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The Wei Forward: Impact Report
Why impactful investing is the way forward in 2022
by Lord Nat Wei of Shoreditch, Advisory Board Memeber Future Planet Capital
With the unprecedented levels of change inflicted by the COVID-19 pandemic, rapidly shifting geopolitics, and the race to get to net zero since COP26, it is clear the world needs to accelerate its innovation and development processes to protect our planet and the human race. Businesses, governments, and NGOs must work together urgently to find solutions.
But there is a vital tool at our disposal that is grossly underused: impactful investing. Innovation and new, disruptive technologies are critical in making progress towards the Sustainable Development Goals (SDGs) and the climate-specific pledges made at COP26, to decentralising our healthcare system to immunise it from future lockdowns, and to make our supply chains and energy systems more resilient to combat inflation and rising living costs. Yes, there has been admirable progress in many areas, but the fact remains that today the technologies simply do not exist to achieve Net Zero in the developed world cost-effectively, or to combat the next pandemic more effectively than we have done so far. World leaders have talked the talk; now researchers, engineers, business leaders and investors need to walk the walk for them. This is where impactful investing comes in.
Experience tells us the greatest technological progress is made by start-ups and scale up businesses, with solutions that government, corporates, and society can get behind when they are needed. Backing innovative solutions to solve pressing issues requires joint action. There must be a concerted effort made by all these stakeholders to unlock impactful investment. Imagine what would happen if we found and unleashed more Kate Binghams (herself a venture capitalist) and the innovative companies they could help us direct resources to not just to procure new vaccines but to revamp the NHS? Or find ways to heat our homes and power our grid more efficiently. Or ultimately help keep taxes low by helping us transition as a country to be more resilient and agile in the face of climate change and future supply and other shocks?
Government should look to play a larger role as a procurer of innovation and encourage impactful venture investing with green and impactful-oriented tax breaks. Pensions industry regulators should take a more balanced risk approach and favour impactful investing so there is a decent world for the pensioners of the future to live in while also boosting the long-term value of their pensions. To not do so, given the societal and planetary risks we face, is a risk itself; one that the regulatory system should be accountable for, alongside protecting the immediate financial returns and assets of members.
Finally, it is essential that society has a more active role in holding legislators, regulators and board members to account, using tools such as the Companies Act 2006, Section 172. All too often we have seen company directors knowingly ignore their duty to help society and the environment, in favour of ill-gotten benefits for a few, just as big tobacco did decades ago. This cannot continue, and customers know it.
The investment community itself has a major role to play. It must look at how best to scale the field of impact, transforming it from a niche, historically less focused on profit asset class, to a
mainstream practice centred around high impact, high profitability, and large global funds. This may require adapting and simplifying approaches; as Tom Beagent, a leading expert in impact at PwC, rightly says: “All investments make impact, good or bad – impact investing is about creating more positive impact.” This transition may also require a reconciliation in academic research between what works practically on the ground for investment professionals and entrepreneurs, and what drives them both financially and socially. This is needed to align incentives amongst the investors, and the investors and the market. It is not a zero-sum game.
But we must be positive and not despair about the challenges ahead. We have the talent, skills and resources, and there are already key players leading the charge such as Future Planet Capital (FPC), who have exemplified a pragmatic approach to creating solutions to huge global challenges, marrying profit and purpose. Whilst the marked growth of impactful and Environmental, Social and Governance (ESG) considerations among investors is encouraging and actors, like FPC, look to generate positive change, we, as an investing community, should remain mindful not to overpromise. It is essential that progress is meaningful and long-term rather than superficial or a ‘quick fix.’
Much of the responsibility for pushing impactful investing rests with VC investors and founders. However, everyone must act responsibly and be accountable. The potential for policymakers, regulators, LPs, pension funds and consumers to play an influential role in bringing impact to mainstream adoption must be recognised and harnessed. A culture change will be needed in Whitehall, in the City, and in the wider country, and there will be bumps along the way as we seek to procure differently, invest more purposefully, and demand those who govern us to be more solutions-focused. We are just at the beginning and the road ahead may seem long, but we must start having joined-up conversations about how we may all endeavour to deliver this change, with impactful investing providing a potential very practical way forward into 2022 and beyond after major shifts caused by Brexit, Covid, and COP26.
