Tom Doornik: so good meeting you. My name is Tom. I'm an investment associate with Doon Ventures. We are a early stage ⁓ VC based in Amsterdam, investing in what we call the regenerative economy, typically in pre seed and seed. Initial tickets, 350K up to ⁓ 700K a million in follow on capacity. Quite a broad view in terms themes we focus on. So, we invest across the entire value chain that can be both B2B and B2C in sectors such as regenerative agriculture, blue economy, materials, so for example, packaging or building materials, circular models as well. And then we actually also do sustainable consumer brands and services, which I will get to probably somewhere later on in this chat.

Alex Shandrovsky: Okay, amazing. And you recently invested in one of my favorite entrepreneurs out of Belgium. So tell us a little bit about that investment strategy. Can a hundred meet him? What was the thinking process around the thesis of you taking the bet on the company?

Tom Doornik: It sure did. Sure, so I think it's been a while back since we were actually introduced. It was through a relationship in Sweden, which introduced us to one of their current investors, Mudcake. And they introduced me to Dan, which I'm pretty sure you're referring to, the co-founder. And coffee was in general, one of the interesting sectors we looking into.

Alex Shandrovsky: Thank

Tom Doornik: both let's say traditional coffee but also coffee alternatives and we had spoken to quite a few companies in the past but didn't really find a company or brand we were super convinced in then we spoke to Kopi and we were quite impressed both by the team but also the product and the technology. So I'm not sure to what extent you're, let's say aware of what they do and how they work, but they actually have a single ingredient coffee alternative, meaning they can use one input stream, which in their case is a legume. for example, chickpeas or yellow peas, through a special fermentation technology, they can turn into basically a coffee bean. and their technology enables them to have the bean retain its shape. And by doing so, they can actually blend it with conventional coffee. I where we saw a lot of impact is I think twofold. by using lacunes, there's actually a very interesting regenerative play because they are very good for nitrogen fixation, so health. And secondly, Coffee is, first of all, being influenced by climate change. So it's causing some supply issues, meaning higher prices, but also price volatility. And ⁓ also of the food staples that ⁓ quite a ⁓ to climate change as well. So use of fertilizers, pesticides, deforestation, not even to about social issues in the supply chain. I think in copy we found a alternative that can be integrated in existing supply chains, ⁓ in terms of product, but also in terms of process. can on taste, ⁓ very important well. So we tasted it, but more importantly, graders also tasted I found it to taste the same as conventional coffee. And maybe even more importantly, it can also compete on price. So as I said, coffee prices are rising, they're very unstable and they have a very affordable but also stable product that they can offer. So I think from that perspective, it takes every box that you as an early stage investor to see. And so we were very happy to join the cap table.

Alex Shandrovsky: Yeah, so I really love that analysis and Tom is a real expert. So let's break it down a little bit to the listeners here. You heard a few things that are interesting to me, right? First of all, you were looking at that space, right? You had already a thesis around it, and then you were trying to find, like you identified the problem. It wasn't copy's job to tell you about the problem, right? You already knew the problem statement before you met them.

Tom Doornik: Correct. Yeah.

Alex Shandrovsky: Okay. And then the second thing is that you already had a sense of the landscape, right? There's, you know, there's several players that are looking at this problem, similar to like the chocolate space, which I was, I was in the cell culture's chocolate space for about a year and a half. So, you know, chocolate, coffee. So you probably looked at all the players when you were thinking about this is the right bet to make. Right. So that's another thing that is really important to listeners. When you think you're having the conversation with the investor, it sounds like Though they're having parallel conversations with your competitors potentially at the same time. Would that be correct?

Tom Doornik: Yes and no. So we didn't speak to all competitors in the landscape. Of course, we did our own diligence and made a competitor landscape and looked into who's active in the market. I think more interestingly, we also speak to other companies in the ecosystem. So being traditional coffee players, coffee roasters, on legumes, other VCs to really get a ⁓ picture of where this market is and where it needs to go. then for us to build a thesis, okay, do we believe company A is actually the one to realize that transition? And think what ⁓ copy for us is really their interoperability within existing supply chains. I think that a very ⁓ unique factor and to... to get the conviction. didn't need to speak to all companies out there. I think we got a pretty good understanding of the market by also speaking to the more existing players and incumbents. of course it also helps to actually know what competitors are working on and to see to what extent they can compete.

