Field Notes: Manna Tree looks for the next Vital Farms; the IPCC’s sixth report; NatureFinance offers a biodiversity credits roadmap, Leading Harvest arrives in Australia and California’s Agri-Tech Innovation Summit

First look

Manna Tree Partners exited pasture raised eggs business Vital Farms upon its IPO in August 2020. (Image: Getty)

Incubating the future
Manna Tree Partners closed its second fund on $300 million in November and took an additional $90 million in co-investments. The firm is now busy amassing the type of portfolio that will allow it to achieve similar exists to Vital Farms, which went public in August 2020 and delivered 4x invested capital and a net IRR of 80 percent.

Future-proofed acquisitions: Co-founders and managing partners Ellie Rubenstein and Ross Iverson told Agri Investor the firm seeks out businesses in niche and “unsexy” food subsectors, such as cottage cheese in the case of portfolio company Good Culture, that they can ramp up and turn into the type of business big dairy players and generalists will view as a must-have.

“Private equity ESG funds that were raising $2 billion to $5 billion, we are in the category of what they need,” said Rubenstein.

Bolt-on service: Sixty percent of the firm’s LPs are made up of family offices, many of which have pre-existing food and food supply-chain assets. Iverson says the firm sought out these LPs so they can get added value out of Manna Tree’s research and deal pipeline, with many viewing the firm’s investments almost like bolt-on acquisitions.

Read the full article here.

They said it

“Almost half of the world’s population lives in regions that are highly vulnerable to climate change”

Aditi Mukherji, one of the 93 authors that contributed  to the IPCC’s sixth report, sets out the scale of the threat posed by climate change to the human population.


A ‘liveable future’ remains within reach
The UN’s Intergovernmental Panel on Climate Change published its sixth report on March 20 and the findings do not make for happy reading.

First, the positives: The IPCC said there are “multiple, feasible and effective options” still on the table for humanity to reduce its greenhouse gas emissions and adapt to a changed world.

But the report also says: “The pace and scale of what has been done so far, and current plans, are insufficient to tackle climate change.”

The IPCC adds: “Emissions should be decreasing by now and will need to be cut by almost half by 2030, if warming is to be limited to 1.5C.”

Given how unlikely it is for GHG emissions to be slashed in half by 2030, its hard not to read this as: the 1.5C target has been missed. Which would explain why the IPCC has spent some time talking about overshooting the 1.5C target in this report.

Overshooting the target: Exceeding the 1.5C rate of warming would mean an even bigger financial bill and new and more effective carbon removal technology – much more that would be required to stay within the target. This would also come with irreversible implications.

Read the full report here.

Natural capital

No ‘phantom’ biodiversity credits, please
NatureFinance has published a consultation paper offering framing and practical proposals for the development of a biodiversity credit market, which it hopes will support better alignment with the Global Biodiversity Framework and the Paris Agreement.

Governance wanted: The paper argues market-based solutions in the nature credit market have not delivered performance-based outcomes. “The reverse has occurred in the high-profile case of voluntary carbon markets beset by recent scandals pointing to ‘phantom’ credits,” said the report.

“Credible product quality is a central need, but it is not sufficient by itself. Even markets with contested reputations, such as finance and pharmaceuticals, have rules that go beyond certifying the quality of the goods traded to ensure some transparency and accountability of market actors and, often, to set the prices that they can charge,” added the authors, Simon Zadek and Dorothée Herr.


Leading Harvest comes to Australia
Leading Harvest, the US-based non-profit launched in 2020 to create a universal standard for sustainability assessment of agricultural operations, has launched in Australia. Until now, the standard had only been available in the US.

The standard: Leading Harvest aims to create alignment across the supply chain and wants producers, buyers, farmers, facilitators and industry groups to operate from a single standard. It hopes this will deliver savings, efficiencies and better environmental outcomes across the agricultural industry.

The program will launch with 540,000 hectares across 21 crop types covering all six Australian states.

Support from big players: Investors involved in the Australia launch include Manulife Investment Management, PSP Investment, goFarm Australia, RRG Capital Management and Warakirri Asset Management.

Upon its founding in the US, Leading Harvest was backed by Nuveen, PGIM Agricultural Investments and Ceres Partners, among others.


SVB looms over all things agtech
The weeklong Agri-Tech Innovation Summit held in California (March 13-17) brought the great and good together for three consecutive conferences devoted to animal tech, ag tech and foodtech.

Elephant in the room: The long shadow cast by the collapse of Silicon Valley Bank was hard to escape, reports Americas editor Chris Janiec, as the concerns around finding a potential buyer and possible contagion into Europe played out over the source of the week.

GHG emissions or animal welfare: Temasek director Sagar Bhadra was one of several speakers to sound a note of caution on the market influence of interrelated environmental and social goals.

“People care a lot more about the environment than animal welfare. Dollar for dollar, if somebody said, ‘Hey, your animal welfare is going to get marginally worse from where it is today but we’re going to solve the issue of all GHGs from animal production,’ the unfortunate reality is that is likely going to end up happening,” he said.

“It’s been proven enough that in animal production, yield, taste and safety are all linked to animal welfare, so hopefully it doesn’t get any worse, it only gets better. But probably only marginally better.”

Agtech fundraising

  • British vertical farmer Harvest London raised an undisclosed sum of capital from Foresight Group to accelerate the company’s growth. The pair also secured a 140,000-square-foot facility in south London to expand the company’s operations.
  • Tyson Ventures, the VC arm of food giant Tyson Foods, made a seed investment into start-up Athian, which is a cloud-based carbon credit marketplace for the livestock sector.
  • Momofuku Goods, a NY-based line of restaurant-grade pantry essentials, raised $17.5 million in growth funding.
  • Cocoon Bioscience, a Spanish proteins developer for cultivated meat, raised €15 million. The round was co-led by Columbus Venture Partners and Cleon Capital.
  • Dutch food-waste reduction startup OneThird raised $3 million in seed funding. Pymwymic led the round and was joined by Halma Ventures, Shift Invest and Oost NL.

Also in the news…

  • Plan to plough $1bn into sustainable farming in South America misses target
    Fund for beef and soy farmers who protect rainforest struggles to make loans as planned (Financial Times).
  • The Global Sustainable Aquaculture Roadmap: Pathways for Systemic Change
    In 2022 the world’s population surpassed eight billion and is set to continue growing. This growth makes it crucial to transform global food systems to meet the United Nations’ Sustainable Development Goals and the Paris Climate Agreement (World Economic Forum).
  • The way of water: Why Aetos Capital bought WestWater
    ‘The combination of climate change and population flows have made water a scarce resource in the western states,’ said Aetos CEO Chris Allwin (PE Hub).
  • Friday Letter: SVB collapse leaves big hole in venture debt
    The failure of Silicon Valley Bank is a ‘once-in-a-generation event’ for non-bank lenders, says Zack Ellison, who is raising a venture debt fund. (Venture Capital Journal).

Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp.