What I learned this Week: Mar 31, 2024
If you want to build a ship, teach them to yearn for the vast and endless sea.
Lessons of the Week
We invest equally in health and agriculture, but recently, there have been more lessons in regenerative agriculture, likely because of the recent Ag conferences.
Early adopters of regenerative are achieving gains in productivity and profitability. The regenerative ag venture opportunity is likely packaging regenerative systems into turn-key solutions. If the next wave of adopter exist. They may not. If so, the opportunity may be helping the core set of successful adopters buy up operations of laggards. This would be Aimpoint Research® forecast of 85K large farms going to 60k larger successful farms over the next 20 years.
That all said, regenerative is one important tool towards the real goal and larger market: the opportunity to eliminate the healthcare cost of poor nutrition.
What I learned this week….
It's hard to beat OpenAI lead (et al.), but AI still needs training sets. 5M vehicles build Tesla’s FSD training set every day. Who will be the first to build digital twins in soil, nutrition, or human health?
In China, applications run within chat applications like WeChat. You can order an Uber using chat. Could health and farmgate apps run within message apps like SMS, Signal, Telegraph, or WhatsApp instead of Apple and Android? The FTC wants to know.
Network Centric Investing: Bloomberg beat Reuters because of its messenger system. You paid 25K for a Bloomberg terminal and gained frictionless access to anyone in finance. Does a proprietary message network drive exponential growth if you want to rule data markets or AI?
Your why: Farmers only doing regenerative ag for the payments are the least likely to do it right.
Farmer Profitability: You cannot be in the red and be green.
Downside scenario: The supply of farmers that can successfuly implement regen may be small.
Assuming electric vehicles take off, what would agriculture look like without 80M acres of biofuel production? When would it happen?
If we are going to have medically tailored meals covered by insurance, should food innovators start selling directly into healthcare systems to capture early adopter behavior?
We start curious as children and then become less curious in time. Why?
When issuing a mayday call near a large bridge, the bridge authority is listening and shuts down bridge traffic to avert further disaster.
If you want to build a ship, don't drum up the men to gather wood, divide the work and give orders. Instead, teach them to yearn for the vast and endless sea.
Antoine de Saint-Exupéry's
Note: Some of these are non-attributed but permitted quotes from our network
Some Conclusions
Following up on some comments from last week…..
Palantir of Nutrition Density: Ozempic, climate, inflation, nutritional variability and health will continue to pressure CPGs and Grocery to speed new products to market. New products will be healthier and affordable. In the stages of grief, CPGs are still in denial about Ozempic. But will progress to acceptance soon enough. Food will realize it can take market share from pharma. At that point, better food likely requires better crop genetics, macro/micronutrient optimization, fortification, taste optimization, and value engineering. All optimized simultaneously during product development. Innovations in crop genetic tools, microbiome discovery, and metabolomics necessitate tool integration between these disciplines to resolve coupling in system optimization. Better crops, for example, can’t drive negative externalities in climate. Time to market will require digital twins and in-silica models that replicate human metabolomics, moving away from field trials, taste panels, and long approval cycles. FDA will need to move to synthetic control arms. Increasing computing capacity in AI will open new opportunities. AI will require large training sets of human and crop data. The bulk of these sciences are outside the expertise of CPGs. Palantir helps other markets strategically integrate AI and big data. Someone(s) will step in to optimize food, taking market share from the healthcare cost of poor nutrition. Food created health problems, fueling pharma growth. Food can take the market from pharma with innovation.
Why the Investing Shortfall: Venture investing is off by nearly 90%. But we need innovation to eliminate the $14T in healthcare costs from poor nutrition. What gives? Institutional investors follow a portfolio strategy that balances allocations in fixed ratios across public securities, bonds, private equity, private credit, real estate, and venture capital. 40% public, 5% ventures, etc. As interest rates increase, the value of existing bond portfolios declines. Institutional investors need to reduce things like venture capital and increase their bond holdings to balance their portfolios. Because venture capital is illiquid (i.e., you can not sell it quickly), institutional investors start to renege on capital commitments. They pressure venture firms to sell assets. They stop investing in new funds. While interest rates went up more than 12 months ago, because of the illiquity it takes time to work down the imbalance. Institutional investment in VC firms and VC firms' investment in startups will remain low until this backlog is resolved or interest rates decline. In the meantime, there is perhaps an arbitrage for investors who do not follow a rigid portfolio allocation model.
The Arbitrage: While interest rates disrupt venture investing, entrepreneurs still find opportunities. This means large family offices, with cash, have the opportunity to find well-priced deals deflated from funding shortfalls. It also means good companies go unfunded. Conferences like World Agritech and FarmCon may have an opportunity to highlight the deals VCs aren’t doing. And match-make these deals with other investors. To prevent a shortfall of innovation, networking matters a lot to remove the friction between money and opportunity.
Nutrient Density Tech Stack
The “Tech Stack” to nutrient density and Food is Health includes:
Holobiome - Mastering the microbiome
Brightseed - Engineering micronutrition
Holganix - Soil Microbiome
Kula Bio - Nitrogen Fixation
Benson Hill - Genetics
White River Soy - Mini Mill
Edacious - Nutrient density optimization
Bushel - Financial Services and payments
The tech stack will expand to include additional platforms for financial services, human health, and in-silico models for soil, human nutrition, and animal nutrition.
On X…
On Substack….
Don’t kill curiosity in children
Weeks Charts
Who needs friends…
Prices going Cocoa
Reid Hoffman should just make it an automatic thing after you spend enough time at department of ___ that you get that credential.
Honored to be featured
Also why are Cocoa prices going crazy?