May 4, 2020

By Michelle Pelletier Marshall, GAI Media

The Manna Tree Partners team, under the direction of CEO Gabrielle “Ellie” Rubenstein, has established a culture based on 3W’s: Wilderness, Wellness, and Well-Fed. A strong focus on these tenets in life and work sets the investment office – based in Vail, Colorado, and established in 2018 – firmly positioned in its mission to provide consumers with a more transparent food supply chain from production to plate, to improve human health.

Four investments into its history – from supporting ethical egg and butter producer Vital Farms, to leading a $12.7 million funding round for plant-based ingredient maker Nutriati, to securing a $15 million minority stake in organic, pasture-raised beef producer Verde Farms – Manna Tree last week announced capital commitments of $141.5 million towards their first fund.

From Manna Tree Partners Fund I, to which 131 investors in 18 countries contributed, the company will look to make six to eight more investments in companies focused on nutrition and healthy food production in an effort to support a healthy food supply chain.

For her part, Rubenstein, who grew up under the tutelage of her billionaire father David Rubenstein, who is co-founder and co-executive chairman of The Carlyle Group (CG) and also owns a 10 percent stake in Manna Tree, found a way to bridge her passion for healthy eating and an outdoor lifestyle into the world of private equity.

With studies in the agricultural space over the past decade – Rubenstein graduated from Harvard in 2010 and then studied agricultural economics and agribusiness management through a program at Purdue and Indiana Universities – and a penchant for recognizing the need for a historic shift in human health in part due to living with food allergies, Manna Tree was launched. Sitting alongside Rubenstein in navigating the burgeoning opportunities amid a pipeline of promising investments are co-founders Ross Iverson and Brent Drever.

GAI News caught up with Rubenstein just after Manna Tree’s announcement of this significant fundraising.

1). How did your passion for healthy living inspire the founding and direction for Manna Tree Partners?

First, I was a former athlete – I was a ski racer – and I think when you are an athlete you always care about what goes into your body. Second, I’ve had medical issues or allergies as a result of ski racing injuries, which helped me become passionate about sourcing my own food via hunting and fishing – a way for me to be able to control the supply chain of what goes into my own body. It has really become a passion of mine, not just from an eating standpoint, but from maintaining a healthy lifestyle. Third, I have gravitated towards an outdoor lifestyle. I am very passionate about what it does for your soul as well as your decision-making. Our firm has a culture of the three W’s and we take this mindset into the field.

I always knew I wanted to go into investing but I made it very clear that I was only going to invest in things that were at the foundation of Maslow’s Hierarchy of Needs: food, water, or shelter. My investment career started by building someone else’s family office in Alaska where we were looking at deals in water and sustainable fisheries. Given that I was already passionate about health and sustainability, it was easier for me to understand the due diligence processes for these opportunities.

But of course, you need to have more than just passion: you need to study market trends, have the right capital, and the right relationships to make it work. I made the decision to get a double masters in this area which allowed me to have very specific relationships to actualize these deals. When I was getting my degree, I was building what is now Manna Tree – looking at deals, deal flow, and studying the industry.

2). Manna Tree Partners focuses on companies that produce, process, and distribute healthy food. What type of opportunity stream are you seeing in this segment, and what type of due diligence do you perform when choosing an investment?

We have seen the proliferation of companies that are consumer-facing, though not all that many that own or verify their supply chain. We are heavily focused on investing in the “health” of the food supply chain – from farm to fork. We have to verify all those steps and manage them – that is part of our portfolio work. We also are writing larger checks than many – $15 to $50 million – so the average startup is not our focus. We are looking for companies that are EBIT positive and revenue positive with strong cash flows – the more mature companies with a founder and a management team in place who are at scale, looking to take that scale further.

The common theme in our investment portfolio is market share. We have the largest pasteurized egg company, the largest organic beef company, etc. I’d say our portfolio is indicative of where the market is going. If you look at the top five trends in the natural products industry now, the top two are meat and eggs. We are experts in the protein space given that we have four investments in protein. We are examining opportunities in cold chain, such as cold chain supply chain logistics companies. And we are also looking at Canada. Anything you can do to get closer to the source – Canada is where our chickpeas come from and there are strong farmer relationships there. We also like to go into companies that are founder-led where the founder still has skin in the game.

3). The just-announced $141.5 million in capital comes with the promise of numerous new investments. Have you established a timetable for this, or identified any possible investments or partnerships?

The breakdown of the fund’s investor base is very unique – 30 percent are women, and 20 percent are next generation investors. The investors believe in our team, which has very strong operational capabilities. We provide deep expertise as well as a global network that allows us to source deals and create value by leveraging those LP relationships for distribution and margin growth. So we specifically targeted LP in countries or areas with holdings in their investment portfolios that can help us get into grocery stores.