By Lord Wei, Author of the Wei Foreward report published by Future Planet Capital.
Fusion Energy- The Future of the World's Energy
The UK Innovation & Science Seed Fund (UKI2S) first invested in Tokamak Energy over a decade ago when fusion energy companies were few and far between. We knew it would be a long haul, but we always believed that momentum would build. So we are delighted to see that there are now multiple companies who between them have raised well over $4 billion, with the last few weeks seeing a flurry of announcements from Helion, Commonwealth Fusion Systems and General Fusion with some very large sums being bandied around. These financings are very welcome news and reinforce the growing perception that fusion energy has moved from the realm of science fiction to that of an engineering problem. In other words there is confidence that time and money and application will deliver a viable source of carbon free energy at some point in the not too distant future.
Of course this is not going to be tomorrow but sometime in the next decade. And the engineering needed to get there is non-trivial. From power electronics and AI systems capable of controlling unstable plasmas through to radiation resistant materials for the inner walls of the reactors, there remains a huge amount of work to be done. Much of it will need to be done in collaboration with government labs and academia, but there will also be massive opportunities for the private sector to be innovative suppliers to the fusion companies. This has the potential to create technology leaders in fields outside fusion, perhaps before fusion itself is realised.
TAE Technologies have already spun out a company TAE Life Sciences, using TAE’s particle accelerator technology to create a compact neutron source that can be used to target boron-doped tumours more accurately. Elsewhere, one of the most interesting enabling technologies is the magnets that confine the plasma and the materials that they use. High temperature superconducting (HTS) materials first emerged in the lab about 40 years ago but have been a wonder material struggling to find a sufficiently attractive application. But the compact tokamak devices being developed by Tokamak Energy and Commonwealth Fusion Systems use HTS magnets and the know how being applied to magnets for fusion is already sparking thoughts of other applications ranging from space propulsion systems to portable MRI scanners that could save lives at the roadside.
At UKI2S we have already invested in two start-ups that are a by product of the race to fusion, in the form of Luffy AI and Qdot Technology. Qdot’s expertise lies in thermal management and they are looking to bring the skills used to design the exhaust system for fusion reactors to bear on current problems such as the charging cycle for EV batteries. Whilst Luffy, whose founders emerged from UKAEA’s Culham site, are developing a neural network that could be transformative in improving robotic and industrial controls.
The word “moonshot” is over-used and is often taken to mean something that is binary in outcome. Win big or lose all your money, in other words. Fusion energy is definitely a big win, no doubt about that. But it is also a moonshot in the sense of the Apollo Space programme, which gave us core aspects of our daily lives in the form of the silicon chip, fly-by-wire and freeze-dried foods, all of which were either direct creations of the programme or massively accelerated by it. Fusion technologies could do the same and give us new capabilities few of us will even have on our horizons. Watch this space.
By Mark White, Investment Director at UK Innovation & Science Seed Fund (Future Planet Group)
The Democratisation of Venture - Is it Time for the Industry to Grow Up?
Future Planet Capital was founded with the vision of connecting the world’s biggest investors to the brightest minds to address global challenges profitably. In our early years this meant targeting sovereign investors and governments, pension plans, corporates and, in partnership with Barclays Private Bank, ultra-high net worth individuals. But there is one “biggest investor” group that until now we have not and covered and that is the “Crowd”. In this blog, I explore the importance of democratising access to venture and what that means in terms of economic efficiency and financial inclusion.
How Big is the Crowd?
According to Bloomberg and the Securities and Exchange Commission, throughout much of 2021 the share of total equity volume traded by individual investors in America has been well above 20%. In a market worth well over $30trillion, that makes individual or retail investors very big indeed. In the US, the poster child for retail investors is Robin Hood who have over 22m clients or 8.5% of the adult population. In Britain, CrowdCube and Seedrs have financed some of the country’s biggest success stories most notably Revolut, the next-generation bank whose stock market value now exceeds that of all but one of Britain’s traditional banks.
