don't know if it's a riot, but the sort of opposition in Holland, it was France, but yeah, yeah, but you also had in Holland. Right, you also had. You made a progressive law and then saw there was a lot of opposition to that.
Speaker 2:It was yeah we'll get into detail, but it's interesting how sensitive anything around farming is in the Netherlands, especially now with a political party that says it's for the farmers, but is the input industry basically. And of course, it was really good at getting farmers and tractors on the street for anything. And we have a huge environmental issue. We've been ignoring European law on safety measures for decades and at some point somebody took the Dutch government to court and won.
Speaker 2:Obviously, I think the nature areas are so degraded that we need to do something about the farming, and that led to our whole not very productive explosion of we're going to buy them out and just close. Of course, it led to farmers saying, yeah, but we've been doing exactly what you wanted us to do for 20, 30 years. We've got a bigger stable, we put more filters on it, et cetera, and it's not enough, and now you just want to buy us out and close. So we definitely didn't handle it well, but it mostly came from ignoring basic nitrogen law and water quality law for decades and saying yeah, we were special.
Speaker 2:We always negotiated a special way out and at some point somebody said let's test this in court. Yeah, just for reference, I think we're world champion in the Netherlands of biodiversity laws. Yeah, and in terms of obviously also way too many animals inside, which creates all of this nitrogen load With imported feed from elsewhere.
Speaker 1:Yes.
Speaker 2:And we export all this protein as well, so it doesn't lead to any extra people fed.
Speaker 1:No, it's exactly the same here. So we're actually feeding minus 7 million people in Denmark because we import more tons of protein than we export all that comes out of the agriculture. So we have a destruction machine going on here and we have so few fish left in the waters right, because we have all this nitrogen. But I think the main thing is that we got a CO2 reduction law in 2019, and we have to get to 70% reduction in 2030. But it doesn't really take our imported consumption. So it's better than nothing, but not maybe a true measurement. And in the end, there was no way to get to that point without the farming right. So it started as a way to get a CO2 tax on farming as well, because we have an industry now, as a way to get a CO2 tax on farming as well, because we have an industry now. But then it also got into the nitrogen question because we are breaking all EU rules here because we have so many factory farmed animals that you know, yeah, the nitrogen goes out into the water, right.
Speaker 2:But it's interesting that it did come to a sort of political consensus, or at least carried by all the different groups, and not led to riots.
Speaker 1:Yeah, exactly, and I think that is quite an accomplishment. And I know the government really wants to export both that sort of governance model where we involve different parties, but also now the companies that are enabling that, and that's also that's the next question. It's good for you, yeah, potentially, if the big companies manage to say oh yeah, we just need to put some different feed into the animals and we'll export that. We had marginal bio solutions. That could be one narrative. The other is the whole production system and what are we growing on our fields and what are the true costs of them? And, from a societal perspective, what would be the most effective and efficient things to produce and export? Right, in terms of actually feeding people and not ruining our own country, because, yes, if another country wants a lot of cheap pork, then they should grow it. I don't see why we should ruin our country doing it for them. And we're so close to so much water, so having nitrogen here is even more crazy than a place far away from water. Right, because it gets out there.
Speaker 2:And I think, is that notion landing in Denmark as well? Why are we ruining our country for export elsewhere? Why are we left with literally the shit?
Speaker 1:No, because I think the big farming association is still telling the story that we are making so much money from export. You don't have to be that good at math to if you minus the subsidies and add the externalities. No way, that's a sort of good business doing that right. So I think the most interesting point right now is to say that, okay, we are facing global uncertainties, as you said in the beginning. So let's say that we are faced with more sort of global shocks to the primary production of soy and grains and everything, but also trade tariffs, wars.
