Six Truths to Know Before Investing in Food System Change
The onus for creating a new vision of a healthy, equitable and vibrant food and farming system can't be on just the scrappy and hard-working farming and food entrepreneurs. They need investors to help them grow.
But not just any investor. They need investors that support their vision of a fair and healthy food system and understand that profit can be measured in more ways than dollar signs.
Truth One – You Can Leverage Your Capital to Help Fix the Food System
The traditional investment landscape has long focused on 'extracting' profit from our natural resources — and the people that have farmed and produced food with those resources. Countries built their economies on the wealth of their natural resources. But while creating our current eight trillion global food and farming economy, some critical steps were skipped along the way. We forgot to take into account the soil, the health of ecosystems, the people and communities that grew it, the nutrition of the food we produced, and ensuring that all humans had equal access to healthy, nourishing foods.
That system has been showing ominous signs of vulnerabilities for years, heightened by the coronavirus pandemic, the growing impact of climate-change catastrophes, and shifting and burgeoning global populations.
And yes, impact investments are making a difference, as responsible investors step up to finance the world they want to see. ESG (environmental, societal and governance) assets have grown by more than 274 percent since 2012, according to the US SIF The Forum for Sustainable and Responsible Investment.
Still, added up, impact investment has merely been a "rounding error" in the overall investment landscape, says Allison Kelly, CEO of ICA Capital, a Bay-area accelerator and investor in FS6 Portfolio company, Firebrand Artisan Breads.
So much more capital is needed for significant change.
Not only do those with the means have a responsibility to invest, they need to get it right this time around. Impact investors can do things traditional financing can not. They have the flexibility to seek out the "opportunities to be transformative," Kelly says, and find "ways that you can use your capital to demonstrate a new model of capital transactions."
Truth Two – It’s Time to Shift Your Investment Mindset
For mission-driven food and farming entrepreneurs like Jacqueline Smith, of Central Grazing Company, finding the right investor is challenging. They must be willing to understand her vision that "it all starts with the soil.”
Smith, an entrepreneur in the FS6 Accelerator's fifth cohort, is creating new opportunities outside of the commoditized agricultural economy for the devastated Midwest farming culture. Her business purchases humanely and regeneratively-raised lambs at a fair price from Midwest ranchers and sells them through a direct-to-consumer subscription box service.
From her perspective, investors who built their wealth by extraction must embrace a "fundamental mind shift" if they want to support transformative food system opportunities. They need to look at the entire "ecosystem" of the business they finance — including the animals, the soil, the environment and the community.
"Those things don't exclusively mean that the investor won't get a return on their investment," Smith says, "It just means it comes slower and it comes with care and patience."
Her investors, Smith says, get a return on “every single person in that ecosystem. It means better health, better stewardship for the land and eventually a return on their money."
Working to help empower marginalized persons to improve their lives is "messy," Kreutz says. His investors need to be on board with that and see the extra "profit" in what they do from day one.
Kreutz has learned that it helps to show investors exactly where profit that doesn’t appear on his bottomline, ends up. For instance, he takes five percent
FS6 is a nonprofit based in the San Francisco Bay Area whose mission is to support impact-driven entrepreneurs as they transform how we grow, produce, and distribute food. The organization runs a comprehensive accelerator program that mentors entrepreneurs by coaching them through a wide range of business and organizational needs. FS6 also works to educate stakeholders on the unique capital needs as it relates to redefining the food system.
Learn more about our program offerings and how to apply here.
Justice & Fairness