The State of Sustainable Food Systems Investing | Civil Eats

The State of Sustainable Food Systems Investing

More and more individuals, foundations, and other institutions are showing an interest in investing capital in food companies that address social and/or environmental issues, a phenomenon both mirrored and encouraged by a growing number of conferences, panels, workshops, and even entire organizations dedicated to the field. At first glance all this activity might seem like great news–but if we dig a little deeper, there are some hidden impacts that good food advocates would be wise to examine a little more closely. I challenge all of us to begin to recognize and acknowledge the differences inherent amongst food system investors, entrepreneurs, and the organizations, events, and capital tools that serve them) in an effort to make appropriate connections between them.

Over the last several years, I have attended dozens of events highlighting investment opportunities in “sustainable,” for-profit food or agriculture companies. Most recently, I attended the panels that comprised the Food Systems Track (here’s a video explaining what it’s about) at the Social Capital Markets Conference (aka #SoCap10) in San Francisco. Six sessions featured over two dozen speakers covering a wide range of food- and agriculture-related investing topics, curated by Melanie Cheng of FarmsReach and Om Organics.

“I drafted an outline of the track, which was reviewed by at least 10 industry vets, from grant makers to investors to organization directors to entrepreneurs,” Melanie explained when I asked how she put together the lineup. “Needless to say, the content evolved a fair amount, most notably to include fewer cutting edge innovations in favor of ‘proven’ models that were ready to replicate and/or scale, and to add a separate strategy session just for funders to learn how to make the most impact.”

Based on my own informal list of metrics, the Food Systems Track scored extremely well compared to similar events: there was a good range of food system components represented (compared to events that focus only on, say, technological fixes or large-scale food manufacturers); a deep commitment to ecological issues (compared to a focus on, for instance, large-scale solutions designed to “feed the hungry” while disregarding cultural appropriateness or ecological risks); an excellent focus on investing opportunities (compared to rallying cries for sustainable agriculture without offering tangible opportunities for investors); and ample time for well-moderated Q&A from a highly engaged audience. Where the event fell a bit short was on coverage of social justice and labor issues (Melanie pointed out later that “though labor rights weren’t covered explicitly, we did focus on efficient, expanded distribution and affordable technology, both of which greatly impact farms’ bottom line and ability to pay their workforce better”) and in not providing enough time to discuss the full range of complications related to pitching farmland to investors.

The panelists represented an unprecedented diversity of food systems solutions, both in terms of the businesses (or funds) they run and the capital tools they used. “It was impossible to cover all the important issues in just six sessions,” Melanie noted, “but there was consensus amongst the industry advisers that what we were covering were the hot levers.”

I still found myself longing for a more explicit acknowledgment, from the moderators or the speakers, that not all investors have the same motivations or expectations for wanting to invest in the first place. Likewise, nobody pointed out the fact that each food system entrepreneur launches their business based upon a particular set of values, which may or may not be the same as the values of the next entrepreneur, and therefore finding a match between fundraiser and financier takes more than identifying the food system “lever” upon which to focus one’s efforts. (To be fair, none of the food & agriculture conferences or events I have attended reached this level of analysis, much less the diversity of presenters that Melanie did pull together, and I hope we will see a shift in this trend in the future.)

It never ceases to amaze me that participants in this movement generally agree that planting mono-crops is a limited answer to the challenges facing agriculture and hunger today, and yet many still seek the “mono-solution” when it comes to either launching entrepreneurial ventures, or choosing how exactly to invest in them; there were many instances when panelists, moderators, or attendees fell prey to the common temptation to identify the solution, whether entrepreneurial or financial, that would miraculously solve one (or multiple) food system issues.

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I propose that we embrace a biodiversity of solutions within the realm of sustainable food system investing. Let us acknowledge the differences between investors (individual or institutional? accredited or non-accredited? seeking high financial returns, high social returns, or both? risk tolerant or risk adverse? investing for the long-term or short-term? etc.), entrepreneurs and their ventures (corporation, co-op, L3C, hybrid for/nonprofit? what management style? what growth expectations and rate? geographic range? expected outcomes and metrics used to measure them? etc), and financial tools (including both the traditional, ie debt and equity, and the more innovative options like crowd funding or community-supported models).

Let us also be clear about the differences in the very conferences and organizations designed to bring together investors and entrepreneurs who want to be part of the good food movement, carefully identifying the positions of the various players within the bigger picture. Otherwise if we let the players themselves define the field, and their roles within it, we may find ourselves scrambling later to correct misconceptions about “sustainable agriculture” that stem from early investor or entrepreneur experiences with certain events or organizations representing values that may not be aligned with their own.