In short, the Crowd is big, very big.
Why Democratise Venture?
From a Future Planet Capital perspective, with our eyes on the world’s biggest investors then it makes absolute sense to find channels to market to this Crowd, to find ways to democratise venture.
For the industry as a whole, it also makes sense. As The Economist’s lead article this week makes clear, 7 of the world’s top 10 companies were venture capital backed. This is great but the traditional investor base for venture capital is geographically centred on Silicon Valley and driven largely by ultra-high net worth individuals and endowments. In more recent years, Chinese-led corporations, such as Alibaba or Tencent, have overtaken Californian investors. This makes the industry highly dependent on a small number of names and their enthusiasm will be driven by fashion, feast and famine depending not only on their own financial well-being but political and tax considerations too.
For individuals, the fact that so much of the world’s increase in wealth has come from private markets has further accelerated income and wealth equality.
It’s not good for the industry to be dependent on a handful of billionaires and their companies and even less so for the ordinary individual who has no access to this deal-flow. For both diversified, more stable economic growth and for fairness, it would make sense for venture to be democratised.
Democratisation in Practice
From 2022, Future Planet Capital will be making 10% of its deal flow available to individuals via crowdfunding platforms. For sophisticated individuals this can be on a deal-by-deal basis. For purely retail investors with limited wealth it will be via long-term diversified investment products. For the first time, individuals will have the same privileged access to impact and innovation companies emerging from the world’s top universities and research centres. Our launching partner, Seedrs, with whom we’ve raised our own Series A, has just been acquired by Republic, the US based private investment platform. With these partners and others, we expect over time to provide fair access to top deals.
Over the long-term, however, our ambition is to link venture capital products to long-term individual savings plans. For those saving for a pension with a multi-decade time-horizon and no need for liquidity, diversified-venture portfolio’s are surely an effective way to fund individuals’ long-term liabilities.
Groups such as MakeMyMoney matter are also advocating for individuals to take control of the ethical implications of their investments and the impact of their financial commitments. Indeed for many this is the biggest way that they can make a difference to the challenges of climate change, education, health, security and sustainable developments.
So, perhaps paradoxically, for venture capitalists, for the industry as a whole, for individuals and for the planet, democratisation of venture is a key stage in the institutionalism and scaling-up of an important asset class.
By Douglas Hansen-Luke, Executive Chairman
Future Thinking: Terra Carta
Venture Capital Battles in the Fight Against Climate Change
Future Planet Capital were honoured to have been invited to #COP26 by His Royal Highness, Prince Charles, to support his work with #terracarta and the Sustainable Markets Initiative. There we showcased seven companies that were able to make a clear impact in facing down the challenge of climate change.
Where were the venture capitalists?
Sifted recently wrote that apart from ourselves and a small number of others the #venturecapital industry failed to make an appearance at COP26 and lamented that this key driver of innovation was noticeably absent. Aside from ourselves, General Atlantic were present and they announced a $4bn late-stage venture #climatechange fund. Few of Europe's top 40 sustainable venture groups made it to COP26. Does this reflect an industry failing?
What is the venture industry doing?
I say "No". In fact venture is already making considerable investments in climate change and is further aware of the wall of funding destined to follow from asset managers, corporates and governments. The industry is on the right track and as detailed in the forthcoming Lord Nat Wei's report "The Wei Forward" there are many practical paths for impactful investment to follow, be measured and be recognised.
In our own portfolio and pipeline we number nuclear fusion, sustainable fashion, circular supply chains, smart materials, smart cities and agritech companies as all capable of making an impact through improved energy usage, reduced emissions, circularity, fixing food and protecting the environment. There is a shortage of dealflow relative to demand but it cannot be said that venture is ignoring climate change or failing to make a difference. Instead it is performing a valuable purpose in ensuring that only the best, most practical, most impactful, companies get the majority of funding.
