Perennial Fund

Interview with Brandon Welch, Director of Radical Capital & Investor Lead of the Perennial Fund 

I learned about the Perennial Fund just after I started Integrated Capital Investing when Brandon called me to learn more about the philanthropic landscape for investing in regenerative, agroecological farming as I had participated in reviewing funds and investment opportunities in this space for Swift Foundation. I was excited to then meet Phil Taylor and learn about how they are supporting farmers and farms to find the financial and technical resources needed to transition their lands to regenerative organic agriculture.

Jen: Why was the Perennial Fund created?

Brandon: We help farmers transition to regenerative organic by providing access to financing, know how, and markets. If one is missing, the transition to organic farming is an order of magnitude more difficult. From our work with farmers across the U.S, a recurring theme is that their local community bank is not willing to lend to them during the transitional years to organic farming. This is because many farmers lose $50-200/acre during the three transitional years to certific organic farming. Once they reach certified organic, they are 2-3x more net profitable than their conventional counterparts however,traditional lenders are not set up to take a long-term view of the transition.. We saw this value gap and decided to create a long-term financing vehicle to fill the space.

Jen: How are your investment funds catalytic in a way that is different from other funds?

Brandon: Our fund includes numerous innovations never seen in the U.S. mid-sized agriculture industry. 1) We are helping farmers transition to regenerative organic agriculture with a working capital innovation. 2) 50% of acres will be Regenerative Organic Certified. 3) Each loan comes with technical assistance, farm planning, access to crop markets, and a community of changemakers. 4) Each loan has two built in forbearance years to account for weather variability. 5) There is a 0% management fee. Costs are covered by a mix of government and foundation grants. 6) We are running the world’s first broad scale study on the ecological and economic outcomes of transitioning to regenerative organic agriculture.

Jen: How do you describe the kind of non-financial returns the fund offers?

Brandon: Transitioning 5,000-7,000 acres of farmland to regenerative organic offers a plethora of returns beyond financial. Ecologically, it will result in positive benefits for vegetative diversity, bird communities, pollinators, soil carbon sequestration, and water quantity and quality. Socially, we are showcasing what a new standard in agriculture can look like for curious farmers who are seeking a way off the industrial highway. The learnings from this pilot launch will provide the data and credibility to provide cultural shifts across institutions and farmers intrigued in seeking a balanced way of feeding humanity. One of our core goals is to understand and measure the key performance indicators in ecological and financial well-being at the field and farm level and how this builds equity in the land such as water and carbon retention and increased wildlife (e.g. birds). We hope this shifts how conventional banks think about the opportunities organic transition represents.

Image Caption. In the summer of 2020, the Mad Ag and Perennial Fund team lived in an airstream for a month as they toured 37 farms, 10 states, and 5,500 miles. Building relationships in the field is foundational as in-person due diligence reveals more than a cash flow statement ever will. Photo Credit: Brandon Welch.

Jen: Can you describe how you use integrated capital to do your work?

Brandon: In December of 2019, we received an Natural Resources Conservation Service Innovation Grant totaling $817,000 over 3 years to create and launch the Perennial Fund. Our work would not have been possible without this grant. Innovation takes time to root, and with a fully dedicated team of three, the creation phase of the Perennial Fund took over one year. This initial grant is small compared to the catalytic chain of events it has set us on. We will be putting $7M to work in this first fund and beginning the raise of a much larger second vehicle in 2022. Small seeds can grow forests.

Jen: What is transformational about the businesses that you invest in?

Brandon: We are working with farmers on the cutting edge. They are growing food at a scale that can shift the entire value chain once a critical mass is reached. Following the diffusion of innovation, we work with the top 3.5% of farmers, and only farmers that are regenerative organic. These are farmers who have taken the risks, are leaders, and have the grit to see it through.

Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?

Brandon: We are doing internal and external work. We have established one of the principles: when you come to work, you have to be prepared and willing to transform yourself. We are working with Soul Fire Farm and others to create an anti-racist strategy to inspect our own work and how are we actively dismantling racism, service days, new relationships, and diversity commitments.

Image Caption. Rebecca and Tanner examine the soil profile of a Colorado farmer to determine how effective the current management regime is. Based on this resource assessment the Mad Ag team is able to make recommendations spanning the integrated trifecta of financing, management, and crop marketing. Photo Credit: Jane Cavagnero.

Jen: What does a foundation or investor need to understand in order to invest in transformational businesses?

Brandon: A foundation or investor needs to understand the following in order to invest in transformational businesses:

  • Product market fit: Is the service or good, exceptionally good at solving a key constraint their target customer is experiencing and has that been verified directly from their customer? If the business raising money does not know this answer, they only have a theory or idea, and the magnitude of risk higher.
  • First Principles: Each investment opportunity should be approached from a first-principles stance. Thinking through questions such as: “Why are they raising money?” and “If they couldn’t raise money, could they still achieve the same outcome?” might be places to start. “Is their solution foundational to reinforcing other positive feedback loops?
  • Risk is key: A new idea that is capable of systemic change will have more risks than it will merits. The difference is that the one or two merits, if successful, will far outweigh fifty other risks. It is these small numbers of positive outcomes that will rock the boat. This is what risk is all about!


Jen: What do you tell people who think your fund is risky?

Brandon: It depends on what they believe risk to be. We have hedged much of the major risks by securitizing the loan, adding forbearance years, covering the costs with philanthropic donations, surrounding ourselves with a strong network of advisors, and leaning heavily on lead farmers for the formation of the product. Ultimately, this is the first time the culmination of these models have been used in this particular context, but none of these ideas are original. It’s the way we have pieced together the ideas and concepts that is original. In modern society the new value generally comes from cobbling together previous innovations – truly novel ideas are rare.

Jen: What happens if we don’t do integrated capital investing? 

Brandon: Without integrated capital investing, you can end up optimizing for one outcome at the detriment of others. A myopic approach can be extremely effective at maximizing for one metric like carbon sequestration or financial returns – but it will likely fall short of doing both well. Integrated capital recognizes that capital is an energy force that has a ripple effect throughout the system it interacts with. There will be positive and negative feedback loops that respond as a result of any capital flow.




The Perennial Fund

Investment Thesis/What is your rationale for your approach to investing? We help mid-sized US farmers transition to regenerative organic agriculture by providing long term and equitable financing that includes technical assistance, farm planning, crop marketing, and a community of changemakers.

Geography: The Upper Midwest of the United States

Year Founded: 2020

# of Investments: 20

# of Investors: 43

Funds Raised: $10 M


What’s on Brandon’s Minds?

Book: The Bitcoin Standard

Song: “Sleight of Hand” by Menahan Street Band

Podcast: Greylock: Blitzscaling 11: Patrick Collison hiring at Stripe and the role of  Product Focused CEO