Speaker 1:What we can see in Denmark is, just before First World War and Second World War, the number of animals in Denmark, farm animals was going off a cliff, reduced with 70 to 90 percent because there wasn't grains enough for both human and animals, to 90% because there wasn't grains enough for both human and animals. And all of a sudden it was clear like, okay, there was a loss of calories and a protein we give to the animals first. So before and under World War I, we couldn't get the grains from Russia, so it was basically made forbidden and you would go to prison if you gave grains to a pig and creating that awareness that then if the borders are closed, we can't really we're totally doomed. We don't have any food left because we are feeding minus seven million people and we are plus six million people. So we need to make that shift and I think that narrative has some potential in it right.
Speaker 2:But the question is yeah, I think it has. Like the strategic food security narrative in europe has never been more urgent since, has always been urgent but has never been discussed as much, I think, as in the last few months and also Ukraine war. But also the scary part is it might need that kind of shock where the borders really close. But of course, then the countries that are the regions that have been most progressive with this are going to be the ones that can still feed, quite simply.
Speaker 1:Yeah, that would kickstart the demand at that point, right, so we have to be ready to it. I think that's unfortunately. The more realistic part is that this transition will be shock based, so it will be oh, now we don't have any more feed? Then okay, then we can have the animals. But then we need to be, ready and know how to eat legumes and everything else.
Speaker 2:Yeah, and there's an interesting research that came out of EARA talking again on the agri-food systems change piece of. First of all, talking about the feeding the world, the narrative that's always very strong. That's in the map as a very strong and negative narrative in that sense because it's often used by the agri-food input industry as, look, we're feeding the world, which you already debunked nicely for the Danish system. I'm just laughing because I see a massive piano being moved. That's being live people. Tonight there's a piano concert.
Speaker 1:I think it has wheels on it. Yeah, it has wheels but it looks significant.
Speaker 2:But also a piece on the animal feed side. And they researched I'm going to get the name wrong, the number wrong, let's say 40 regenerative farms in Europe. First of all, they produce usually at least as much and more as their conventional counterparts, so let's put that to bed. There were more photosynthesis, all the things we like more of, but on the animal feed, very interestingly, they didn't get anything from outside. So they get it from bioregional maximum. So any shock, they'll be fine. Compared to, of course, bioregional still means it might be grown with input from others, but it's a much more resilient system.
Speaker 2:And we're doing a whole series now on the role of animals in the food system of the future. And the whole notion you can import feed from elsewhere is quite bonkers if you think about it. Yeah, especially feed that you can eat. Like feed and food. There's only two letters difference. But it's a very different industry, I can tell you. And so it's interesting to see those numbers. Like none of that was imported from beyond reasonable driving distance or even beyond the farm. In any case, of course, the best ones we know are fully zirconia-declared.
Speaker 2:What's the role of animals growing the pasture? Never give them anything else, because then your energy balance is completely out of balance. But also, no, I think there was a big project here I'm going to get the numbers wrong again like 800 hectares of great pulses and that ended up in pig feed because nobody was buying it. I know it's a pet peeve of you, or it's a very important project like how do we get, how do we eat more legumes? And how do we? Because it's good for any, everything. Yeah, of course, unless you import it from far away. And as henry dimbleby, I think, sent on the podcast, if everybody just loved lentils, we'll be fine. Yeah, a bit simplistic, but we get pretty far with that. How are you seeing that? Because how do we grow? It's a very different question, but the legume loving part of our society or we get get a big shock and suddenly discovered that amazing Fiverr beans growing here, or amazing, it shouldn't go to pig feed. It should actually be a Fiverr model to Andres.
Speaker 1:Well, I think it's a question I really appreciate you asking because so I think it also ties a bit back into impact of investing versus system change. Investing because we just last year invested in a company called Organic Crave and they do lentil chips crisps. So it's, I believe, 83 or 84% lentils, 8% sunflower oil sprayed on it and some spices on it. So it's relatively not unhealthy I would say it's still chips, but you get actually a lot of proteins and we help create some demand for lentils and over time also other legumes will do that. So it's a company that creates snacks, and it's not that the ideal food system does not have any snacks.