The Business and Sustainable Development Commission estimates that $45 trillion needs to be invested in addressing climate change by 2030. This money can be sourced from the $130 trillion that the Glasgow Finance Alliance for Net Zero (GFANZ) has pledged by 2050 but it needs to find routes for deployment.
The solution is in our hands...
And it is here that Venture can be helped by all those governments, corporates and indeed activists who attended COP. Through a series of nudges more funding can be released and rushed to innovative technologies targeted to beat climate change.
One of the most effective actions available to governments would be to free occupational pensions to invest more in venture. In the UK alone over $1 trillion is managed by local government pensions but their allocation to venture is minimal. This needs to change but in a highly conservative industry this needs encouragement from government. For corporates, similar nudges are required. At all annual general meetings shareholders who talk of engagement must insist on an #ESG policy and one which explicitly targets #netzero. A great example of leadership comes from Arcelik Global and its CEO, Hakan Bulgurlu. Awarded a Terra Carta award for their vision this top 3 manufacturer of air-conditioners and white goods has pledged to be fully carbon neutral within a decade.
And, in the final analysis, it is activists and individual consumers who will make the biggest difference. As voters, activists at shareholder meetings, as employees or through purchasing decisions, individuals in their millions can influence the largest governments and corporations.
So, "Yes", venture is making a difference to investing in impact and innovation but, individuals, all of us, are able to influence, lead and accelerate everything the industry does.
By Douglas Hansen-Luke, Executive Chairman
Future Thinking: Sustainable Growth
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Future Thinking: The Heart of Healthcare
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Mobile Money, African Start-ups and the SDGs
Financial inclusion is an intermediary target in 8 of the 17 SDGs. Consequently, igniting progress towards the SDGs requires a large-scale push to increase financial inclusion. This blog explores how both start-ups and corporates alike have leveraged the mobile money ecosystem to catalyse progress towards the SDGs. Notably, mobile money is a key enabler of innovations within Future Planet’s impact areas of food security, climate action, education and health.
Igniting faster progress towards the SDGs requires a large-scale push to increase financial inclusion. One channel through which this can be achieved is mobile money. This is technology which allows users to receive, store, spend and send money using just a mobile phone and its SMS signal. In Sub-Saharan Africa, mobile phone adoption is forecasted to grow by 4.3% year-on-year until 2025. With greater mobile penetration comes the potential for sustainable ventures to reach a previously ‘unbanked’ population and achieve an impact on a much larger scale.
Two features of mobile money are particularly salient. First, it provides a safe and low-cost method of saving money. For example, a study in Uganda found that the use of mobile money increased food expenditures per adult by nine percentage points and reduced perceived food insecurity providing valuable liquidity to vulnerable households. Second, mobiles provide a fast and low-cost method of sending and receiving money. In fact, remittances sent via mobile transfer are on average 50% cheaper than traditional methods. Consequently, the well-known mobile payment service M-PESA in Kenya was found to increase per-capita consumption and lift 194,000 households, or 2% of all households in Kenya, out of poverty.
While financial inclusion is an intermediary target in 8 of the 17 SDGs, how have start-ups leveraged the mobile money ecosystem to catalyse progress towards the SDGs? Let’s touch on a few of Future Planet’s impact areas; climate action, education and health.
SDG 13 - Climate Action
Climate change threatens to drive an estimated 100 million people into poverty by 2030. Mobile money innovations plays a key role in mitigating climate risks by helping farmers become more resilient and helping communities that have been displaced by climate shocks. Index insurance, which can act as a safety-net for farmers following climate shocks on their crops, use mobile money to distribute payouts to farmers. In a similar fashion, government-to-person (GTP) payments are often enabled by mobile money. For instance, in 2014, the Government of Fiji partnered with Vodafone MPaisa to disburse assistance to over 32,000 households affected by Tropical Cyclone Winston. In the Philippines, Mercy Corps and BanKO implemented a mobile money programme to distribute financial aid following Typhoon Haiyan in 2013.
