Impact Investment Fund Managers Turn Agri-Food Investment Into A “Mindful” Practice

Vietnamese Zen Buddhist monk Thích Nhất Hạnh (1926-2022), an advocate and teacher of eating mindfully once said that “When practiced to its fullest, mindful eating turns a simple meal into a spiritual experience, giving us a deep appreciation of all that went into the meal’s creation as well a deep understanding of the relationship between the food on our table, our own health, and our planet’s health.”

With modern industrial practices in the food sector contributing to a variety of social, economic and political ailments as well as environmental degradation via unsustainable water use and water pollution, greenhouse gas emissions, environmental contaminants, pollutants and through the depletion of natural resources— with food waste alone producing 3.3 billion tons of carbon dioxide each year— consumers and investors are beginning to recognize that dollars spent in food and agriculture can either help to solve or perpetuate many problems in the world today.

The 40-year-old Kirchner Group, a traditional merchant bank and boutique advisory firm, and Kirchner Asset Management, its private asset and fund optimization division that specializes in the management of under-performing and end-life venture capital and private equity funds with a strong focus in the agri-food business space, is using the concept of Mindful Food to guide its portfolio company support, in keeping with Kirchner’s conscious investment ethos known as the “Kirchner Impact Model.”

According to Blair Kirchner, Managing Director and Co-Head of Impact Activities at the Kirchner Group, The Kirchner Impact Model refers to Kirchner’s “earning and returning” approach “that reflects Kirchner’s values and a compassionate culture of integration between creating value and promoting values across all of its activities: commercial, philanthropic and impact.”

“As we look at it, every business can be improved, and every business should improve the world,” says Kirchner.

Tim Lee, President at Kirchner Asset Management who developed the Mindful Food strategy, explains that while the Kirchner Impact Model has the same objectives across all of the industry groups in which Kirchner Group operates, the implementation of Mindful Food is tailored to the food and agriculture industry, in which Kirchner has an especially strong domain expertise and track record (Health & Life Sciences being the other).

“The goal of Mindful Food is to proactively improve the odds of commercial success for food and agriculture companies that have the potential for positive social impact,” Lee explains. “Using this approach, we use a structured methodology whereby we support and add value to food and agriculture companies (and their stakeholders) at every stage from start-up to exit.”

Kirchner has applied its concept of Mindful Food across its partnerships with agribusiness including Dehy Alfalfa Mills, of Arlington Nebraska, a leading supplier of alfalfa ingredients, its collaboration with Red Sea Farms in the Middle East which focuses on the commercialization of research in saltwater farming in water-scarce regions and in its Kirchner Food Fellowship, a university student-led impact investment program that finds, funds and assists promising socially responsible agricultural businesses through capital allocation training while providing the students with discretion over a pool of investment capital.

The Kirchner Food Fellowship currently operates in Mexico, Central America and the United States and recently launched its inaugural cohort for Historically Black Colleges and Universities (HBCUs) in collaboration with the Foundation for Food & Agriculture Research (FFAR), The Rockefeller Foundation and Burroughs-Wellcome Fund, to support the development of future agricultural financiers and to contribute to diversity and inclusion in the industry, and is currently working with fellows from Florida A&M University, Morgan State University and Xavier University.

I recently caught up with Tim Lee and Blair Kirchner to find out more about Mindful Food.

Daphne Ewing-Chow: Tim, can you tell me about how the approach of Mindful Food is more specialized than the Kirchner Impact Model?

Tim Lee: The first step in Mindful Food is to resist the temptation to think that “if you build it, they will come,” or that any good solution will translate into a successful business. While this applies to every business venture, we find the temptation is especially strong in food and agriculture, likely because there are billions of mouths to feed with only more to come.

Ironically, it is the sheer size and global nature of food and agriculture that makes proper business planning trickier than most other industry sectors. The sources of complexity range from scale (none of it is virtual, all of it involves physical), to supply chain (in which no one’s position is fixed), to competition (once local, now increasingly global), to distribution (no other industry sector has produced more intermediaries), to government (regulations abound, on top of trade policies and taxation), to consumer tastes (shifts in diet and generational preferences), to science, nature and sustainability (we produce and consume food very differently from our ancestors; it will necessarily be the same in relation to our descendants), to name just a few.

The next and more enduring phase of Mindful Food deals with frequent reassessments of the plan and exceedingly high levels of vigilance in measuring and course-correcting financial results. 

Said another way, food and agriculture companies almost always have more to do and more to overcome than most other businesses— with less money! Therefore, capital efficiency figures prominently in the Mindful Food offshoot of the Kirchner Impact Model.   

When successfully implemented, Mindful Food enables impactful businesses to not only avoid dying on the vine but to optimize their reach in solving important global problems.

