Regenerate Ventures is a new entrant to the EIS Market with the ambition to ‘restore health to the food system from farm to fork.’
Agriculture is one of the least digitised sectors in the world, it’s a sector that’s challenging to innovate for a whole host of reasons, and it’s responsible for a third of total carbon emissions globally.
We spoke to Paul Rous, one of the directors of Regenerate Ventures to discuss the Agritech fund’s aims. Alond with Rous are partners Ben Stafford and Ryan Cameron, who were both at Impax Asset Management. The expertise of the team is impressive, with over 60 years of combined experience in sustainable investing.
Rous has deep expertise both within finance and agriculture. Rous cut his cloth at Goldman Sachs and then in asset management, and focused back in the 2000’s on clean tech and technology before leaving the city to spend six years diversifying his family’s farm.
After I asked him if this move back to his family farm was the ‘seed’ for his current venture with Regenerate he laughed and recalled when he first moved back to the farm in Suffolk the local paper had the headline, “from hedge funds to hedge rows.”
That local headline may have been a little misleading because while Rous was innovating the family farm he was still deeply involved with investing.
Rous spent years angel investing but came to realise it wasn’t the most efficient vehicle for Start-ups, with many of the funds in London focused on more later stage businesses. Rous then started his first venture fund Fuel Ventures in 2014.
Rous moved on to set up Blackfinch Ventures, having gained deep tech experience in the previous years. As Blackfinch Ventures moved towards generalist investing Rous continued his passion for agriculture, becoming chair of the Suffolk CLA, continuing to work on his own farm and taking part in the countryside alliance.
Rous maintains throughout this period his desire to merge these two, perhaps disparate, industries, agriculture and tech, continued to grow. The focus on supporting multiple agriculture startups in recent years has included working with the Shake Climate Change support programme for early stage innovation.
Though exiting Fuel Ventures in 2016, Rous commented on the portfolio he helped set up. “It’s still performing very well, he added, “it just goes to show there was a time and a place where these companies needed the capital and support that Fuel was providing.”
This right time and place philosophy is perhaps one of the most exciting elements of Regenerate Ventures Fund I.
Agriculture is the world’s oldest industry, and of course it’s seen innovation throughout history. However when one looks at sectors utilising different types of technologies, like satellites, autonomous vehicles, biopesticides, or bio-stimulants, it’s clear: much of these necessary technologies could be integrated into the agriculture industry effectively.
In essence this is what Regenerates new EIS fund looks to do, integrate new technologies into the vital industry of agriculture.
This aim is not without challenges. The average age of British farmers is 60, so adoption is clearly tricky. The regulatory landscape across the globe is also a continuous challenge.
Rous doesn’t shy away from these challenges either, “The Agrifood system is broken and the way we farm is becoming harder and harder.”
He continued, “There is a lot of wastage, there is a lot of food producing land that is being lost to urbanisation, the cost of inputs is sky-rocketing along with the cost of transport.”
The COP26 pledge to innovate global supply chains may focus minds, but for Rous “we need people, and we need capital, and we need experience and expertise.”
Many see the opportunity in this situation. Over the last five years Rous has also seen an increase in capital into the sector, one needs only to look at Bill Gates recent agricultural investments in the United States, becoming the largest landowner in the country.
So what is the opportunity Regenerate Ventures and other investors see? Whilst other investors have concentrated on the last mile delivery of food, there isa lot of complexity and opportunity further upstream and inside the farm gate. Innovations that use natural solutions to encourage growth and reduce the use of pesticides are increasingly important due to changes in policy.
The opportunity here is twofold. There are a lot of sustainably branded investment vehicles that have questionable marketing when in terms of its real ESG credentials. What Regenerate is offering in its new EIS fund is a truly sustainable investment portfolio, cutting right to the heart of what sustainability means for investors, and the planet.
Agriculture and the food supply chain contributes to about a third of carbon emissions globally, and the food supply chain is costing the world trillions of dollars in both obesity and malnutrition. Rous notes that the world wastes about a trillion dollars’ worth food a year.
The only way to fix these problems is through innovating these industries, which means increasing the soil health over years, farming more nutritious crops, with less chemicals on less land. The challenge is to produce a crop with higher nutritional content with less cost and while being better to the environment.
The second aspect of this opportunity is of course financial. The volume of capital into agriculture innovation and the food supply chain over recent years is vast and stands to increase considerably.
There are also a lot of businesses seeking investment, as Rous put it, “There’s lots of them out there, they just need the capital and support to grow.”
However there is a gap in investment. For seed stage businesses there is access to philanthropic and academic funding, and for later stage businesses there the opportunity for vast buy outs, and it is between these points that there is a gap where Regenerate’s team are stepping in, and once again for Rous, he believes he’s in the right place and at the right time.