Integrating payment technology with climate ventures is nothing new. Alipay, an online mobile and payment platform with over a billion users, launched Alipay Ant Forest in 2016, a mobile app which rewards users with ‘green points’ for undertaking low-carbon activities. For every virtual tree a user plants, Alipay plants a real tree. To date, 500m users have planted 100m trees in arid areas throughout China spanning a landmass of 933km2 (equivalent to the size of 130,000 football fields!)
SDG 4 - Quality Education
Increasingly, mobile technology is being used by EdTech start-ups across emerging markets to enhance and supplement traditional ‘brick and mortar’ schooling, providing better access to primary, secondary and tertiary education or professional development training.
In Africa, collaboration between mobile money and EdTech start-ups is mutually beneficial. Mobile operators have reached the scale that start-ups lack, such that EdTechs can address infrastructure challenges related to delivering and supporting education where conventional models fail or are non-existent, particularly in remote rural areas. On the other hand, start-ups have the local innovation mobile operators need. For instance, Kenyan start-up Eneza Education partnered with mobile operator Safaricom to launch a virtual classroom available on any mobile phone. To date, it has provided over 10 million learners with access to primary and secondary education resources. In a similar purely ‘offline’ offering, Ghanaian start-up Chalkboard Education leverages existing mobile networks to provide access to university courses for disadvantaged students via distance learning using just SMS. In Uganda, a flexible education loan using mobile money wallets and a pay- as-you-go (PAYG) business model is helping parents pay school fees. In households using this product, only 15% of students missed a day of school compared to 24% of students in households that did not use the product.
Deeper, more integrated partnerships between mobile operators and EdTech ventures are necessary to build on these gains to ensure access to quality education can continue to be offered at scale. In this context, the mobile industry has a significant role to play in improving the accessibility, affordability and quality of education in emerging markets.
SDG 3 – Good Health and Well-Being
When it comes to global health, mobile money lowers financial barriers to receiving healthcare by lowering the costs of registering with health insurance, paying premiums, and receiving disbursements. In Kenya, M- Tiba’s mobile health wallet enables health payments, savings and access to credit via mobile money. Since its launch in 2016, it has facilitated 155,000 patient visits to medical facilities and $2m in medical payouts. It also contributes towards disease detection. In Pakistan, providing incentives via mobile money resulted in a 300% increase in tuberculosis detection over one year and a 90% increase in patients adhering to treatment.
A View to the Future
A plethora of rigorous evidence exists on the enabling role of the mobile money ecosystem in progressing the SDGs. Deeper, more integrated approaches are needed between mobile providers, start-ups and investors to capitalise on potential synergies in collaboration. Here at Future Planet, we provide growth financing to scale these innovative solutions. In doing so, we ensure that innovative start-ups can realise their growth potential to ensure a healthier, safer and fairer future planet.
Future Thinking: The Global Security Challenge
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How consumer attitudes will be critical in determining which alternative sources of protein rise to the top
The Green Revolution of the 20th century radically transformed the way we grow our food, allowing farmers to keep pace with increasing food demand following rapid population growth. Global populations are projected to continue to increase to 9.7 billion by 2050 (FAO). Meanwhile, as countries across the world develop and the middle-class expands, there will be a shift in diets that leads to an increase in the demand for meat. Global agricultural practices are thus poised to once again be transformed by a host of new technologies that will allow the sector to adjust to these projected demographic changes. As ever, the preferences of consumers will be critical in shaping which of these new technologies and start-ups will find success in our rapidly evolving food landscape.
GM food – what lessons can be learnt
Humans have been altering the genetics of the food we eat for thousands of years through artificial selection. In the late 20th century, genetic engineering emerged as a technology that allowed the more direct and precise alteration of an organism’s genetics that did not require the use of breeding. The use of genetic engineering in agriculture to produce genetically modified (GM) food has the potential to dramatically improve both crop yield while offering additional health benefits and improving the sustainability of agriculture as a whole.
