The 2022 Regenerative Food Systems Investment Forum meditated on one key theme: how can we take advantage of what Darren Bacuss of Biome Capital Partners called “the most compelling investment opportunity ever?” The answer became apparent from the sharing of spaces and visions from the get-go: it will take numerous capital providers and investors across the entire agricultural value chain to make regenerative work. And in fact, it is precisely this spirit that has led to a 10x exit value and 2.5x investment value in AgTech from 2019 to 2021. Be it the government’s Climate-Smart Commodities program, early-stage capital investors such as Trailhead Capital, investment bankers like Big Path Capital and Provenance Capital Group, and farmland investment fund managers like SLM Partners and REITs like Iroquois Valley Farmland REIT, each investment focus provides a symbiotic effect to other investors in the ecosystem that de-risk future capital allocation and provide momentum to regenerative agriculture for years to come.
As Trailhead Capital Managing Partner Tripp Wall put it, complicated natural systems are being depleted in soils, ocean acidification, and deforestation, so thus complex solutions will be “imperative to solve this right now” by pulling on consumer demand, corporate interests, and policy tailwinds. Consumers are empowered by “the ethic of where we spend our dollars” as well as the increased demand for nutrient dense and transparently non-toxic food. Corporates are beholden to shareholder interests, Paris Accord-based carbon neutrality claim, and employee morale and engagement. And last, regulatory and policy tailwinds are apparent in forms of tax breaks like the 45Q, the Climate-Smart Commodities program, and California’s prop 12, for instance. As Wall put it, this will lead to a see change from the “anthropological to the mycorrhizal to the zoological” through the “imperative confluence of science, corporate interest and collective wisdom and consciousness of people who care about the health and the earth.”
In a world of a compressed “investable universe” due to changing social norms and macro-economic conditions, as Bacuss put it, regenerative agriculture stands above as an opportunity to deploy capital at scale for a variety of actors with, rather than competing visions, complementary visions. There isn’t one specific vertical to invest in, but rather a whole ecosystem of capital collaborators to keep pushing and de-risking the proposition of investment at scale for each other.
To put it more specifically, Robyn O’Brien of rePlant Capital spoke about the farmers rePlant works with and the need to think about how different capital sources can positively impact farmers: “Our farmers need all three of these organizations [Trailhead Capital, Mad Agriculture, and rePlant] to succeed and all three of us need to succeed” to make a difference. While Trailhead funds the agricultural technologies that will make a direct impact on the future of farming, Mad Agriculture can provide transition financing and technical assistance needed for regenerative adoption, and rePlant can work with corporates to guarantee a premium for regenerative practices. Furthermore, we will need technologists and investors to focus on measuring the outcomes and practices adopted in projects and programs, as Jon Hendrickson of Aether Investment Partners, LLC put it. Additionally, organizations will be needed to standardize metric reporting and definitions at the heart of the movement over time, which Devon Klatell of The Rockefeller Foundation pointed out (and thankfully we had experts like Shannon Boselli of Proof to provide the lay of the land here!).
At the Forum, we also had the example of startup Propagate Ventures announcing their $10M Series A Raise and a vibrant discussion on their recent USDA Climate Smart Commodities grant win focused on agroforestry and partnership with Cargill to scale agroforestry in their supply chain. Propagate’s story reflects the different roles capital allocators will play in incentivizing – and profiting from – novel projects. Early capital allocators, like Grantham Neglected Climate Opportunities and Elemental Excelerator, provided support to Propagate until it demonstrated commercial viability, while Cargill’s involvement in project financing will lead to better environmental outcomes from farm partners and large-scale adoption of agroforestry in new markets. The Climate Smart Commodities grant only serves to accelerate this transition and involves an ecosystem of actors, including MRV partners, NGOs, and, as a notable pain point, technical assistance providers for agroforestry implementation.
All these incredible insights were premised on a story we’ve all been watching over the past three years: the rise of regenerative agriculture into a mainstream, daily occurrence in media and corporate news. This transformation mirrors the growth RFSI has seen since its first forum in 2019, going from 180 grassroots capital allocators and startups in California bound together to catalyze mission, to this year’s brain trust of 355 attendees, mirrored almost perfectly in funders and startups in a regenerative hub of Denver, Colorado. How will we assume our responsibility as a “super keystone species”, as John Kempf of Biome Capital put it? How can we ensure, as Jennifer O’Connor of Funders of Regenerative Agriculture questioned, if “we are in right relationships with ourselves, the land, and the animals?”
As Mark Lewis of Trailhead explained: “we are the people we’ve been waiting for” and Anouk Schoors of The Nest family office put it best: “success breeds success.” We need more successful cases to create a snowball effect for the narratives and perceptions around regenerative agriculture. If we do so correctly, we can find large swathes of institutional investment investing across the continuum, from farmland to technologies to consumer brands. Everyone has a role to play in building this space and attracting even more talent, capital, and consumers in the big-tent regenerative movement. Though there may be important disagreements on the role of, for example, carbon markets and ecosystem services, CPG premiums for regenerative goods, how to commercialize nutrient density, and so much more, the very fact folks are sticking to their visions, trying it out and seeing what succeeds speaks volumes to the collaborative and entrepreneurial nature of regenerative agriculture. We can’t wait to see the outcome of these efforts!
Kevin Silverman writes about all things related to soil, climate, and the regenerative movement.