Stephen Hohenrieder, founder of Grounded Capital Partners, joins us to discuss a different approach to capital—by treating the symptoms of an unhealthy system rather than incentivizing them.
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What if the real scalable impact can be made in investing in mature, well-established, and trustable food companies? What if we can invest in these companies and enable them to go further and deeper? What kind of investment structure would make this possible?
Investing in Mature Food Companies
Often, investors choose to put money on small-scale but promising startups. While this kind of move is reasonable, investors should also pay attention to mature companies that have been playing in the industry for a substantial amount of time. These companies have built systems, solutions, people, and other things that can be much more impactful when utilized. Most importantly, consumers already know and trust these brands, so connecting to consumers will no longer be an issue.
“One of the biggest learnings for me was engaging people and connecting the dots of solutions that already exist, rather than inventing something new.” – Stephen Hohenrieder
Wines: Investing in Capital Equipment
There are also investors that find investing in capital equipment more sensible, and this is quite evident in the wine industry. Some find it easier to build an ecosystem (i.e. winemaking expertise, branding, cold storage, regional distribution, grape growing, etc.) around winemaking. This is all because of ever-changing consumers who have started becoming interested in the origin of what they consume and looking for products that are authentic and traceable.
“Food is increasingly experiential. I believe that consumers are looking for simple foods that relate to who they believe they are and what their values are.” – Stephen Hohenrieder
‘Less Sexy’ Route Towards Scaling
Grounded Capital Partners’ collaboration technique entails becoming a catalyst to achieve a ‘bigger picture’ and having the same vision. Since their goal is to build the next generation of leading food companies, it’s important for their partners to be on a scale that already has a starting platform as well as working programs, rather than starting from scratch. For Stephen, taking the ‘less sexy’ route towards scaling is just as impactful.
“While the growth rates of going from 100 acres to 1000, or 10,000 acres might be really impressive, going from 100,000 acres to 500,000 acres in the same period of time might be just as impactful, but maybe not as sexy.” – Stephen Hohenrieder
Period of Adolescence for Investing
Having an indefinite mindset around time of investment or ‘investing indefinitely’ is necessary to make the best decisions when deploying the capital. However, many new investors in the regenerative space still seem to be in the period of ‘adolescence’ for investing—they feel awkward and they don’t see enough investable opportunities. To find the gems in the regenerative space, investors can just look for those companies/people who do their work quietly, but excellently. These could be startup companies, but most of the time, they are companies that have been present for decades.
“There’s an awkwardness right now in that transition from the very early days to a more mature investment. It’s so interesting, but there are a lot of investable opportunities out there.” – Stephen Hohenrieder
Other Points Discussed
Koen and Stephen also talked about the following:
- There are many interesting parts in the regenerative space investors should look into;
- Sticking to your normal diligence criteria when investing;
- Investors who have the capital and farmers who do the work on the ground should meet halfway;
- The collaborative approach to capital;
- Working with brands that have already established that trust and credibility with the consumer;
- Redesign the federal farm subsidy program to level the playing field.
To know more about Stephen Hohenrieder and Grounded Capital Partners, download and listen to this episode.
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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.