However, following its emergence, aggressive campaigning against the use of GM food has led to a widespread public mistrust over GM food and perceptions that it is unsafe. While there is little scientific evidence to support these ideas, the rapid nature with which they were spread has led to complete bans being imposed on GM food in many regions of the world. Regardless of whether these decisions are ill-informed, the case of GM food highlights how consumer perceptions and public opinions can rapidly condemn the use of a technology within agriculture to failure. Emerging technologies that aim to offer healthier, more sustainable alternatives to the food we currently eat must work hard to win over the acceptance of consumers in order to avoid being condemned to a similar fate.
Recently, some start-ups have cleverly begun to harness novel genetic engineering technologies to improve crop output without affecting the genetics of the final food product itself, ensuring it remains a non-GMO (genetically modified organism). Our portfolio company, Tropic Biosciences, is utilising the latest CRISPR genome editing tools to improve commercial varieties of tropical crops such as coffee and banana, reducing their susceptibility to disease. Not only will Tropic Biosciences’ technology improve crop output, support local communities and reduce the environmental impact of agriculture, but crucially, it will begin to sway consumer attitudes towards the safe use of genetic engineering technologies in our food systems.
How plant-based alternatives are finding success
Plant-based alternatives are becoming an increasingly more popular option for meat-eaters and as a result, start-ups and companies in this space are thriving. Leaders in the market such as Beyond Meat and Oatly have navigated successful IPOs in recent years whilst Impossible Foods is set to join them later this year with a valuation that could reach $10 billion. The success of plant-based alternatives has been aided by an increased public awareness for the importance of reducing our meat consumption and subsequently reducing our impact on the planet. However, these companies have crucially won over the trust of consumers, ensuring them that their alternative foods are safe. This has included capitalising on the failings of GM food with plant-based products frequently advertising the fact that they’re ‘GMO free’. Having earnt the trust of consumers, plant-based alternatives must now seek to reduce their costs in order to continue to expand and sway more meat-eaters away from their traditional purchasing choices.
Will cultivated meat thrive in a similar fashion?
Start-ups and companies developing cultivated meat hope to mirror the success of plant-based protein alternatives over the coming years. Cultivated meat, frequently described as ‘lab-grown meat’ uses the biotechnological application of stem cells derived from animals to produce cultured meat in a bioreactor. The technology is rapidly evolving with Eat Just leading the way having sold the first lab-grown chicken nuggets in a restaurant in Singapore in the late stages of 2020. Cutting costs down from the hefty $17 that the Just chicken nuggets were sold at will be essential for cultivated meat start-ups to progress. However, more importantly, hard work must be done by scientists, entrepreneurs and investors to inform the public about the safety of cultivated meat in order to ensure it is not disregarded as a spooky, futuristic technology. In doing so, cultivated meat may well become a popular protein alternative to rival plant-based alternatives over the coming decades. The evolution of both plant-based and cultivated meat technologies may be critical for reducing the environmental impact that the meat industry currently has on our planet.
By Tom Barnes
EdTech: Facilitating the Future of Learning
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Zeroing in on Waste
Globally, 90 billion tonnes of raw materials (i.e. biomass, fossil fuels, metals and minerals) are extracted and used each year. By 2060, this figure is expected to double. Our approach to the use of these materials is linear. Just 19% of waste is recycled or composted. The remaining 81% is incinerated or dumped.
To reduce the amount of raw materials being extracted and wasted, we must increase the effectiveness of waste management solutions and integrate waste back into supply chains. This can create value, which currently goes untapped. A recent report estimated that each metric ton of uncollected mixed waste represents an average loss of about $375. Thus, it is not surprising that adopting a global circular economy could create some $4.5 trillion value by 2030.
Fashion, A Case Study:
Fashion is a case in point. Clothing production doubled from 2000 to 2014. Across the same period, the average length of time for which consumers kept each clothing item halved. This rise in demand has placed increasing strain on global raw material supply. Despite this increasing strain, in 2017, less than 1% of material used to make clothing was recycled.
