Mar 21, 2024

Mad Capital’s organic, regenerative ag fund grows

A campaign to raise $50 million to provide growers with loans to transition to regenerative organic practices has received commitments from numerous investors.

Through its Perennial Fund II (PFII), Mad Capital has received commitments from 16 investors, including Builders Vision, The Rockefeller Foundation and the Schmidt Family Foundation. The PFII aims to bring Mad Capital’s total financing to more than 150,000 acres of farmland and partnerships with more than 50 farming families.

Launched in 2019, Mad Capital has been actively lending to regenerative organic farmers for five years. As of February, it has deployed more than $25 million to 30 farmers, which has helped transition over 10,500 acres of land to organic production. The PFII brings Mad Capital closer to its ultimate goal of financing 5 million acres of regenerative organic farmland by the end of 2032.

“We are aiming to build a bridge between two distant worlds that need one another to transition our food system — Wall Street and organic farmers,” Brandon Welch, co-founder and CEO of Mad Capital, said in a news release. “Providing farmers with access to capital gives humanity a shot at producing an abundance of healthy food while being ecologically accountable to our working lands and those that steward them.”

Agriculture is one of the leading drivers of climate change, and extractive farming practices are causing biodiversity loss and healthy soil, according to the release. Regenerative organic farmers reverse this damage by working with nature, creating economically and ecologically resilient food systems. PFII — Mad Capital’s second private credit fund — will provide regenerative organic farmers in the US with tailored loans to cover the full array of capital needs so they can transition to organic, invest in soil health, develop new markets and diversify their enterprise.

“Mad Capital is playing an integral role in the transition to regenerative organic agriculture,” Sara Balawajder, director of investments at Builder’s Vision, said in the release. “Through their innovative and holistic approach, they are providing capital to farmers who have been overlooked and underserved by traditional capital markets, while their broader platform also offers technical assistance, market access, and a sense of community.

“We’re excited about Perennial Fund II and its potential to de-risk this space and open up capital market access more widely to farmers looking to transition their practices,” she said.

PFII will utilize an innovative blended structure with a first-loss pool to bolster the underlying performance of this emerging sub-asset class within ag lending. It’s designed to generate impact forward and uncorrelated current yield within the core fixed-income allocation of a portfolio. Early indications from Mad Capital’s Perennial Fund I (PFI) portfolio show that this risk is further reduced within the niche of regenerative organic farmers due to the substantial increase in on-farm revenue from organic premiums.

“The Rockefeller Foundation believes Mad Capital’s model and team have a strong track record of delivering both the performance institutional investors are seeking and the impact on people and climate the world needs,” Maria Kozloski, senior vice president of innovative finance and economic equity at The Rockefeller Foundation, said in the release.

Only 1% of farmland in the U.S. is certified organic, compared to almost 10% in the European Union. Lack of access to capital is a primary barrier to wider adoption, as traditional financing institutions lack the understanding and financial products to support regenerative organic farmers, according to the release. Transition finance such as Mad Capital’s is one of the keys to keeping pace with the surge in consumer demand for regenerative organic food and fiber.

“This is a bold reimagination of financing in nature’s image, empowering farmers to create farm ecosystems that are good for the earth and good for humanity,” Phil Taylor, co-founder of Mad Capital, said in the release.