Regenerative practices lead to higher quality and much higher prices in year one and, over time, to lower costs, which makes the regenerative business case in certain cash crops that are exported (spices, tea, coffee, etc.) so strong that it almost spreads on its own. Nothing is easy, but this is really hopeful. In this conversation with Thekla Teunis and Gijs Boers, founders of Grounded, Grounded Ingredients and Grounded Investment Company, we discuss why quality is intimately linked to regenerative practices.
We talk about why we don’t need transition finance in many cases, but we do need philanthropic capital to figure out what regenerative looks like in specific circumstances. When that research and development (in other sectors we would call that R&D ) is done, it can be rolled out profitably and relatively easily with more commercially focused, return- driven capital.
We talk about why it’s easier to act regeneratively in many places in the Global South (easier, not easy). And we talk about the why of super hands-on investing. Knock knock- there are regenerative barbarians at the gate. What if we do private equity right and use it as a tool for good?
No, don’t worry, this is not a hallelujah story about how capitalism is going to save us all, but we are talking to two very, very experienced entrepreneurs and company builders, now turned super hands-on investors in East and South-Central Africa. In their context (you see, it’s always context-specific), super hands-on investor involvement makes sense. They invest in processing companies that buy and process spices like coffee, tea (you know, all those things that make your kitchen and cooking more interesting and your mornings bearable).
This is Thekla and Gijs third time on the show, and we talked about all the lessons they’ve learned building companies across the African continent over the last 12 years, and why, despite all the scars and R&D paid for, they are super optimistic.
We discuss how they designed their investment fund from the ground up instead of top down, and how their story is landing with sceptical investors. Really, no need for regenerative certification and transition finance? Again, in this context, regeneration makes sense from day one, and now it’s time to scale and replicate it.
REGENERATIVE PRACTICES AND QUALITY
We don’t romanticize the journey. Early-stage processors are fragile, working capital is brutal, and traceability takes time. But the leverage point is clear: invest in existing processors with the potential to upgrade quality, sort precisely, and access better markets. Pair equity with hands-on support—agronomy protocols, post-harvest training, certification, inventory discipline, and sales—to move from thin margins to durable profitability. One spice company lifted gross margin from near zero to 19% while growing revenue; a coffee partner scaled farmer networks from 2,000 to 5,000 and pushed toward profitability by pairing regenerative training with market access.
There is a direct, observed link between implementing regenerative agricultural practices and improvements in the quality of the crop. This quality improvement is a core part of the commercial thesis, as it enables access to better markets and higher prices.
“What we see indeed is that there is a correlation between product quality and regenerative farming practices […] I think it’s partially because of the farming practices, but also in our case, because we combine the regenerative farming training with post-harvest handling training and quality management training. So, the farmers who are doing regenerative agriculture are also often organic certified.” – Thekla Teunis
INVESTMENT MODEL AND FUND STRUCTURE
The fund’s structure evolved significantly based on market realities and investor expectations. The initial preferred model of an evergreen fund faced structural challenges in attracting institutional capital, leading to a pragmatic shift to a closed-end fund.
“We tried to raise this evergreen structure, but it was super difficult. So, we’ve spoken to, I don’t know, how many people, and then the issue was, I think, also a little bit structural. You need to get to a certain viable fund size to be attractive for people to invest in the fund. So many people have in their mind that this is about 20 million in fund size, but then ideally you are larger, so you’re about 50 million, which was actually also our ambition, or even bigger than that. But then the problem is that a lot of the larger institutional investors do not invest in evergreen funds, especially not when they invest in equity.” – Thekla Teunis
MARKET ACCESS, GRADING, AND FINANCIAL REALITIES
A major focus is on the critical importance of grading—sorting produce by quality—to maximise revenue, as price differences between grades can be multiples. The discussion also reveals the harsh financial realities for processors, including long payment terms from buyers that strain working capital.
“So, the trick of the processor is to be able to source all of those so that you get the highest quality grade, you can sell them separately, and then the lower, lower, lower, lower. Because then you can maximise your margins.” – Thekla Teunis
THE ROLE OF R&D AND SYSTEMIC CHANGE
We also dig into what most funds ignore: R&D. In Zambia, years of context-specific trials finally cracked cultivar choices and seasonal playbooks; tomatoes hit strong yields at far lower input costs, onions overshot expectations two years running, and drought resilience created sales when others had none. The takeaway is not that premiums save the day, but that protocols do—and they need early grant support to exist. On the finance side, we map the cash squeeze from spot payments to farmers versus 120–270 day buyer terms, then share how a trading arm offering 60–70% pre-finance can flip the economics and keep value local.
The dialogue underscores a significant funding gap for research and development (R&D) tailored to regenerative, context-specific farming systems. This contrasts with the well- funded R&D of conventional input companies, creating a systemic barrier to scaling regenerative practices.
“But that R&D is highly underfunded and that’s I think in the whole regen ag space.” – Gijs Boers
“So, if there are grant funders listening, this is where I think you need to put your money; it is the biggest lever” – Thekla Teunis
OTHER POINTS DISCUSSED:
Koen, Thekla and Gijs also talked about:
- Localized input production models
- Buyer payment term challenges
- Niche-to-mainstream market pivot
LINKS:
LINKED INTERVIEWS:
- Thekla Teunis and Gijs Boers, what African regenerative farmers can teach us
- Thekla Teunis and Gijs Boers, The Good, the Bad and the Ugly of regenerative agriculture
- Gijs Boers on why the biggest drive to the growth of regenerative agriculture is quality
- Transition Finance for Farmers series
- Fernando Russo – From selling Playboy’s to growing coffee, cacao, credit and lots of cows
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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.