The least sustainable sector of the fashion industry is fast-fashion. With relatively cheap products, the business model aims to allow customers to keep up with current trends. Production processes have to be low-cost in order to make fast-fashion viable; products are often made from a combination of different cheap materials. Such a blend of fabrics makes recycling these cheaper products difficult. These problems are compounded by the volume of clothes produced by fast-fashion companies. With some fast-fashion companies releasing as many as 20 new clothing lines each year, fashionable apparel quickly becomes outdated. Purchased at relatively low prices, and with such short product life-cycles, these clothes are perceived of as being disposable. Indeed, in the UK, 336,000 tonnes of clothes are disposed of in landfill each year.
There is, however, a profound circular shift underway in the fashion industry, driven by consumer demand. In a recent survey, two-thirds of textile sourcing executives said that consumer pressures for sustainably sourced materials would likely become a top factor in their supplier ratings by 2025. As a result of these changing patterns of demand, sustainable sourcing at scale will soon become essential for fashion companies who wish to remain competitive. Recycling and upcycling materials will be the main avenue through which sustainability can be achieved in the fashion industry. Reusing materials will allow the fashion industry, responsible for at least 4% of global greenhouse-gas emissions, to cut out carbon-intensive resource extraction processes.
A Circular Approach:
A circular approach which creates value whilst limiting waste and emissions must be adopted not solely by the fashion industry, but by industries across the board. From food to plastic production, we must reduce our linear approach, characterised by over-extraction and unused waste. Future Planet's focus on innovative solutions spinning out from the world’s top universities that intersect both digital and circular shifts ensures that these start-ups can realise their growth potential to make a substantial difference. While assisting with the creation of these new circular systems, they must characterise production and consumption to have a positive impact on our future planet.
by James Derham
Sustainable Growth
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A Better Future Planet - Series Summary
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Food For Thought - VC & Livestock Production
The impact of livestock production:
Livestock supply chains account for 14.5% of global greenhouse-gas (‘GHG’) emissions. There is a strong case, for those in the position to afford alternatives to livestock produce, to reduce their consumption. Producing 100g of red meat generates 40 times the emissions given off when growing 100g of vegetables. An individual who chooses to go vegan for two of their three daily meals would reduce their food-related GHG footprint by around 60%. Conscious choices made by consumers who are in a position to reduce their consumption of livestock produce will thus be essential in reducing agricultural GHG emissions. This solution also requires no innovation.
However, meat, milk and eggs provide 34% of the protein consumed globally. These foods also supply billions of people with essential micronutrients, inter alia, vitamin B12, A, iron, zinc and calcium. As the global population grows in size and wealth, consumers will demand more meat and dairy. Ruminant meat demand is projected to grow by 88% between 2010 and 2050.
So, whilst it is necessary that those who are in a position to do so reduce their consumption of livestock produce, it is clear that innovative solutions are required which allow us to continue to supply the demand for these products sustainably. Future Planet, strives to provide solutions to both of these problems. By utilising our global network and connecting spin-outs from the world’s top universities with those who are working to implement low carbon livestock production, we aim to address these problems with growth funding to increase their scale and marketability.
Low Emission Livestock Production:
Enteric fermentation, the process of digestion in ruminant livestock, is responsible for 44.1% of global livestock emissions. The product of enteric fermentation is methane. Per tonne, methane has 86 times the warming effect of CO2. Researchers and alumni at the world’s top universities are providing solutions which can help abate ruminant methane production by adding natural compounds to feedstocks. With the necessary funds to scale these solutions it will allow them to be integrated into highly optimised feedstock supply chains. Future Planet aims to help these start-ups and spin-outs unlock value, whilst decreasing ruminant methane production.
Green Proteins:
Plant-based pork and chicken could reduce GHG emissions by 30-36%, and plant-based beef by 80-90%, compared with their meat counterparts. However, consumers bear an average premium of 86% when purchasing plant-based proteins. High prices are one of the most significant barriers to consumer adoption of plant-based protein foods. A similar issue is faced by innovative start-ups producing cell-based alternative meats, a method which reduces the impact of livestock on land use by more than 95%. The capacity to provide both types of alternative protein to consumers at a price parity with their meat counterparts will be crucial in reducing agricultural emissions.
