Why I Started a Food Innovation ETF: A Journey from Personal Conviction to Growth Investing

A Childhood Realization

Not eating meat is one of my earliest memories. As a child, I simply couldn’t stomach it. The texture, the fat, the gristle—it all felt unnatural to me. I remember explaining to my parents that it just wasn’t appealing, but they were convinced I needed it to survive. So, under their watchful eyes, I tried to comply, but when they weren’t looking, I hid pieces of meat in my pockets, under the radiator—anywhere to avoid eating it. Of course, I was caught and grounded. In my young mind, I learned that eating meat wasn’t a choice; it was a societal expectation.

Confronting the Reality of Factory Farming

Fast forward to my 20s and 30s, and I had come to understand the realities of factory farming. I would mention to friends, “Do we really need pepperoni on that pizza?” The backlash was swift. “Oh, you’re such a tree hugger,” they’d say. I realized that everyone around me was participating in something they knew wasn’t right. Yet, because it was the norm, questioning it was met with resistance. It was a strange contradiction: people were aware of the problem but unwilling to acknowledge it openly.

A Turning Point in My Investment Journey

As I continued my career in finance, serving as Chief Investment Officer for a small family office, my perspective broadened. My focus shifted beyond personal choices to the broader implications of our food system. A turning point came during a Thanksgiving dinner with my nephew, a member of the University of Oregon football team. He told me that his team’s nutrition coach had banned meat and dairy during the season. This revelation struck a deep chord. I had known all along that my body rejected these foods, and now, science and performance nutrition were affirming what I had always felt instinctively. That day, I made a decision: I would no longer let societal pressure dictate my choices. I changed my diet on the spot. 

The Business Case for Food Systems Transformation

Once my diet changed, my business instincts kicked in. I started analyzing the food industry through an investment lens, and what I discovered was staggering. The inefficiencies in the food supply chain were glaring. Factory farming was not just environmentally disastrous — it was a poor business model. The numbers were irrefutable: 32% of the world’s methane emissions come from animal agriculture, primarily cows. Deforestation, biodiversity loss, food insecurity — all traced back to the same source. Our current system consumes vast amounts of land and water to produce a fraction of the calories needed to sustain the world’s population. With global demand for meat projected to rise by 50%, and no corresponding increase in land or water, the consequences of inaction were clear: food could become a privilege of the wealthy, leading to geopolitical instability. 

The Need for an Investment Solution

Where there is inefficiency, there is innovation. Thus, I saw a massive investment opportunity in food system transformation, a total addressable market estimated at $9 trillion to $14 trillion. Just as we transitioned from landlines to mobile phones, from horse-drawn carriages to automobiles, our food system is on the cusp of a transformation. Investing in companies pioneering sustainable food solutions wasn’t just ethical — it was financially sound. The U.S. Department of Defense is now allocating significant funds to food innovation as a matter of national security, a strong market indicator that more global investment is to come and that de-risking these innovations from government is highly likely.

Further, the World Bank projects that $450 billion to $650 billion will need to be invested annually in food system transformation over the next decade, a massive opportunity for investors. As far as impact, The Boston Consulting Group found that investing in diversified proteins was up to 40 times more effective at reducing greenhouse gas emissions than investments in other green technologies.

It seemed logical to me that I would invest for the small family fund in this opportunity as part of an overall growth and impact strategy. Investing in private opportunities is much too risky with no liquidity so that wasn’t an option. When I looked for an investment vehicle in the public markets that focused on sustainable food systems transformation, I found nothing. There were ESG funds that excluded certain companies, but exclusion alone doesn’t drive innovation. The growth opportunity is investing in the companies actively creating the solutions — the innovators in AgTech, biotech, fermentation technologies, regenerative ingredients, diversified supply chain innovations, and sustainable materials.

Creating VegTech™ Invest

I didn’t want to invest in high-risk private equity or tiny startups that lacked scale and distribution. I wanted to invest in the companies large enough to drive real impact, with the supply chain infrastructure to transform the global food system. Since no ETF met these criteria, I considered building one myself. This became a reality when I met my VegTech™ Invest business partner and Chief Investment Officer, Dr. Sasha Goodman who, for the same business reasons, had also been on a path to investing in food system transformation in the public markets. This serendipity is how our food innovation ETF was born.

Today, our ETF is the first US thematic to focus on sustainable food system transformation, investing in companies leading the way toward a resilient food future. We are proud that Ethos ESG has recognized our fund as carbon neutral without buying offsets. The companies in our fund have a global warming potential of just 1.18 degrees Celsius — well below the Paris Accord’s 1.5-degree target and significantly lower than the S&P 500’s projected 2.86-degree impact. We believe we have firmly captured the growth and impactful large-scale opportunity of food system transformation.

Investing in the Future of Food

By investing in the innovators redefining how we feed the world, we are investing in a more sustainable, resilient, and secure future. For investors seeking both high-growth potential financial returns and meaningful impact, our fund provides an opportunity to participate in a transformation that is already underway.

What started as a personal journey has become a professional mission. Food systems transformation isn’t just an investment thesis — it’s an investment in the future of our planet and its people. And for those of us willing to embrace this change, the potential rewards—both financial and societal — will be profound.

You can learn more at VegTechInvest.com.

Read Elysabeth’s November 2024 GreenMoney article “The Growth and Impact Potential of Investing in Food System Transformation”.

 

Article by Elysabeth Alfano, CEO of VegTech™ Invest, Advisor to the Food Innovation ETF, and the voice of sustainability for Advisorpedia magazine, hosting the Upside & Impact: Investing for Change podcast.