Last year’s US election is creating surprising opportunities for impact investors looking to disrupt food and ag industries. The odd-bedfellows pairing of President-elect Trump and Robert F. Kennedy Jr. means a foe of Big Food and Big Pharma is likely to be the new leader of the US Department of Health and Human Services.
Kennedy has said he wants to “Make America Healthy Again” by ridding our food supply of the pesticides, food additives, ultra-processed foods and other hallmarks of industrial agriculture that have contributed to a spike in chronic disease.
“With more attention being put into the food system, there’s a lot of opportunities there,” says Meifan Shi of Toronto and New York-based Waterpoint Lane, which secured $6 million this week for its first food and ag sustainability fund. “When you look at the issues within the food system, the ingredients and the way food is being processed and travels through the entire supply chain, absolutely, there are so many things that need to be changed.”
The new attention coincides with a rush of innovation in healthy and sustainable food and agriculture. Companies with solutions in alternative proteins, regenerative farming, sustainable fertilizers and food waste solutions represented a rare bright spot in a tough fundraising year.
A new report from Sightline Climate found nearly 250 food and land use startups raised capital in 2024, making the sector second, in terms of volume of deals, only to energy in the climate tech space.
Agricultural conglomerates such as ADM and private equity giants such as Bain Double Impact are seeking opportunities in regenerative agriculture.
Future of food
Waterpoint writes early-stage checks of around $250,000 for startups developing tech-enabled solutions that have potential to drive efficiency and sustainability across the agrifood value chain.
With the inaugural fund, Shi told ImpactAlpha, “we want to show that there are a lot of different companies out there that are affecting the way that food is being consumed, the way that it’s being produced, the way that it’s going through the circular economy.”
Among the seven companies in Waterpoint’s portfolio is New York-based Starfish Technologies, which has built a real-time food traceability system to help food businesses reduce waste and improve safety; Myland, a Phoenix-based soil regeneration startup that helps farmers adopt regenerative agriculture practices and harness native microalgae found to enhance soil health; and Canada’s Relocalize, which tackles “middle-mile” logistics and builds robotic micro-factories that package food directly at distribution centers to decarbonize and hyper-localize food transport.
Other Waterpoint portfolio companies are tackling water efficiency, food security and food waste, which Shi says “continues to be a large area for impact.”
Institutional capital
Shi, a woman of color, launched the Waterpoint Lane fund in January last year with fellow first-time fund manager Ben Gibbons. The pair struggled to reach their initial $7.5 million target.
A former private equity executive, Shi has been working her institutional investor network, but many of these investors “don’t invest in first-time funds,” she says. So she and Gibbons are focused on establishing a track record. “We’ve been very diligent about getting Fund I up and running, investing in some really great companies, and then getting Fund II launched,” she says.
Shi expects to immediately go into fundraising mode later this year once the first fund is fully invested, with a goal to raise a bigger fund that fits the allocation requirements of large institutional investors.
Impact fund managers are hoping for a less challenging fundraising environment in 2025 as M&A activity picks up and returns capital for LPs to invest in new funds, including those of new private fund managers (see, “The Liist, January 2025: Glimmers of hope for impact fund managers shine through the fundraising fog”).
Some sustainable ag funds are feeling upbeat. “2024 was a strong fundraising year for us,” Brandon Welch of Mad Capital, which is raising a $50 million fund to invest in regenerative farmland transitions, shared on Linkedin this week. “We ended the year with $35 million raised out of our $50 million target for Fund II,” Welch wrote. “We have a few more months of racing toward the final close, and then, as nearly all asset managers do, we’ll start raising our third fund.”
Mad Capital, which is looking to finance the transition of 10 million acres of farmland to regenerative agriculture by 2032, has financed 300,000 acres of regenerative farmland since 2021. With a potential $250 million third fund, Welch hopes to “unlock institutional capital markets and lower-cost financing.”
