A new funding sector? Agriculture 2.0

By Deb Parsons, Co-Director

Last Wednesday, I attended the Silicon Valley Agriculture 2.0 conference hosted by one of our members, Janine Yorio of New Seed Advisors. It was a new mix of people at a conference focused on agriculture, food systems and technology. I saw many familiar faces like the folks at RSF Social Finance and several IC members but also in attendance were Kleiner Perkins, US Venture Partners and corporate vcs. Is sustainable agriculture the next “clean tech” sector?

This certainly has been a topic of conversation at Investors’ Circle for many years. The Slow Money Alliance actually became a movement into itself to address the long term capital needs for sustainable agriculture. But the question last wednesday really was is this a hockey stick return kind of space or more patient capital? I would argue that it is both and that some vc’s will be extending the investment horizon from the 3-7 years to 5-10 years.  And at what point does an investment become “patient”?

During the event there were about 12 venture pitches throughout the day and a side conference focused on Aquaculture.  While I didn’t attend the aquaculture pitches I did see a few interesting companies that are still too early for IC but ideas to watch and some that have already presented to IC.

18 Rabbits: an all natural granola bar with a great community story pitched. Alison Bailey Vercruysse pitched to our network in the Fall 2008. She continues to have success and if you haven’t tried her product check it out at Whole Foods or Peet’s coffee.

Marrone Bio Innovations: this is a company that was in the IC20.  Pam Marrone continues to create innovative, environmentally friendly products for increasing yields.

Too early for IC but to watch:

  • Cityscape Farms– an aquaponic rooftop garden focused on increasing the quality and quantity of good food in urban areas.  Ideally addressing food security and scarcity issues.
  • Capay Valley Farm Shop – this is a CSA model and then some run by a great management team.  If only they could figure out a way to also include micro-brew and bread.
  • Inka Biospheric Systems – a socially conscious company that has created a series of solutions in response to the global “water, food, and housing” crisis.  This company has great mass commercial potential as well as products that would be essential in developing worlds, refugee camps and areas of crisis.

At the Spring IC Conference April 20 (Registration still open), we will be addressing the topic of “Investing in Lood Systems” hosted by Amy Dickie of CEA Consulting and Elizabeth U at RSF Social Finance.  The topic will be building off Amy’s paper ” Local Foods: A guide for Investors and Philanthropists”. And if you want to learn even more about the topic check out Slow Money’s annual event in June.

The MBA Venture Fellows

by Molly Deringer, Entrepreneur Services Manager

When I began working in the Entrepreneur Services department at Investors’ Circle, I received the equivalent of a crash course in social entrepreneurship and business plan evaluation. By participating in the review of applications submitted to the network, reading the company evaluations completed by our member investors, and listening as investor committees discussed both the appeal and the weakness of a particular company, I learned a considerable amount about early-stage business in a short period of time. Today, with the new IC Venture Fellow program, we’re able to offer this unique learning opportunity to a new generation of leaders in the social venture space.

A bit of background: Every six months, Investors’ Circle initiates a new cycle of deal screening in preparation for the next national conference and venture fair. Our company selection process lasts about 3 months, immediately following a company application deadline. Roughly 95% of the deals submitted come in at the 11th hour before the deadline. Before sending company applications along to committees of our investors, it was the job of Investors’ Circle staff to do an initial review of each application and determine whether a company would make our first cut. During a 10 day period, it would be my job to do a first screen on roughly 250-300 company applications. As you can imagine, the level of scrutiny I could apply to each company was minimal. A good brunt of the “winnowing down” work was passed on to our investor-led selection committee members who were only given a couple weeks to review deals themselves. Each season, we ended up with a stellar group of presenting companies at our venture fair, but the process for getting there left something to be desired.

I’d been ruminating on the question of how to bring additional eyes and minds into the initial application screening process when Napoleon Wallace of UNC’s Kenan-Flagler MBA program visited our office last summer. Napoleon was meeting with K-F alumn Deb Parsons when he mentioned a proposal he’d put together as part of a class project that would integrate MBA students into the IC process. Obviously, my ears perked up.

Napoleon and I worked together to develop a proposal for the inaugural IC MBA Venture Fellow program which began August 2009. Despite our concerns that the program would conflict with students’ internships and the start of a new semester, we received 30 applications that season. The fellows completed their assignments on time and with great thoughtfulness. As a result, we were able to send just 15 to 20 proposals on to each of our member-led selection committees, as opposed to the 40 or 50 proposals sent the previous season.

More importantly, through the venture fellows program, Investors’ Circle is able to provide the next generation of social investors and innovators with exposure to real early-stage social enterprises while building the social investment community. Anne Katharine Wales a second year MBA student at Wake Forest University, comments, “The Venture Fellows program offered me an opportunity to evaluate real time deals and at the same time gave me a chance to work with some top MBA students from across the nation.” Students also find the program to be quite synergistic with their academic curriculum, providing them opportunities to apply theory learned in the classroom. Dominic Hofstetter, a two-time IC venture fellow from Chicago Booth School of Business, notes “There is only so much you can learn at school about making decisions under uncertainty. But by scrutinizing more than 30 business plans over a two-week period, with real consequences behind my evaluations, I was able strengthen my intuition about what a good business plan should look like.”

Investors’ Circle’s mission is to promote the transition to a sustainable economy through direct investment, innovation and inspiration. Through the Venture Fellows program, we hope to inspire MBA students to pursue a career in social enterprise or investment while providing them with the tools and knowledge to excel in that career. Jorge Mas Saavedra a student at Babson’s F.W. Olin school of business who has also been working in the Ashoka Changemaker Campus Initiative, says, “Being part of the IC Ventures Fellow program has given me the complimentary tools needed to carry these projects forward and make them a true success. It has given me a more broad vision as to the future of investing in order to alleviate the pains of this world.”

At our Spring Conference in San Francisco, we will invite several of our MBA Venture Fellows to participate as special volunteers where they can see the companies they’ve reviewed present, meet our member investors, and join in as active members of our community. Napoleon Wallace, who attended our Fall 2009 Conference and Venture Fair, commented boldly that the event was “the highlight of my year”. Through the MBA Venture Fellow program, Investors’ Circle is able to serve its entrepreneurs and members more effectively, while creating new opportunities to include younger, enthusiastic members of the social venture community.