Yes, the enormous range of combinations represented by all of these differences presents a very complicated landscape for an investor seeking projects in which to invest, and for the entrepreneur seeking capital for her food-based business. But if we continue to ignore these differences, the risks are two-fold: on the one hand, we risk of alienating or disappointing prospective investors, and a few inappropriately-matched investments might lead to a soured view of the whole field of food system opportunities. Worse, in the absence of tools to help entrepreneurs navigate the soup of financial options available to them, we run the risk that the best of them may lock themselves into financial agreements that may prove ill-suited to the values upon which their businesses were founded in the first place.

Finally, let us recognize that every participant in this movement, whether we agree wholeheartedly with their values or not, offers a valuable piece of the puzzle that is the movement to support good food. In much the same way that we have no idea which variety of food crops will survive climate change to feed us into the future, we cannot predict which food system business strategies will end up being the ones that will ultimately work to restore our communities and ecosystems while feeding us all; and since it will take a multitude of capital tools to support the variety of solutions, we could do worse than to support them all with our confidence and our dollars, while still striving to make the best matches possible to both investors on one side of the capital equation, and entrepreneurs on the other.

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Elizabeth Ü is executive director of Finance for Food, a nonprofit that educates food-system entrepreneurs in the United States about the full range of financing options available to support them. Her book Raising Dough: the Complete Guide to Financing a Socially Responsible Food Business, will be released by Chelsea Green in June 2013 and is currently available for pre-order. Elizabeth previously served as manager of strategic development at RSF Social Finance, helping launch a loan fund to support high-impact, sustainable food ventures. She has served on staff at the Business Alliance for Local Living Economies (BALLE), and spent two years as program officer of Slow Money, then a project of Investors’ Circle. Elizabeth regularly speaks, designs and delivers workshops on the topics of impact investing, social finance, and sustainable food systems at conferences geared toward foundations, financiers, investors, philanthropists, nonprofits, and social entrepreneurs. Read more >

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  1. Elizabeth- Thank you so much for the SoCap wrap. Wish I could have been there. I'm in 100% agreement with your point about the need for a biodiversity of solutions. As I work to make Slow Money a reality in Boston, I'm fully aware that it is but a small piece of "the solution." But the fact that there was a food track at all is a big step forward, as there was zero discussion of food at SoCap 2008, save for the ad hoc discussion I convened.
  2. Thanks for the article, Elizabeth. You're too right about the complexity of funding... On the upside, several speakers and attendees have written that they learned a lot about what is possible (with a little ingenuity!) and met some unexpected financing partners. I hope SOCAP is the first of many steps in the right direction.

    I'll be posting all the sessions' audio and PPT files to the FarmsReach blog within the week, for those who are interested:
  3. Great article! I think it will prove useful for both the attendees and all those who wished they could have been there.
    The prospects for foundations and institutional investors to bring mission driven capital to the good food sector are very exciting. Individual investing,community financing, Slow municipal bonds, loan funds like Vermont Sustainable Jobs Fund and RSF, and new financial products and services all help fill out the picture and present a whole palette of solutions.
  4. Thanks for this article Elizabeth, great to get a snapshot of the discussion! It reminded me of my experience at the Ag 2.0 conference earlier this year, which brought companies and investors together. We were there to pitch our business and attract a values-aligned investor interested in promoting sustainable agriculture, community and slow returns; however, we felt that the investors who attended were most interested in the latest ag tech start-up and high - typical VC - returns, etc.

    Your article is a great reminder of how important it is to find and bring together good matches. That said, it sounds like a lot of ground was covered at SoCap and it is incredibly complex to address all of the issues!

    Thanks again,
  5. Elizabeth Krueger
    Nice article and great points. Good to see the ecosystem of investing begin to be described relative to the food system. The SOCAP10 Food track left me hungry for more, too.
  6. Beautiful piece addressing the complexity of what we face. I deeply embrace your suggestion of a polyculture of solutions. Kudos!
  7. Elizabeth,
    Sharp as always. This tension between efficiency and complexity is very real. Here in the Pacific Northwest I meet small businesses who are startled by the variety of financing strategies and investors who are at a loss for how to source and structure deals that meet their fiscal and social needs. I see two solutions emerging, those that make complexity more approachable through technology (e.g. Profounder and Mission Markets) and those that interpret the chaos through consulting services (e.g. Cutting Edge Capital).

    It will be interesting to see which of these strategies has the better revenue model. Locally, I've asked angel investors if they are ready to pay for a 'priest' or intermediary that can play matchmaker and the answer has been, "not yet." And yet we cannot expect small food businesses to pay for the service either.

    I explore other options such as the democratization of financial transactions and leveraging institutions at

    Thanks for starting this dialog Elizabeth,

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