We tried to reduce the load-in curve of why food should be part of the investment portfolio; it’s no different than a healthcare allocation or an energy allocation. We present it as a strong research investment case, noting that what’s happening in food today is the adoption and convergence of three industries: consumer and retail, food and ag industry, and the healthcare industry. Not to forget that today the healthy foods investment marketplace is valued at $1 trillion.

I do think that where we’ve already deployed our capital is where the market is going. You are seeing a rise in animal proteins using regenerative agriculture practices. Many people have focused on the plant-based, but don’t forget that animal proteins are a larger global trend that is rising just as fast.

Our market outlook is that I would expect another six to eight companies in this fund, and we seek out these companies that make food more accessible, traceable and more sustainable. We’ve already invested in four. You are going to see things that have a health component to it, with a focus on food as medicine. If you go on our website, we have publicly debuted Manna Tree Health, which is basically our research and development. It’s a partnership of six different pillars that we have been able to manage from strong LP relationships. Within those pillars we are looking at all aspects of food from a human health angle through the health and well being of the production process.

On average we do a deal a quarter. It’s a typical 10-year fund with a three-year deployment cycle. We expect to do two to four deals this year and close out the fund the next year. But we are not in a rush. We have very strong deal flow right now, and investors are looking to move money into the space.

4). How has coronavirus impacted operations?

Our number one priority has been the health and safety of our portfolio companies. We tend to be the second largest investor to these companies so we are very active on their boards. The health and safety protocols were there, we just strengthened them, which helped increase their capabilities. These businesses are really trying to ramp up production in order to meet the demand with what is going on in this world. And we are all adjusting to the new normal – how do you do due diligence without visiting face-to-face? We are getting creative.

Our due diligence efforts are led by part of our firm called Manna Tree Growth. We have a network of operating executives and advisors who are subject matter experts that are scattered around the country, and in fact, the world. We have investors in 18 countries and 19 U.S. states. Most of them are pretty close to our investment thesis so we’ve been able to leverage that for due diligence. We are taking our time because it’s more important that the capital is deployed well.

5). This February you were named to Worth magazine’s list of “Groundbreakers 2020:50 Women Changing the World”. How does this motivate you further and help support Manna Tree’s mission?

This motivates me in two ways: number one, our team. Six out of 10 of us – our investment professionals – are women. I believe that if you give women opportunities, they are great managers. But I’m also not a believer that you need to only have women. I think what you have to do is be able to work with men who love instilling confidence. I think women are by nature nurturers, as well as that they care about this industry. It’s been really great – we have a very positive work environment and a great team, which I think is why we’ve been able to raise the funds. We hire around personality traits; we use personality tests, we have candidates write essays about our culture – what does Wilderness, Wellness, and Well-Fed mean to you? As a result, we’ve built more of a family-type environment. And while resiliency is usually a sought-after characteristic, I’d say high trust and teamwork is tops on the list as well.

The second part of the motivation from this recognition is that we seek out partnerships with other women.  Every one of the institutions or wealth managers that we’ve worked with have been women bankers. I do believe that women support women, and women give money to women bankers. I also don’t want to understate the fact that I work closely with my father and we have a lot of father/daughter pairs in our investor base. And this seems to be common around the world in these family offices, that the women in the 30-40 age group tend to be taking the reins in the operations. This has been most rewarding because it’s relatable as well as authentic.

I am most proud to call my dad our biggest cheerleader and have others see the infectious, authentic, performance-driven investment manager that we’ve built. Those are the five values that we stand for: authenticity, credibility, teamwork, trusting, and performance. When you pull the onion layer back at our firm, it’s the real deal. Many have been impressed at how transparent and open we run our firm. We have tried to become an outsource CIO, and that’s what women do: we are great communicators, we’re honest, and we’re hardworking, and this has been an example to those men that we have worked with so that they start to bring more women into their investment organizations.

ABOUT GABRIELLE RUBENSTEIN

Gabrielle (Ellie) Rubenstein is the co-founder and CEO of Manna Tree Partners, an asset management firm committed to revolutionizing the food supply chain and improving human health. Rubenstein has a MS-MBA in Food and Agribusiness Management from Purdue University and Indiana University’s Kelley School of Business. She also has a BA in Sociology with honors from Harvard University and a graduate certificate in Mind-Body-Wellness from UCLA’s Center for East-West Medicine, and the Semel Institute for Neuroscience and Human Behavior. An active philanthropist, Rubenstein was awarded a Presidential Volunteerism Medal, and currently serves on the American Red Cross at the national headquarters as lead volunteer advisor for service to the Armed Forces.

~ Michelle Pelletier Marshall is managing editor for Global AgInvesting’s quarterly GAI Gazette magazine and a contributor to GAI News. She can be reached at mmarshall@globalaginvesting.com.