Whilst it is essential that those in a position to do so reduce their consumption of livestock produce, it is also clear that low emission husbandry is achievable. Abating GHG emissions from livestock farming will allow us to supply the growing demand for meat more sustainably. Also it is essential in ensuring that meat demand is met sustainably will be Green Proteins. Nonetheless, it is clear in both the low emission livestock production and Green Protein spaces, innovation and investment are required to ensure that these solutions unlock their impact potential.
By James Derham
Food for thought - VC & AgriTech
Food for Thought: Why VC Investment in Sustainable Agricultural Practises is Essential
This article will focus on Future Planet Capital’s (FPC’s) approach to the agricultural ‘Challenge Area’, first defining the scale of the problem, and then showing how our approach can help encourage the implementation of best practices that allow us to sustainably produce more food, whilst consuming fewer finite resources.
Food Security: The Growing Demand for Food.
As the global population rises to a projected 10bn by 2050, the demand for food will also increase. The difference between the total global agricultural land area used in 2010 and the projected total area required to feed the global population by 2050 is 593 million hectares. This is an area nearly twice the size of India.
Today, almost 800 million people face hunger on a daily basis. Unless the food supply can be increased, the number of people suffering from hunger will increase. However, arable land is finite. Thus, we must develop solutions that allow us to produce more food, from the same amount of land, whilst consuming fewer resources.
This means that new technologies and practices must be developed to ensure a sustainable increase in agricultural yields. Globally, 75% of farms are smaller than three football fields. These new technologies must be low-cost, to allow them to be adopted by these small-scale farms. Researchers and alumni at the world’s top universities are providing such solutions. At Future Planet, we know that impact drives returns. The growing companies in the Sustainable Agriculture space, emanating from innovation dense ecosystems, promise not only meaningful impact, but also profitable future opportunity.
Sustainable Agriculture: The Rising Demand for Food Must be Supplied Sustainably.
Agriculture is responsible for 19% of green-house gas (‘GHG’) emissions. The proportion of total global emissions for which agriculture is responsible is set to increase. As the global population grows in size and wealth, consumers will demand more meat and dairy. Thus, the projected increase in population is not proportional with the expected rise in meat demand. Indeed, ruminant meat demand is projected to grow by 88% between 2010 and 2050. To meet these changing patterns of growing demand, the business-as-usual outlook will see agricultural emissions increase by 15-20% by 2050. Green protein solutions can help supply this increased demand sustainably, by offering plant or cell-based alternatives. Ruminant animals are almost 10 times more carbon intensive than alternative animal protein and more than 30 times more carbon intensive than vegetable protein. FPC is helping to connect researchers and spin-outs from top universities in the Green Protein production space with growth funding to increase their scale and marketability. This will help abate emissions from carbon intense protein production.
Alongside Green Protein solutions, we need new Agri-Tech methods that enable us to produce higher yields, whilst consuming fewer resources. Knowledge gaps are being plugged by promising Seed and Series A start-ups and spin-outs from universities. The Agri-Tech solutions that FPC are looking to fund not only help to ensure that farming becomes more sustainable, but also that revenue streams are maximised for farmers. Take, for instance, Genetic Engineering. By enhancing the genetic resistance of crops and livestock to disease, the companies that FPC are investing in will help increase yields and thus revenues for farmers, whilst also increasing the food supply and thus food security for consumers.
For current and future generations, embracing sustainable agriculture is a matter of survival. Farming is significantly less consolidated than other sectors; reducing emissions requires action by the more than 2 billion people employed in agriculture. New low-cost, high-impact solutions that increase yields and reduce emissions are essential. Innovative ideas that fit these parameters are being developed at top universities. However, many are yet to be commercialised. At FPC, we provide growth financing to scale these innovative solutions. In doing so, we ensure that these companies realise their growth potential, whilst assisting with the creation of the sustainable agricultural systems that must characterise the industry on our future planet.
Thank you for joining us on this journey.
By James Derham
Environment & Agriculture
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Sustainable Consumption
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Energy And Emissions
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