Speaker 1:I believe we should eat more healthy than that. But it's the company we could find up here, that one of them that moves the most tons of legumes, and they teach people that, yes, lentils can be other than dull. We can do all sorts of stuff with it, right. So we saw a need. We talked to more and more farmers who were starting to grow different types of legumes, but they couldn't really sell it, and those who could sell it it was used for animal feed, and then we're back into the same. Yeah, well, ok, maybe it replaces soil from Brazil and that's better.
Speaker 2:But still it grows. It grows your soil and it fixes nitrogen.
Speaker 1:yes, but we'd rather give it to food rather than feed, right?
Speaker 1:So from a pure impact investment perspective, I'm not sure this investment would have made sense, because you're replacing potato-ish or whatever conventional chips are made of with a legume and that might be slightly better from the CO2 perspective, definitely better from a nitrogen perspective. But I think the big story here is trying to move consumer demand and show that it is possible and give farmers some conviction that if you grow it, there will be people who will eat this over time, right? So I think if we had very narrow KPIs, I'm not sure we could have made that investment, but we did. And an interesting point in that is that they saw themselves as a snack company and were like, okay, that's good, but we want a legume company. So if we made this investment, then you have to do legumes and we don't want to do any cocoa or cocoa bars or anything. And after some reflection they thought that was a good idea and we've written that into the documents. That that's what the company will do now is help consumers eat more legumes in different ways.
Speaker 2:And maybe the snack angle is the way to get people to. Maybe it is.
Speaker 1:It is one of the ways, right and yeah, so I think that's one way we are trying to solve a downstream problem that we need to grow more, but we need people to move more, and they actually had a lot of traction commercially selling this they're actually good at that and creating a nice-looking brand around it.
Speaker 2:Which is fundamental. Yeah, it lets people buy this stuff and take it off the shelf.
Speaker 1:Yeah, and some people do and some people will keep doing that and hopefully that will grow with two, three percent a year, but still it's a very slow transition.
Speaker 2:I would say, like the snack brand, they have to sell and be eaten, otherwise it's a great story. Oh, in that way.
Speaker 1:Yeah, they do that. So that's it. Yeah, but I'm also just saying that there are those going to the organic shops.
Speaker 2:Yeah, of course They'll keep doing that and people are making noise. I saw on LinkedIn I'm going to say the bean company, but it's the Bean Co in the UK and improving that simple quote unquote boring beans locally grown that were a staple until 40, 50 years ago. With the right packaging and the right story, sell. Yeah, exactly they really. And Andres Iara, a friend of the show, is doing the same with fava beans, turning it into fava mola instead of guacamole.
Speaker 2:Why do you need to bring avocados from far in very questionable circumstances, and turn it into an interesting spread that goes really well in the hospitality industry, where they need the dips etc. And a good story and etc. And we had timeless seats or timeless, I think, timeless on around the lentils in the US, which is a 30-40 year story now, and but there they needed to create the market for lentils, like it wasn't really there until restaurants started picking it up. And that's such a fundamental, important work. What's like? How do you change a local culture cuisine? Of course you're in the chef space, in the chef hotspot in the world, so that might help. But how do you move? Yeah, you need to move tons and tons of lentils, otherwise you're not going to touch a lot of hectares.
Speaker 1:Yeah, so that's one way. Another investment we made is in a company called Nutromami which does some cross fermentation of fava beans. So it actually really gives a lot of umami taste and they're going for a more Nordic umami taste instead of the more Asian miso taste in this and it actually really helps in the texture of products and it also helps unlock some of the B12. For us who don't eat that much meat, that's very good to get also Fundamental, yeah.
Speaker 1:So in this case the good processing, the fermentation, yeah exactly, and you get a lot of the protein in it still. So I think we're trying to get it in different places in the value chain there people pay for fermentation.
Speaker 2:The kimchi is like there's a fermentation sort of shelf stable is not true because it continues to go, but there's definitely a cra definitely a craze around fermentation and products and potential margins. And selling a cabbage or selling kimchi is a very different business, but it seems to be there. People are looking for it and willing to semi-pay as well.
