A conversation with Thomas Hogenhaven, managing partner at Planetary Impact Ventures, an evergreen investment vehicle based in Denmark, about how to put money to work using regenerative principles, and the ins and outs of being part of a radical fund.
LISTEN TO THE CONVERSATION ON:
What does regenerative investing look like? We talk a lot on this podcast about where to put money to work: in soil regeneration, soil measuring tech, food as medicine companies, compost companies, virtual fencing etc., but we rarely talk about the how. How do we put money to work using regenerative principles in service of life and the companies instead of extracting as much value out of the companies in the shortest amount of time? Today an interview with a team that doesn’t want to become the largest fund in regeneration, but the most radical one.
NEED TO INNOVATE ABOUT HOW WE PUT MONEY TO WORK, NOT JUST WHERE
A year ago, Thomas and his team were merely focusing on sustainability. Now they are setting the path to be regenerative and will probably move that bar once other investors also move. Their role is to help increase the spectrum about how investors can invest and how close they can get to philanthropy without being it and still being a for profit fund.
‘If we get too big or get too many LPS that don’t truly believe that, then it will be impossible for us to have that role. So rather have less money, but from LPS who actually really wants to support and push us to be more radical in a good way’. – Thomas Hogenhaven
‘I think the first step is to understand what returns means for them, because economic returns is one thing they’re looking for, but it’s certainly not the only one, and it might not be the most important one {…} you need some focus points about what’s important to you’ – Thomas Hogenhaven
‘Try to get get rid of reductionism and understand that this is very, very complex.’ – Thomas Hogenhaven
TRADITIONAL FUND STRUCTURES NOT SUITED FOR TRULY TRANSFORMATIVE COMPANIES
There’s a whole class of companies that are not using the tool of finance because they don’t want to be exposed to the risks of taking mainstream capital. Founders fear the impact and seeing their work go away if they were sold to a bad industrial player or something like that.
‘I talked to the most progressive founders I could find, and a lot of them if not all of them, said that they didn’t really like taking investors with seven or 10, plus 2 years time horizon, because they knew they would be sold, and they wouldn’t really be in control about who would own them.’ – Thomas Hogenhaven
INVESTORS SHOULD BE IN SERVICE TO LIFE
It isn’t about getting up in the morning to make the most money back to investors. If the only thing that matters is the returns we would be in service to the economy. That is the opposite of being in service to life. That’s what needs to be changed. Between 5% and 15% of investors get this idea. There are a lot of pushbacks on that because people think it’s too hippie or that finance is not being understood.
‘We need to generate a return but it’s not the most important thing. It’s not why we’re doing this, it is a means to an end and not the other way around.’ – Thomas Hogenhaven
‘So, right now we see the economy as something that’s transcending life, it’s something even more fundamental than life, something that’s on a very special level in our society, that we care so much about our economy and life is in service of our economy, that we need to take care of our economy first, and then the rest will follow. And we don’t think that’s the right way to look at it. So we want our finance and our investments to be in service of life, not the other way around. So we use money to support the life and healthy ecosystems and not try to monetize them or be extractive of those but vice versa.’ – Thomas Hogenhaven
HOW INVESTORS ARE RESPONDING TO THIS NEW STRUCTURE
It seems investors are starting to see that the returns are there in the long run. It takes years to build up a system, investors are starting to realise that exiting too early is actually a limiter in terms of impact and returns.
‘A year and a half ago institutional investors would not be interested in us because of the evergreen fund. But now some of them are getting back arguing that it may not really be a blocker. There is a shift in that sense and some of the American VCs are also making that turn, which helps shifting the narrative.’ – Thomas Hogenhaven
OTHER POINTS DISCUSSED
Koen and Thomas also talked about:
- The beginnings of Planetary Impact Ventures;
- What tech is Thomas excited about and understanding the true needs;
- Different investments made by the fund;
- What would Thomas do with 1 billion euros fund;
- What would Thomas change if he had a magic wand
To know more about Thomas Hogenhaven and Planetary Impact Ventures, download and listen to this episode.
LINKS:
- Danish organic meal box – Aarstiderne
- Thomas Hartung
- Triodos Food transition fund Europe
- Aqua Spark
- Agrain, investment of Planetary
- Wildfarmed
- John Fullerton – Regenerative economy
- Beyond coffee
- Bioomix
- Steward ownership – Purpose economy
- Sequoia Evergreen
LINKED INTERVIEWS:
- Armin Steuernagel on how to keep a mission driven company independent and raise capital
- Laura Ortiz, Let financiers being seduced by Latin America biodiversity wealth
——————————————
Feedback, comments, suggestions? Reach me via Twitter @KoenvanSeijen, in the comments below or through Get in Touch on this website.
Join the Investing in Regenerative Agriculture and Food newsletter on www.eepurl.com/cxU33P
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.