Growing a sustainable future: a conversation with impact investor Peter Arensman

Agriculture is a considerable part of the climate problem. It generates up to 29% of greenhouse gas emissions. Food systems are also very vulnerable to climate change. So there’s a double incentive to improve sustainability in the sector.

Further reading below 👇

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The good news is innovative businesses are emerging to effect change and progress may be happening faster than we think. We spoke with impact investor Peter Arensman, the son of a farmer who has devoted much of his career to promoting education and funding sustainable food ventures. 

Could you tell us a little bit about yourself and your background?

Peter ArensmanI was born as the son of a farmer in the southwest of the Netherlands. My father sold the farm before I could follow in his steps. This led me to university. I studied Business Economics at Erasmus University Rotterdam. After I graduated, I spent three months working at Cargill. But I decided I was not suited for corporate life. So I resigned and started my own company. I ran the company for eight years. The venture was not very successful, so I had to start all over again when I was 35. I had no money in the bank, house, or car. This didn’t kill my entrepreneurial drive though. I started BAS Consultancy, a finance and accounting consulting firm. I'm pleased to say this was a success from day one. 

You’ve been a philanthropist since your time at BAS, if I’m not mistaken. 

Yes, when I started BAS, I decided to donate 10% of my gross profit every year to charitable projects. The projects we supported were focused on education in English-speaking countries in Africa. As I visited these countries over the years, I became more invested in the long-term effects of our donations. 

After a decade, I decided to leave my CEO role at BAS and remain a shareholder. I started investing and became a board member in several companies. I then decided to start an investment firm called People Planet Profit. This was over 15 years ago; I registered the URL, which shows how early I was in this area.

Since then, I have started investing in companies to improve the smallholder’s position. A smallholder operates in small-scale agriculture. As I learned more about this sector, I decided to go further and start a new commercial investment vehicle: Future Food Fund. I saw a big transition in the agricultural and food scene and wanted to contribute to it. 

Can you tell us more about Future Food Fund?

We started it six years ago with a €15 million fund. We have invested in ten companies so far. Today, I’m setting up a second fund, Future Food Fund II, which will be between € 50 and €60 million.

What can you tell us about your experience going from accounting to investing?

It was tough for me to fundraise because I didn’t have a track record in the investment or agri-food scene. So, I decided to start studying again six years ago. I enlisted myself as a full-time student at Wageningen University. A little over three years ago, I graduated as an agricultural engineer. I’m a guest lecturer at the university now, teaching future engineers how they can set up their own companies.

As the son of a farmer, you must be extra proud to be a graduate of Wageningen University, one of the best academic institutions focused on agriculture and forestry. My next question is about Future Food Fund. How do you select companies for investment, and what would you like to see in a startup before you invest in them?

Selecting companies, I found out, is just a matter of hard work. You have to get as many companies in your pipeline as possible. You want to see every startup and scale-up. The key is to make the right choices. We have seen over 600 companies in the last five years. We invested in ten, which means we fund 1 in every 60. The three most important things we want to see in companies are:

  • The business plan: how a company will generate revenue and stay competitive. 
  • The team: we want to see a balanced team. We don’t want to have a one-person show. We prefer teams of three. We see many teams with two founders, and we always advise them to hire a third person who can bring balance to the management team.
  • The third is scalability. It has to be able to grow very fast.

Comparable, reliable and complete - the CSRD forces corporates to step up on sustainability reporting

CSRD BlogCompanies are getting ready for the EU’s Corporate Sustainability Reporting Directive (CSRD), effective from January 2024. 

The CSRD aims to ensure that companies publicly disclose reliable and comparable sustainability information that meets the needs of investors and other stakeholders. 

Read the article 👉

Can you share some insights about the successful startups you invested in?

Well, I cannot say that all our investments are successful. They have not exited yet. Our business model is to invest against X and de-invest against a multiple of X in 10-15 years. One of the most successful companies in our portfolio is Pieter Pot, an e-grocer that operates without packaging. They’ve been growing by 10% monthly for the past couple of years. Their value has gone up tremendously.

Another company in our portfolio, GROWFOAM, makes biodegradable growing plugs, a piece of substrate that enables seeds to turn into small plants. When you grow vegetables, you go through three stages: the seed, the vegetative state (when the seed grows into a small plant) and the propagation state (when you have a fruit that produces more seeds). The company enables producers to transition to controlled environment agriculture (CEA) and vertical farming, which have many advantages for sustainability and OPEX reduction. 

Can you share some of your lessons learned from sustainable investing?

There are many lessons. Times are changing very fast. When I started Future Food Fund, impact was seen as a nice thing to have in your business plan. Within four years, impact has become a must-have. You see that companies who are geared towards impact have a higher valuation. For me, this was a lesson. I never expected that things could change so fast. 

The Business Model Canvas itself changed. It went from being focused on profit to being focused on the “3Ps,” incorporating people and the planet. 

What do you want to achieve in the coming years with Future Food Fund?

We want to make suitable investments, of course. I’m the founder of the fund and a bit older than the rest. I don’t have ambitions to become wealthier. I want to make my investors happy, and I like the team to be satisfied. I want them to have fun in their work, and I want them to make an impact. Last but certainly not least, I want to invest in companies that can change the world. 

Looking at Pieter Pot, you can see they accomplished something extraordinary: they put the packaging issue on the table. That’s a direct result of our investment. Packaging is now on everybody's agenda. But to go back to your question about lessons learned, we’ve also realised that there are no easy solutions. In the old days, everything was sold without packaging. We learned that it helps to preserve food. 