Speaker 1:Yeah, and I think that's one thing we would like to make more investments in is in the local infrastructure for farmers so they can take their cabbage and make it into kimchi, because they can't just sell all the cabbage at once, especially if they try to sell locally. And, yeah, the margins are much higher once you do some preparation of the food right. So we would really like to do that, and I'm not sure what the right business model is yet, if it is to support someone doing cooperatives for a lot of local farmers and facilities or how that business model looks like. But I wish there were more innovation in that space and we would really like to support that.
Speaker 2:Yeah, a smaller scale processing. I'm always curious. I've seen some things left and right, but what is different now? As investors, we always ask the question what is different? What is enabling it now compared to five years ago or 10 years ago? Researchers always ask the question what is enabling it now compared to five years ago or 10 years ago? Yeah, maybe the sensors, the AI and maybe some of the smaller roasting that we see now in the cacao and coffee. Of course. What technology or why is it possible now compared to five years ago or 10 years ago? Or maybe there's a demand in market because it's going to be difficult to compete on price on mega factories. But we also see in insect farming that the mega, for once, are struggling a lot.
Speaker 1:Yeah, also vertical farming right.
Speaker 2:Yeah, decentralized makes sense, but in a, let's say, certain bandwidth, like what's the optimal? Is one farm, should it be or should it be 10 farms? Yeah, and how do we make sure that these processing units are at least compatible, like in pricing, like not, they're going to win it, but not crazy expensive. So it only becomes like this kimchi or sauerkraut is going to cost the moon and nobody's ever going to buy it except for the happy few, as always. What's there? That's a sweet spot in manufacturing and we're going to see, probably with sharks, a lot more focus on that. What's the more resilient? Smaller, more decentralized, but not completely tiny manufacturing? Does 3D printing enable that? Does certain technologies? I think we're going to see a lot there, but I just don't really fully understand it yet. What are the pieces? Because, as you said, it makes a lot more sense to sell a bit processed compared to just commodity market.
Speaker 1:Yeah, or be able to do both right, Because you can't switch back and forth because you store it.
Speaker 2:basically it's stored energy, like batteries are renewable energy.
Speaker 1:Yeah, I don't have any deep insights into that. I'm really hoping more people will come up with different models. So what we're seeing right now is still a lot of CSA software coming around.
Speaker 2:Not that that's not important.
Speaker 1:No, it is important.
Speaker 2:Peter Obi, but yeah, how many can you have?
Speaker 1:unfortunately, yeah, and still the bottleneck there is more the number of farms out there who actually wants to do it right and can make a living wage off of it, and so I think actually trying to help the farmers, the small and medium scale, build that living wage is a job to be done here, and I do believe finance can play some role in giving them the infrastructure to make more money at some point. But I would really not to be the investor who come and tell them what to do, so I would rather have them come and say they have this vision and would that be something for us?
Speaker 2:Yeah, and then the last bit on. We were done before when we started on control and humbleness. Like this, work is the pinnacle of being humble in terms of living systems, dealing with uncertainty, dealing with control and or non-control.
Speaker 1:Yeah.
Speaker 2:How has that been over the last years, Humbling?
Speaker 1:I would say, to learn how little we do control.
Speaker 1:And I think one thing we have been thinking quite a lot about is the whole financial world, how much we pretend we can control, like we can say, oh yeah, we'll make this asset allocation and we'll have this IRR and I know it's targets, but it's always set with so much confidence and even though if you look at a normal distribution chart, it's so unlikely that any particular fund will deliver what they are telling they think they will deliver or try to deliver.
Speaker 1:So I think we are pretending we can be all sorts of stuff that we can't do and that we ourselves control the return profile of the fund. Of course our decisions matter, but it's one of many things that matter. It could also be the financial markets, the policy regulation, all this and we have no or very little control about that. And I think we need to recognize that much more that we practically control nothing in this world. And maybe it's our ego or our sort of need for control that tells a different story, sort of need for control that tells a different story. And it's not to say that we shouldn't have any strategic direction or we shouldn't try to facilitate the system change. But what I have learned is that we can try to create the right preconditions for that to happen, but it is not our control if it happens or not.
