Naveen Sikka (TerViva)

Rooted in the natural power of an ancient supertree, and applied to the modern food system via some clever financing, distribution, and processing innovations, TerViva has brought to market the world’s first carbon negative oil and flour ingredients.

Naveen Sikka, Founder of TerViva

Here at Climate Tech VC we’re big fans of natural solutions to climate change that, with a little scientific and business model enginuity, come out far ahead of their non-natural competition. TerViva has done just that. Rooted in the natural power of an ancient supertree, and applied to the modern food system via some clever financing, distribution, and processing innovations, TerViva has brought to market the world’s first carbon negative oil and flour ingredients. To hear the story, we had the pleasure of chatting with Naveen Sikka, the disarmingly affable and exceptionally bright CEO of TerViva.

First things first, what is the Pongamia tree and why is it a better crop?

The Pongamia is a millennia-old legume tree. Cultivated in the subtropics, it was favored in ancient times for its beans which are loaded with antimicrobial compounds which, depending on who you ask, can solve all of the world’s problems. Now, the Pongamia tree is mostly used for reforestation because it’s hardy without being invasive.

What role does TerViva’s play as a company in Pongamia production?

We’re a vertically integrated producer and processor. We have a lot of IP around questions like how do you make this bitter bean into a food? How do you formulate the protein into a veggie burger?

We use that IP to work with collaborators to get things done. We put our genetics insights to work with growers who have the land and operating ability. Some of those growers are existing Pongamia farmers in India where the tree is very widespread. With our Indian growers, we employ traceability to ensure that they’re rewarded for the high quality of their crop.

How do we make money? Well, we charge growers for our tree genetics. That’s not our end state business model, but charging for getting those trees in the ground has been a good way to start the movement. Our principal revenue stream is selling the Pongamia protein and vegetable oil ingredients.

We do a little bit across every step of the food value chain and our team reflects that. We’ve got folks who help farmers get the tree into the ground, others who work with the food manufacturers, and others in the lab. But ultimately where we make the money is in the bean.

What other comparable agricultural companies vertically integrated like this?

Our vertical structure tips toward a bias we have around strategy. We believe that true transformation in food and agriculture is going to have to happen through vertical integration. Over the last 5 to 7 years of agtech, we’ve seen that farmers’ share of wallet of the final food product sale is so small that asking them to adopt different technologies or practices has been challenging – they’re just not incentivized or empowered. With a vertically integrated solution, our growers are getting a bigger part of the share of wallet. Said another way, our farmers have a vested interest in doing things differently.

Indigo Ag and Farmers Business Network (FBN) are examples of others trying to empower farmers. And of course, Blue Diamond and Land O’Lakes are legacy examples of the integrated grower model.

You published an incredibly in depth 2020 Sustainability report. For those who haven’t read it yet, what are some of the main messages from that report?

First off, we can use a bigger basket of crops to meet our global food needs. We’re too reliant on 3 to 5 crops for all of our food needs. Consumers are willing to try more things now. The other day I flipped over a Califia butter container and read on the ingredients list that they’re using tiger nuts! What even is a tiger nut?! It’s an exciting time when diverse ingredients get valued. These crops come from diverse land assets that don’t put pressure on 2 to 3 countries to over-farm their land. TerViva stands for alternate, permanent, and sustainable crops deserving a place in our food basket.

The second major point that we drive home in the sustainability report is that farmers absolutely need to be more central to our future food system.

And then lastly, there are “natural” asset approaches and “non-natural” approaches to sustainable agriculture. Non-natural approaches have been getting a lot of attention, and now innovations like cellular meat and vertical farming are super overweight in investment portfolios. They do merit venture’s attention, but that same asset class should be investing in natural solutions. It sounds much more interesting to control nature, but natural solutions solve the problem directly.

Will TerViva’s oil compete with palm oil?

We are going for it! Our current oil product is already a partial substitute for palm. We think we can replace 1 to 2 liters of every 10 liters of palm oil. That means that a product which used to be 100% palm, can now be formulated with 80% palm and 20% Pongamia. Industry-wide, that 20% replacement adds up. We have a strategy to continue to increase that replacement rate, all while maintaining our organic status.

TerViva’s food products are “carbon negative.” Is that a first for the industry?

We think we invented that moniker. But yes, it takes a lot of work to get to carbon negative. We’ve mapped the LCA (life cycle analysis) from field to fork, and we sequester significantly more carbon in our trees than is emitted by the end product. A big carbon negative sink from our Pongamia production comes from planting the trees on degraded agricultural land.

The more that consumers start to value the carbon footprint of their diets, the more important quantification and certification of life cycle analysis will become. For that, digital tools are going to be critical; cool things are going to develop around it.

We’re not 100% certain that consumers will choose a food product because it is carbon negative, but we want consumers to associate TerViva with reforestation on degraded land, and other good carbon approaches. We’re all in on making this the world’s most sustainable food, and control the standard to help regulate how it is manufactured and distributed.

If you have suggestions for food companies that you’d like to see the Pongamia carbon negative ingredients incorporated in, TerViva would love to hear from you! Reach out to [email protected] with thoughts.

To learn more about TerViva, check out their website and be sure to read their 2020 Sustainability Report.

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