S2G expanded its toolkit in 2022 to include a special opportunities strategy, with the goal of helping to scale climate solutions using tools beyond venture capital and private equity. Andrea Woodside, Vice President of Special Opportunities, unpacks the fund’s investment thesis and areas of focus.
What was the impetus for launching S2G special opportunities?
S2G invests across high CapEx industries including agriculture, energy and oceans. Before launching a special opportunities fund, S2G invested in early and growth stage companies within these industries, having capital efficiency in mind. As products and solutions scale to the point of commercialization, they often need more capital to expand to the point of profitability. The special opportunities fund allows S2G to support more mature companies in their scaling journey and provide them with a lower cost of capital that is aligned with their risk profile.
Through its investments across the food and agriculture, oceans and seafood, and energy supply chains, S2G has unique insight into market gaps and de-risking technologies which often present "special situation" investment opportunities that other market participants may not be willing to price. S2G's venture/private equity and special opportunities funds have a symbiotic relationship - the special opportunities fund supports the product deployment for S2G’s portfolio companies, and in return, the special opportunities fund benefits from the technology application layer provided by current portfolio companies.
Has S2G made special opportunities investments historically?
S2G is not new to special opportunities or real assets. For example, its agtech portfolio companies are working across farmland assets around the world. S2G, and Builders Vision more broadly, have helped companies scale through infrastructure financing once they reach that point of maturation. They've invested in companies within the controlled environment agriculture, renewable energy, farmland and water asset sectors. S2G helped to launch Clear Frontier, a company formed in 2020 to purchase row crop farmland and convert it to organic using regenerative agriculture practices. Today, Clear Frontier has raised over $200 million and owns organic farmland in partnership with growers across the US. In addition to Clear Frontier, we have supported several other projects across the energy, oceans and food/ag sectors.
What types of capital structures can S2G special opportunities invest in?
The special opportunities strategy is meant to be a flexible capital source for companies, which means we can structure the security to meet the needs of the entrepreneur. S2G can invest debt or structured equity in companies, both on-balance or off-balance sheet. Typical investment structures include project finance/infrastructure, land purchases, real estate, credit facilities, or even corporate debt. Our first investment out of our new Fund is in Common Energy, a community solar aggregation platform that helps connect subscribers of community solar projects to developers, while helping developers manage subscribers.
What are some special opportunities themes S2G is focused on?
As I mentioned, we invest across the food and agriculture, energy, and oceans sectors, with investment theses aligned with our thematic funds. Within food and agriculture, the special opportunities team is looking at regenerative agriculture lending, controlled environment agriculture, fermentation infrastructure, and scaling other food manufacturing processes to support innovative brands. Within energy, we are focused on backing renewable developers, low carbon logistics, and EV affordability. Oceans and seafood is a more nascent theme but includes interesting opportunities around feed alternatives, aquaculture, and algae production. Things get really exciting when opportunities span multiple themes such as renewable fuels, low carbon maritime infrastructure, and green hydrogen.
Can S2G special opportunities invest in companies outside of S2G's portfolio?
Yes! The Special Opportunities fund is looking to scale companies across our themes broadly and is not beholden to investing alongside other S2G portfolio companies.