Speaker 2:Very very true and it's funny because it mirrors a lot of the, I think, observations I see or I do, or we see when we're visiting farms, especially obviously on the region path, and they're very much in emergence, like what is, and they, it's the reason we started, like farmer, like a farmer philosophy series, which would be an interesting one, farmer philosophy series, which would be an interesting one, farmer philosophy series. And now we're walking the land with regen farmers because they turn very philosophical, very quickly and very humbling, and we're facilitating here and it's emerging, but I don't have a whole lot of control over this one hectare, thousand hectares, and it's reacting to and trying to deal with that complexity, but the successful one seems really good at that. That's probably an underlying and the same with founders.
Speaker 1:Yeah, we'll see. This is our North Star. We're trying to work on this system change and we'll keep doing that. But there are many ways we can do that. And the interesting part is I was visiting a big rewilding project in Denmark and the biologists said the same thing that they have no idea what that nature will look like over time. They are creating the right processes, the natural processes, but they will let the big grazers and the animals and the plants figure out what will happen there, and I think that's such a different perspective than what we are taught at business schools, universities, and I think how do you guess it in founder?
Speaker 2:Is that like an opening question with you? Or do you think we're in control or not? Because it's such a almost binary, I think like humbleness. It's not humbleness, but it's also how do you assess that in people, or that you get that within 10 minutes or so?
Speaker 1:Yeah, so we're not explicitly looking for it, but maybe we should start doing that. Right To find out how much they think they control right now and how much they are. So yeah, this is a plan and we want them to be open to the plan. Right, because if they have a very fixed plan in PowerPoint and Excel and they just keep doing that, then that's, in most scenarios, the road to failure. Right, because we take away our opportunity to learn and get smarter and adapt, and that's really a shame to do that.
Speaker 2:Yeah for sure. Sure you subconsciously, even though you don't ask straight, select for that who is the most?
Speaker 1:nimble Like.
Speaker 2:Darwin already said it's the what is the most adaptable. Not win, survive, survive yeah, that's the only thing we can wish for.
Speaker 1:I think it's yeah, go ahead, no, no, and I just think a lot of us in this space actually know that inside us and have that intuition. To be explicit, it's nice, yeah, but I think it is almost always as if people's shoulders go down a little bit when we say that we know we're not in control of everything, right, yeah, ah, okay, at least now we're being honest and having an honest conversation about that, yeah, so I think that's quite interesting to start to have that conversation, and it also opens up quite a lot and that's also one of John Fullerton's points that like, if you have such a narrow focus and just walking very fast in one direction, you don't really see what's happening in front of you, what opportunities are there, and so I think having that openness to the system around us is also quite important in this whole regenerative mindset.
Speaker 2:I think it's a perfect way to wrap up and I want to thank you so much for this non-in-control conversation we've had and for the work you do, obviously, and being one of the most, if not the most radical funder and fund out there and let's hope in the next time we talk you're not the only one, there are some others obviously there are others.
Speaker 2:But there's a whole cohort of where people can choose and later funding, earlier funding in different locations where it's no need to only do Zoom or fly around the world Not to say that that sometimes is needed, but if it can be avoided it's good and also to tap into local pockets of finance and money that don't necessarily have to travel to Denmark to get their evergreen shot, let's say, and for obviously supporting us to do more as well for the great location where we're at now and hopefully soon we can visit and see the half the farm plus the forest.
Speaker 1:Looking forward to it. Thank you for having me again.
Speaker 2:Thank you for listening all the way to the end. For show notes and links discussed, check out our website investinginregenerativeagriculturecom slash posts. If you liked this episode, why not share it with a friend and get in touch with us on social media, our website or via the Spotify app, and tell us what you liked most and give us a rating on Apple Podcasts or Spotify or your podcast player. That really really helps us. Thanks again and see you next time.
