06 Feb Potlikker Capital Fund
Potlikker Capital Fund
Interview with Mark Watson; President & Co-Founder of Potlikker
Jen: How was the Potlikker Fund Created?
Mark: Fund was started to address rural racism as it manifests in farming and climate impacts. Fund co founded by Mark Watson and Konda Mason
Jen: How are your investment funds catalytic in a way that is different from other funds?
Mark: The Potlikker Capital investment process is anchored in a paradigm which supports BIPOC farmers’ progression along the continuums of both financial sustainability and environmental stewardship. As a result, much of our organizational underwriting resources are focused on preparing farm business balance sheets, farm operations and production programs to grow sustainably. It requires more of an advisory or consultative approach beyond what would otherwise be a traditional transactional mindset which we would consider extractive financially to farmers and disconnected from our broader intent to build more community resiliency. Relationships with farming and farm related businesses are established with the expectation of a multi-year tenure with Potlikker and its many partners including Jubilee Justice. As a result, assessing the willingness of a farmer to partner and learn together overtime is as necessary a criteria for the Fund to engage as is the capacity to repay a loan.
Potlikker’s mandate is to support rural BIPOC farmers nationally by making multiple investments of blended capital (grants, loans and equity) in defined local clusters of connected farmers across the country. Our “clustered” capital deployment approach is significant in that it allows us to deliver technical assistance, support communities of practice, drive new revenue and build capacity to communities in a very efficient manner while reducing risk to both farmers and the investors who provide loan and grant capital.
Potlikker Capital Team
Jen: How do you describe the kind of non-financial returns the fund offers?
Mark: The Fund will offer principal protected “Jubilee Notes” to nonaccredited investors so that they may participate in repairing their own local rural communities. The Fund will also offer “Justice Notes” and “Philanthropic Notes ” to accredited investors. Our underwriting process will deploy these funds coupled with grant and recoverable grants to customize holistic support programs for farmers that may include: introductions to distributors, direct grants for new regenerative farm programs, guarantees to release homesteads form collateral agreements, heirs property lawyers to protect farmland and most notable –creating communities of practices amongst our farmer partners. The Fund is currently in the process of catalyzing both a farm equipment trust and a fishing quota trust which will be both community governed by community. Poltlikker will serve as the administrator. These are among offerings by the fund to create more supportive eco systems for BIPOC farmers to thrive. The underwriting process will not place a significant if any weight on credit scores or tax returns but instead use a relational approach which involves regular onsite visits and vetting business models for their fidelity. Loans will be priced at below market rates (no more than 200 bp over our cost of funds.
Jen: Can you describe how you use integrated capital to do your work?
Mark: The Fund will use grants, recoverable grants, loans and non-extractive equity and near equity investments to provide knowledge, political access, working capital, acquisition loans , equipment, guarantee pools, and resources to establish community collaboratives. We deploy these resources by investing in place based clusters of farmers in specific communities who want to partner together. We can help them form cooperatives to process their products and distribute them as well. We expect each farm we engage will receive on average a mix of 1/3 grant and 2/3 investment capital support over time.
Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?
Mark: The Fund seeks to provide BIPOC farming communities with the access to non-extractive financial capital, knowledge of sustainable farming practices, political access and new markets so that they are able to contribute to the wellbeing of not just their own families, but to better sustain the health of their rural communities. Transitioning conventional farms and sustaining and growing regenerative BIPOC farming businesses in clusters is a direct way to support generational wealth transfers and preserve the political voices of BIPOC farmers in agricultural and food policy discussions.
Jen: What do you tell people who think your fund is risky?
Mark: The intent of launching Potlikker Capital is not to simply launch a fund. The intent is to build a new institution that exists at the intersection of racial and climate justice and can model new behavior for incumbent institutions to relate to BIPOC farmers… including the USDA. We are unaware of a lending intuition with a national mandate in 2022 that is designed to provide holistic support to BIPOC farmers that does so through a reparative capital. Not investing in Potlikker will continue the void of support BIPOC farmers experience as they seek to sustain themselves . It is unlikely that the same institutions that created the unjust agricultural economy that has hurt us all will also be the catalysts to make the system move toward justice without new players.
Investment Thesis/What is your rationale for your approach to investing? Potlikker Capital, a California based 501c3 charitable loan fund founded in 2020 and commencing operations is 2021 Integrating technical, social and blended financial capital to “reparatively” invest in regenerative BIPOC farmers in local community clusters across the nation. Potlikker Capital is a supporting entity to Jubilee Justice.
Geography: Nationally. Current focus is South east, South West and Midwest US
Year Founded: 2020, Operations 2021.
# of Investments:12
# of Investors: 25+ (donors, funders, supporters, investors)
Funds Raised: $ 5.4 mm since inception
What’s on Mark’s Mind?
Book: Tractor Wars by Neil Dahlstrom
Song: Tchelete ( Good Life), Davido Mafikizolo
Podcast: RV Lifestyle Expert, Margo Amstrong