326: Investing in Regenerative Farmland with David Leon and Tim Luckow - Co-op Members Call Preview
Jan 12, 2024
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Guests David Leon and Tim Luckow discuss their investment firms focused on regenerative farmland. Topics include financing, working with investors, co-locating clean energy, profitability, attracting talent, equity partnerships with growers, and challenges in regenerative farming.
Investing in regenerative agriculture requires new investment structures and diverse expertise from outside the industry.
Co-locating renewable energy projects with regenerative agriculture can provide shared cash flow and support soil regeneration.
Deep dives
Investing in Regenerative Agriculture
The podcast episode discusses the challenges and opportunities involved in investing in regenerative agriculture. David Leon of Bion Capital Partners and Tim Luco of Farm share their insights on the topic. They highlight the need for financing regenerative agriculture on a large scale to compete with conventional farming methods. The conversation delves into the importance of profitability in regenerative agriculture and the potential tradeoff between shorter-term returns from energy projects and the long-term goal of soil regeneration. Both guests emphasize the need for new investment structures and the involvement of diverse expertise from outside the agriculture industry.
The Structure of Regenerative Ag Investments
David Leon and Tim Luco discuss the structure of regenerative agriculture investments. They explain the approach taken by Bion Capital Partners, which focuses on real asset-driven investment in regenerative transition. The investment mandate emphasizes 80% land exposure through equity partnerships with growers, and 20% of assets under management (AUM) for enabling investments in AgTech, processing infrastructure, and consumer market access. The guests highlight the importance of holistic thinking and non-extractive approaches to asset valuation in achieving long-term profitability in regenerative agriculture. They acknowledge the compromises and challenges involved in creating investment structures that align with regenerative principles and attract institutional and sovereign wealth funds.
Co-Locating Renewable Energy and Regenerative Ag
The podcast episode explores the concept of co-locating renewable energy projects with regenerative agriculture. Tim Luco shares insights on Farm's model, which involves partnering with agricultural operations and actively seeking co-location opportunities with clean energy projects. The aim is to create shared cash flow for farmers and investors while addressing short-term uncertainties and timelines associated with soil regeneration. The discussion highlights the potential value of using clean electricity on-site and the role of community-scale energy in supporting regenerative agriculture. The guests also touch upon the challenges of finding parcels suitable for co-location and the need for attractive financial returns to compete with conventional farming methods.
David Leon of Biome Capital Partners and Tim Luckow of Farm lead our recent Co-op members call discussing how they are building their investment firms focused on regenerative farmland.