Plantbased Business Hour

Why Institutional and Philanthropic Investors Are Focusing on Food – the Milken Institute on the Plant Based Business Hour

Caitlin MacLean, Senior Director of Innovative Finance at the Milken Institute, and Holly Freishtat, Senior Director at Feeding Change, join Elysabeth Alfano on The Plantbased Business Hour to discuss blended capital and why institutional and philanthropic investors are using this approach to focus on food.

Specifically, they discuss:

  1. What is the Milken Institute’s Feeding Change initiative? What does it aim to accomplish?
  2. Holly, what were your takeaways from COP28, and have you seen this play out in the finance community thus far?
  3. Is investing in food systems transformation considered innovative finance? If so, why?
  4. When do we think Wall Street capital, a major component of blended capital, will come into play? How will this transpire?
  5. No one knows the future, but if we had to guess timelines, when do you think we will see ‘S-curve capital’ come into the plant-based innovation space? What could this mean for investors?
  6. How are you seeing recognition of this topic take seed on Wall Street?

Below is a highlight clip and transcription from their long-form conversation.

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Elysabeth: I bring on my guests Holly Freishtat, who’s the Senior Director of Feeding Change at The Milken Institute and Caitlin MacLean, who is the Senior Director of Innovative Finance at The Milken Institute. Thank you both for being here today.

So I’m wondering if either of you have a sense for how quickly food systems transformation might, for lack of a better expression, come from behind and shift quickly.

Holly Freishtat: The answer is that it’s not going to all shift equally at the same time. There’s going to be certain parts that may shift first, another part might be behind and then it will kind of leapfrog in front. So when we’re talking about a food system, we’re talking about production, but production can go from crops in the ground to seafood right in the oceans to controlled environment agriculture that could be plants or it could be cultivated proteins. Seafood or meat.

So there’s a lot of different areas and then there’s all the inputs for that agriculture from your fertilizers to your seeds to your tractors. We’re talking about where to invest in a food system. Some of it is infrastructure and some of it is going to be related to technology. So that’s one part. Then you have the manufacturing of the food system and then how you are addressing scope 1, scope 2, and scope 3 of manufacturing. And you have all the transporting of the food, the trucks of refrigeration and so forth.

© Bona Furtuna

Then you have the actual built environment of how it’s being sold. All the stores. Then we have all of us. All the consumers in our homes or whatever they may look like, eating and disposing and wasting the food and all the waste that’s built in the system. So that’s the whole food system and so when we start to look at how we invest and what’s going to go first or second, we’re starting to see it very much in little pockets here, little pockets there. We really can’t guess what’s going to go faster or slower. When we go back to COP28 and one of the things that we say we really need to see is adaptation and mitigation issues around food, right?

As we start to see that, how are we starting to see those changes reflected in the food system? We’re seeing AI is changing a tremendous amount in our supply chain right now, creating some efficiencies that are really going to help. I think we’re seeing quite a bit of movement in the supply chain.

Elysabeth: When is Wall Street going to wrap their minds around it? Philanthropists, they’ve got the memo and governments do as well. You’re seeing Israel invest, China invest, Singapore invest, Holland invest, Germany invest, and the U.S. is investing. We’re not leading the way folks. That’s maybe a national security thing that somebody wants to think about. But you know, we’re in there, but there’s others as well. So when are we really going to see Wall Street jump in?

Caitlin MacLean: Yeah it’s a great question, and I think as you’re talking even to some of those countries that you mentioned, I mean sometimes necessity drives innovation, right? So sometimes it’s the people who see that there is the risk there and they understand how to identify that and price that or it’s the market demand. And as Holly was talking, I was thinking about some work we had done almost ten years ago now on the electric vehicles market and trying to get people to transfer to at least a hybrid or an electric vehicle.

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I’ll say that ten years ago that was still actually a big ask. There were people who didn’t understand what the options were. There wasn’t great infrastructure. Going back to your comment about the infrastructure in terms of charging stations there weren’t great models for exactly what I as a consumer wanted because did it look like the car that I already have or the function of the car that I already have and that answer was no, so there was a whole host of market dynamics that needed to shift and we were trying to get Wall Street more interested. They were saying, “We don’t really see the upside.”

What did it take? It took having government incentives, government carrots to come in and say, “We’re going to incentivize not only the production of cars, but also the purchase of cars.” We’re going to help make it easier for the customer or the farmer in this case, but you know what I mean? In your example, to use the technology that we now have, it also takes the market to say, “Listen we might if we’re Ford or we’re Toyota or we’re Tesla. Most of all we’re going to make this a real market opportunity and we’re going to drive demand.” Then all of a sudden now, Wall Street is extremely tuned into this trend, right?

So I think that’s how you get them engaged. We need government incentives and government carrots in terms of at every level. We need to focus on how you get adoption because even if you have this nice new technology, it doesn’t really matter if no one’s using it. So you need to focus on what it’s going to take to get adoption at scale. Then there needs to be the market draw, and this is certainly the case with plant-based options and protein options. I think we have seen a lot more interest in uptick because of consumer demand.

So you need sort of that perfect storm and then of course, Wall Street would be happy to come over when they see the profitability. I think there are ways in the interim to get them excited, but I think that it does take kind of a coalition approach to making that market opportunity real.

Elysabeth Alfano is the CEO of VegTech™ Invest, the advisor to the VegTech™ Plant-based Innovation & Climate ETF, EATV. She is also the founder of Plant Powered Consulting and the Host of the Plantbased Business Hour.

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