That’s right. If you buy a cucumber with plastic wrapping, it lasts longer. Sometimes having the wrapper is better for the environment. Otherwise, you get food waste. 

Yes, the world is a very efficient place. We’ve come an enormous way. If you look at the percentage of people dying from starvation, this has gone down in the past 50 years. We have managed to create a system where most people have enough food. Changing the food system is not easy. Food is available at very attractive prices. If people die from a lack of food, it’s usually related to a war or something else. More people worldwide are dying from obesity rather than hunger.

Speaking of food and hunger, do you think having quality food available at affordable prices is detrimental? People forget that sectors like agriculture and steel have been very important in building the economy and are quick to blame them for everything. What do you think about that?

As a farmer's son, I’m always on the farmers' side. At Wageningen, I learned that the income parity of a farmer is 0.5. That means they earn 50% of what the average Dutch person earns. I was flabbergasted. Farmers are working day and night. Dairy farmers, for example, earn less per hour than an 18-year-old working at the supermarket. They have to do everything they can to secure their income. That’s something people ignore. 

The amount we used to spend on food after the second world war was about 40% of our income. It went down to less than 10%, thanks to farmers. We thanked them back then; nowadays, many see them only as a source of pollution and contributors to climate change. That’s outrageous. I talk to many farmers who want to become more sustainable but need societal guarantees that they will get their income. Right now, nobody is giving them that guarantee. So, you can’t blame them for being conservative. 

Yes, often farmers don’t have the margin to invest in changing their business model. Speaking of business models, what do you think of the circular economy and what are the 2-3 most important challenges to achieving it?

I see the circular economy as a subset of a sustainable economy. Let’s consider an example. Glass recycling is not sustainable because it has a very large energy footprint. So, you need to look at things more holistically. My main focus is on Agri and food, which also covers clothing. Cotton is a very polluting product. It uses enormous amounts of water and pesticides. Instead of buying 20 t-shirts per year, there should be a movement towards not doing that. New markets are emerging for reuse and recycling, but this may not be moving fast enough.

I think the government will need to impose rules. Circularity and sustainability will become more achievable when governments enact them into law. 

What would this mean for sectors like agriculture? Will we be able to feed nine billion people with regenerative farming?

That’s a good question. There are two schools of thought. One states we should make agricultural land as productive and intensive as possible to leave as much land for nature conservation as possible—the other school advocates for nature-inclusive agriculture. We can feed nine billion people using both ways. Land use is not an issue anymore. You can use vertical farming and greenhouses as we do in the Netherlands. But this is a political question. Countries like the U.S. are opting for intensive agriculture; Europe is choosing the opposite. Everyone knows that regenerative agriculture is complex. Try growing tomatoes in your backyard without having to deal with caterpillars. 

Some schools want to continue with intensive agriculture but use fewer pesticides, fungicides, etc. It will likely be a combination, but reducing these chemicals is an excellent first step. 

You are active in business and politics. What do you think is the role of business in getting to a more sustainable world? Should governments or enterprises take the lead?

I think governments should take the lead. They’re not doing it because these transitions are costly. Politicians don’t like to communicate costly measures to their potential voters. So you see entrepreneurs taking the lead. Lots of larger companies then start following suit. 

I’m generally disappointed in politicians. They postpone taking measures and then impose many rules in a very short time. There should be a longer-term vision. When it comes to energy, there should be a European vision. We should consider that what is possible in one country may not be possible in another.

In Spain, for instance, you have a lot of space. Dutch people could invest in solar energy in Spain and have wind energy here. You can only effect change at a larger scale. Do you agree?

The European and Dutch governments should be more active in this area. 

How do you think businesses and governments can cooperate to make the transition more efficient?

This should be a high priority on the agenda. Governments should sit with representatives from the private sector and work on a long-term plan. But there is a big gap between the political and entrepreneurial worlds. Everything in politics revolves around processes. To survive in politics, you must control the process; entrepreneurs think about results. These are two very different worlds. It’s essential to think about the plan and collaborate on it. And we need to bring smaller entrepreneurs to the table, not just the board members of big companies.

What do you think of regulation in the area of sustainability?

I think it’s good that new rules are coming. Future Food Fund must comply with these rules, which is good. However, we need to make this achievable for smaller funds. There should be a different regime for them. Otherwise, it won’t be doable. Small companies and small funds contribute to innovation. We shouldn’t stifle them. 

I liked hearing about your experience at BAS Consultancy and Future Food Fund. What’s your primary drive at this moment? 

I’m very motivated to make Future Food Fund II successful. I would also love to have more activities with People Planet Profit. My dream is for the agricultural sector in Africa to get to the next phase. Most people in Africa are smallholders. After being active in the industry for many years, I conclude there is no future for the smallholder. The continent needs a huge transition. Smallholders need to become medium-sized farmers. That’s what I will look into in the coming ten years. 

If you had a magic wand to speed up the transition to sustainability, what’s the first thing you would do?

I’m a big believer in education. That’s the first thing I would focus on. It’s the key to solving all problems. This doesn’t mean everybody should have the same opinion. We can have different ideas and approaches, but we must collaborate to solve this challenge.

Why is sustainability important to you personally?

About 20 years ago, I was introduced to the triple P bottom line (People Planet Profit) by Eckart Wintzen, a famous entrepreneur, management guru and a very early investor in sustainability projects. I realised then that we cannot only strive for profit. This was a critical insight: thinking about the consequences of my behaviour for the people around me. Everybody should think about the implications of their actions. For this, we need education, and we require personal commitment.

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