Daphne Ewing-Chow: Blair, how does the Kirchner Food Fellowship tie into the idea of Mindful Food?

Blair Kirchner: The Kirchner Food Fellowship leverages the core tenets of our group and the Mindful Food concept.

The program believes that while the amount of impact investment capital continues to grow, access to that capital for early-stage entrepreneurs in under-served regions and communities is not. For that to improve, ecosystem-specific investment resources and teams of indigenous impact capital allocators are needed to push money and business resources into areas where they are needed most one might even say a ‘mindful approach’. Assembling, training, and empowering diverse student investment teams for this purpose is the core mission of the Kirchner Fellowship.

The program has always had a food security theme as the students look to source for-profit, sustainable enterprises that are working to address food security challenges in some way and execute their discretion on investment decisions.

When we launched the program in 2014, we saw a need to improve the way early-stage equity capital was being allocated in under served markets, particularly in the agriculture and food sector. We also saw a need for more teams of, well-equipped, well-connected, ‘local’ angel impact investors. To that end, we focused our efforts on developing teams of purpose-driven university students eager to rethink the role of for-profit businesses in economic development. They didn’t disappoint. Thanks to their ingenuity and effort, positive change is happening and recognition of the program’s unique contributions to the global impact movement continues to grow.

The program has invested in companies that address issues such as local food production, health, nutrition, food access and soil health and our impact foundation which holds the fellowship investments, acts as a proactive hands-on investor, providing support to its portfolio companies to help them grow and improve operations to help facilitate further investment and impact.

Daphne Ewing-Chow: Tim and Blair, can you tell me of an innovation or venture pertaining to food that has been particularly outstanding to you?

Blair Kirchner: A great example from our Fellowship program is Kuli Kuli, run by an amazing CEO, Lisa Curtis. Kuli Kuli creates sustainable superfood snacks and naturally energizing moringa powders that improve the health and nutrition of women and the planet.

As a Certified B Corp, Kuli Kuli meets high standards of environmental performance and public transparency and partners directly with small family farmers and women’s cooperatives to help them scale their businesses and access the U.S. market. Moringa is often grown and processed by women, making it an excellent crop for women smallholder farmers looking to supplement their household income. By providing ongoing technical assistance and flexible payment terms, they unlock the power of the U.S. market for our supplier partners.

Lisa’s tenacity and mindful approach to business has created incredible growth for her company since our initial vestment in 2015 and has also resulted in significant impact, generating $5.2M in revenues for Moringa Farmers. The company has supported over 3200 women and family farmers and over 24 million Moringa trees have been planted or preserved.

The company has also secured investment from strategics such as Kellogg and Griffith Foods and leading ag investors such as S2G Ventures.

Tim Lee: An example from Kirchner Asset Management is a portfolio investment in Sol Cuisine, a Canadian-based pioneer in plant-based protein alternatives. Its founder, Dror Balshine, saw the benefits of meat-free living well before most, starting the business in 1997, more than a decade before Beyond Meat and Impossible Foods.

^{(Video above is of Dror Balshine singing his plant-based love song, Cauli (You’re My Favorite Flower)}

From an impact perspective, companies like Sol Cuisine are vitally important. Innovations in plant-based meat can play a major role in addressing major environmental issues (climate change, biodiversity, lost habitats, animal welfare) and promoting healthier food alternatives around the world.

Sol Cuisine demonstrated particularly strong potential to our team, due to Dror’s dogged insistence on producing the healthiest products within the category without sacrificing taste, variety and experience. Over many years and considerable investment in research and development and process innovation, Sol Cuisine developed a broad array of menu items that extended well beyond burger patties that were ranked above the competition in blind taste tests for nutritional profile, quality, and taste.

But for all its promise and potential, Sol Cuisine was not immune to the financial realities of the food industry. Tight margins and lack of financing created a vicious cycle whereby Sol Cuisine’s ability to compete against newer, bigger players was dwindling.

Kirchner Asset Management became involved in 2019, assuming the role of key investor and board director. With a Mindful Food approach, we worked with Dror and his team to top-grade and reorient key aspects of the business plan, making the most of the limited capital that was on hand. Within 2 years, revenues went from no-growth to a CAGR of over 60%, margins improved materially, and access to capital became easier. 

An important part of the journey was to augment diversity and inclusion within the management team and board of directors. Strategically, the board evolved to one that was majority represented by exceptionally talented and capable women from the industry. 

With all the pieces of a world-class company finally coming together in a mindful manner, it was almost logical that Sol Cuisine would be approached for acquisition. In fact, this is what occurred, with PlantPlus Foods, a multinational JV created by food processing giants ADM and Marfrig, buying the business for $100 million in January 2022.

The beauty of the Mindful Food approach is that it also ends with a rewarding financial outcome for investors.