Using flexible loans to invest over 10M into regenerative food and agriculture companies in Europe.
Welcome to Investing in Regenerative Agriculture. Where I interview key players in the field of regenerative agriculture, people who are scaling up the sector by bringing in new money or scaling up the practises on the ground.
I had a conversation with Aymeric Jung and Josep Segarra of Quadia Capital (www.quadia.ch) who have been investing in regenerative agriculture and food companies for a few years and put more than 10M to work. We discussed their backgrounds (Aymeric was at Lehman Brothers when it collapsed) and how they are putting money of their investors to work in regenerative food and agriculture companies in Europe.
Two barriers for investing in regenerative agriculture according to Aymeric and Josep:
1. You have to understand that food isn’t a basic product, it is about live, it isn’t a smartphone. You need to regenerate it. It takes time! The price and costs aren’t everything. Quality vs quantity
2. Long term view. If you think buying high quality food it is too expensive you can reduce your food costs by reducing animal protein.
Key is externalities, the more they are integrated the easier it is to compete companies with less or positieve externalities (which you invested in).
Advice to starting impact investors in regenerative agriculture:
1. look at emerging countries, fair trade isn’t enough you need to work on the value chain (or supply web as Gregory Landua would argue LINK!)!
2. investing in the good companies in Europe, help them to scale and to educate their consumers.
Nouriterre is about finding the comfort zone for traditional investors. To get into the comfort zone of traditional investors you need two things:
1. (some) liquidity
2. investment periods which aren’t too long
So they created: Nouriterre:
4 years 4% annual return and some cashflow after 2 years (25%), after 3 years 50% etc..
http://www.quadia.ch/investment/private.html
Diversification, with half of the program goes to financing indexed loans to provide growth capital to SMEs in regenerative food and agriculture.
Index loans, 3 years or 3.5 years.
First 1 year no payback
Every 6 months the company pays back a % of the gross sales
The investor is completely aligned with the company, when the company is successful the investor is and the other way around.
Financed more than 15 companies in the space with growth capital
The other 50% is invested in debt funds for food and agriculture in developing countries.
Quadia was mainly investing in renewable energy and energy efficiency and started looking at agriculture because it wastes a huge amount of energy. Agriculture is a 5,5T industry with when you do it right, has a lot of spill over effects.
An example: Bou sol a socially minded bakeries throughout France, started as a social project, now a company.
http://www.bou-sol.eu/
Working with people with a distance to the job market.
Organic bread to customers who buy large volumes. Nouriterre financed the opening of a new bakery.
Blackrock CEO letter, companies have a social role:
https://www.forbes.com/sites/peterhorst/2018/01/16/blackrock-ceo-tells-companies-to-contribute-to-society-heres-where-to-start/
Danone, the costs of capital depends on the ESG score.
https://www.forbes.com/sites/jaycoengilbert/2018/02/20/every-cfo-should-know-this-the-future-of-banking-ties-verified-esg-performance-to-cheaper-capital/#171703797e4d
SlowMoney, which Aymeric brought to the french speaking countries.
https://slowmoney.org/
It is too late for being just sustainable we really need to rebuild the economy regeneratively. It’s a new economy we are building!
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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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