December 19, 2022

photo courtesy: Mad Capital

By Lynda Kiernan-Stone, Global AgInvesting Media

Years of preparation went into the launch of speciality impact-focused finance company Mad Capital in the summer of 2022. 

Brandon Welch, co-founder and CEO of Mad Capital, explained to GAI News that in 2019, the team identified a gap in conventional banking –  a general lack of extending long-term flexible loans to farmers wanting to transition to regenerative organic practices. 

The following year, the firm received an $817,000 CIG grant and commenced product testing, iteration, and pipeline building before driving 5,000 miles across 20 U.S. states for three weeks in an Airstream trailer to tour 50 farms and speak with farmers on the ground.

In 2021 Map Capital raised $10 million from 42 investors to launch Perennial Fund I while continuing to build out its pipeline. The firm underwrote $4.8 million in loans with 10 farmers operating on 30,941 acres. This portfolio grew to a total of 44,095 acres, of which, 6,920 acres were transitioning to organic.

Through this work, Mad Capital stated it is working to prove the viability of regenerative organic agriculture as an asset class able to provide consistent yield in the face of an uncertain macroeconomic environment. 

Now, Mad Capital announced that it has raised $4 million in Seed capital led by regenerative farming-focused investor Trailhead Capital to provide equitable, flexible funding for organic and regenerative transitioning farmers.

Trailhead was joined in this round by Bonaventure Capital, Homecoming Capital, Impact Assets, One Small Planet, Pelican Ag, Lacebark Investments, and 17 others.

“Regenerative agriculture aspires to work with nature, rather than against it,” said Phil Taylor, co-founder, Mad Capital. “Mad Capital 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.”

Conventional agriculture can be seen as its own worst enemy. It is largely responsible for the degradation of our soil, the release of significant greenhouse gas emissions, chemical exposure in the food chain, and the loss of biodiversity. At the same time, it is also one of the most vulnerable sectors to climate change.

But regenerative growing practices, which work with nature to optimize the health of the entire ecosystem, offer growers the ability to build healthy soils that can protect crops from uncertain rainfall, reduce the need for inputs, reduce farm costs and risks, restore biodiversity, and strengthen the long-term value of the land. 

However, although the spirit is willing, many farmers looking to adopt regenerative practices are finding it difficult to source the necessary funding for the transition, which generally can take three years. 

In response, Mad Capital manages innovative pools of capital in the form of flexible and customized financing to help farmers through this period. Perennial Fund I blends debt funds with traditional financing to create one-of-a-kind capital stacks for their farmers to accelerate their transition as they build up to consistent crop yields.

And over time, the firm stated that it plans to scrutinize their regenerative organic farm loans to scale the growing industry while helping capital partners reach their climate and sustainability benchmarks. 

“This is an amazing team with an amazing opportunity in front of it,” said Mark Lewis, managing partner, Trailhead Capital. “Mad Capital is working to determine how do we optimally reward the stewards that are doing the most noble and regenerative work? That is the question we aim to address and innovate on.”

With the launch of Perennial Fund II, Mad Capital stated that it intends to finance an additional 100,000 acres of farmland in 2023, and has a target of financing 10 million acres by 2032.

Welch commented, “We are thrilled to have expanded our investor community and now have the resources to continue backing farmers who are transitioning more land to regenerative organic production.”

– Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.