Venture Capital Investing in Regenerative Agriculture
Trailhead Capital is a Denver, CO based venture capital firm investing in the regenerative future of food and agriculture through its $50M Regeneration Fund I LP, which has made 27 investments since launching in April of 2021.
Trailhead was originally founded as the family office of Bobby Pelz to invest in opportunities across the food & agricultural value chain, leveraging the 40-year history of the global grain brokerage that Bobby co-founded, McDonald Pelz Global Commodities. In 2020, Mark Lewis, Pete Oberle and Tripp Wall joined Bobby to form a new General Partnership to raise a venture capital fund focused on companies deploying tech-enabled solutions to expand the practice of regenerative agriculture and increase access and affordability for regenerative products.
Trailhead Capital now counts on both Mark Lewis and Pete Oberle as Managing Partners to lead Regeneration Fund I LP and its portfolio of Seed and Series A stage investments. Trailhead differentiates itself from other venture firms in the space by sitting at the cross section of generalist Ag Tech funds and Climate Tech funds, where regenerative agriculture can simultaneously act as a climate mitigation, adaptation and resiliency tool.
This particular niche of the market is put into even further perspective when taking into account global food & agriculture’s contributions to certain environmental decay accounting for up to 34 percent of global GHG emissions, 80 percent of global deforestation, and 70 percent of freshwater usage. We believe that regenerative agriculture practices, and more specifically tech-enabled solutions promoting such practices, can help turn agriculture from a carbon source to a carbon sink, replenish our waterways through healthier and more absorbent soil, improve the quality of food consumed, and allow biodiversity to thrive across our lands, all while improving the way food and other raw materials are produced and delivered to end consumers.
Trailhead is looking to capitalize on this outsized opportunity set by creating a positive impact throughout its portfolio where over 30M acres of land are already being impacted by its portfolio companies, 24.3 MT of carbon is being sequestered from the atmosphere, and 445M gallons of water are being conserved thanks to the technologies and innovations these companies provide to farmers, ranchers, and other land stewards.
Trailhead Capital investors and team at their annual meeting at Stone Barns in upstate New York
In addition to the accelerating growth of portfolio companies, another example of thesis validation includes Merck’s acquisition of Vence, an early investment delivering virtual fencing and autonomous herd management solutions to promote regenerative grazing practices.
As for investments that are currently active in the Regeneration Fund I LP portfolio, HowGood is an example that has the world’s largest sustainability database for food and consumer brand companies. HowGood helps customers such as Whole Foods, Chipotle, Danone, Sysco, Ingredion and many others to track their ingredient supply chain in the most sustainable and regenerative manner. After Trailhead’s initial Series A investment into the company, HowGood subsequently closed a Series B round in 2022 led by Titan Grove.
One other highlighted investment further exemplifying Trailhead’s positioning in the market and investment thesis is Funga, a Public Benefit Corporation that inoculates tree saplings with beneficial mycorrhizae to promote faster and healthier tree growth, while also promoting carbon sequestration and biodiversity in the soil. Funga was founded and is led by Colin Averill, a leading soil scientist and mycologist who is partnering with large timber companies and land investment managers to promote sustainable forestry practices that also provide high quality carbon credits to multinational buyers.
Regarding his company’s progress to date and his relationship with Trailhead Capital as investors, Averill states: “At Funga we fundamentally believe that restoring soil fungi to timber forests is an opportunity to align outcomes for timber farmers, carbon management and biodiversity restoration. Trailhead Capital was one of the first to put real money on the line, investing in a regenerative future for North American timber. They are truly visionaries in the space, and we are so grateful for Trailhead’s ongoing support.”
In addition to the strong network of entrepreneurs Trailhead looks to align itself with, Regeneration Fund I LP also boasts strong backing by reputable institutional investors from around the globe who are fully aligned with the Fund’s mission to use technology and innovation as a tool to promote regenerative agriculture practices throughout our antiquated and inefficient food system. Notable Fund I investors include WovenEarth Ventures, The Cisco Systems Foundation, and The Rockefeller Foundation’s Zero Gap Fund, as well as leading organic farming research non-profit The Rodale Institute.
Jeff Tkach, CEO at the Rodale Institute, expresses his excitement over the Institute’s endowment allocation to Regeneration Fund I LP by saying, “Rodale Institute is thrilled to partner with Trailhead Capital and to bring forth our decades of thought-leadership, cutting-edge science, and proven best practices in an effort to ensure that farmers have every resource they need to fully embrace regenerative organic agriculture and to do so successfully.”
Jane Woodward, Founder and Managing Partner of WovenEarth Ventures, also adds that, “We at WovenEarth Ventures are an early-stage climate tech fund of funds manager. We believe that food and agriculture are an essential part of the path to net zero and wanted to have exposure to the regenerative agriculture fund space. After extensive research, we came to the belief that Trailhead Capital is best in class, and we were thrilled to become an LP in their Fund”.
As Trailhead Capital prepares to make its last few investments in Fund 1 and gets ready for Fund 2, our Managing Partner, Pete Oberle shares “The need, and therefore, the opportunity before us is enormous. A transition to a regenerative food system urgently has to happen, and growth rates in the space serve as a strong indication that awareness is accelerating. When we launched four years ago, we couldn’t have hoped to be better positioned than we are today with more consumers demanding regenerative products, a portfolio of world changing companies and still significant dry powder to help them accelerate. We see a tipping point ahead for regenerative agriculture to go mainstream, and thanks to the trust our stakeholders have placed in us we aim to play a significant role in making that happen.”
About Trailhead Capital
Trailhead Capital is a Denver, CO based investment firm creating outstanding financial, societal, and ecological returns by backing entrepreneurs who are building the regenerative future of food and agriculture. Through its investment Fund strategy, Trailhead targets Seed and Series A stage investments into companies using innovation and technology to address the myriad externalities and inefficiencies in our global agricultural system. Trailhead Capital believes that deploying this catalytic capital represents the single greatest opportunity to improve human, soil, and planetary health today, thereby leading to outsized returns for investors.
Article by Andrew Keesee, who has been working in the financial services industry for over 15 years, with experience in asset management, wealth management, public equities and alternative investments. In 2011, Andrew worked for Vinci Partners, a now $10B AUM Latin American investment manager publicly traded on the NASDAQ, out of their offices in both Rio de Janeiro and São Paulo, Brazil. After 5 years at Vinci, Andrew joined Bobby Pelz of McDonald Pelz Global Commodities in 2017 to help form Trailhead Capital, an investment firm focused on regenerative food & agriculture investing, where he now serves as Vice President and leads the firm’s Investor Relations and Fund Operations. Andrew is based out of Boulder, CO where he also graduated in 2009 from the University of Colorado – Boulder and is an avid fan and supporter of the Colorado Buffaloes.