Alex Shandrovsky: And to my understanding from conversations with Don and Kopi is that, first of all, the supply chain is very solid from source to the ingredient, right? And also the way the processing equipment is very standard as well, right? So they can use, if they wanted to do it's off the shelf equipment. And also even the downstream of how you take the powder and application of it in the capsule form, all the way into a drink is also there, right? So you're just solving for one... piece of the problem, which is that IP of transforming the legumes into a product that can be used in a coffee application, right? But everything else the supply chain is already working and to drop in. ⁓ that be accurate?

Tom Doornik: Correct, and I think what's even more important is that they don't need to set up production themselves. So they can, as you said, make use of off the shelf but also actually work with parties that are actually doing this already for coffee brands. And that of course ⁓ a huge influence on your capex requirements. If you can leverage existing facilities without. that having a very strong influence on your price parity and in your to compete on price. But I think that's a ⁓ fair to say.

Alex Shandrovsky: And then, so that's a fascinating thing you highlight because in the announcement it said you guys are funding a facility. this a facility or is this CDMO that's going to have additional capacity? Which of the two would it be?

Tom Doornik: the latter. they don't need to build their own factory or production line. They can work with existing parties that have the machinery to get production going. And I think for the phase they're in, a huge advantage because again, it lowers capex requirements, therefore funding requirements. And just makes the whole funding play way easier.

Alex Shandrovsky: okay, so let's get a little deeper in this one because this is super interesting to me because it sounds like the ⁓ big risk here is a commercial risk like ⁓ Is the consumer ready to drink an alternative to coffee, right? We this chicory out there right? That's not it's not like there's it's not like there's no new coffee out there There are alternatives out there the market, right? It seems like the consumer is going back to the coffee experience. Another thing is, you know A concern I have is around labeling. Labeling laws around coffee are pretty strict from my understanding, maybe different geographies. Even if you extended coffee with say a blend of 20 % copia, 80 % coffee, you couldn't call it coffee, could you?

Tom Doornik: No, think you hit the nail right on the head. So I think the biggest challenge at the moment is indeed commercial. I think our thesis there is that it will follow the same, let's say trend or developments as we see an alternative meat, dairy, chocolate, you said, where the, let's say product description ⁓ of meat or ⁓ or cannot be used, but. the way you actually produce it, say espresso lungo, which is a description of the production process can in fact be ⁓ I think even in the case of chocolate, ⁓ most cases, the consumer isn't actually realizing ⁓ not eating conventional chocolate. So they call it chocolate fantasy or chocolate dream or whatever. ⁓ that indeed is their main ⁓ going

Alex Shandrovsky: Yeah. I think labeling is a really fascinating piece. I think that's for our listeners, that's a really big breaker. Besides regulatory, let's assume that you can solve the regulatory piece, but how do you label as an ingredient on the front or in the back of the package? That's curious. When you spoke to the coffee industry, were they saying, this is something we actually think we want? Because you guys would be a B2B ingredient. Conversation is led to believe you actually know there's an opportunity here for us

Tom Doornik: Yeah, so I think for the coffee brand, you're solving a huge issue or issues in fact. So it's cheaper, stable supply chains. There's even some functional benefits, meaning no caffeine. but they all have the same issue, meaning how do we actually convince our consumers of buying this? So I think for them, the reason to buy is very evident because it lowers your costs, meaning higher margins, more stable supply chains. But in the end, as you said, labeling ⁓ and this the end customer, that's the challenge, not convincing the coffee brand to implement this because... It can compete on price, on production process, taste as well. But course, the end customer needs to like it and buy it.

Alex Shandrovsky: Yeah, I think that's going to be an interesting educational exercise for somebody brave enough to take that. And that's not to be really Kopi's job, right? I their job is to create the best ingredient possible. It's the job of the brand to go out there and educate the consumer why this is important. And you brought something interesting, which is this is a caffeine-free product, right? So it like...

Tom Doornik: strict.

Alex Shandrovsky: I know some people drink coffee for the caffeine piece of it directly, right? So that means we're not going to target those consumers. We're going to only target the decaf consumer.

Tom Doornik: Not per se, so the product at base value is caffeine free. Of course, caffeine is something you can actually add to the product. also if you blend it with traditional coffee beans, it will have caffeine. Of course, you can also blend it with coffee beans that are free of caffeine. I ⁓ what realized is that where the market is moving is that the whole sustainability angle. ⁓ despite us wanting to believe that consumers find it important, it's currently for many consumers not a reason to buy it. So there needs to be a me benefit or a functional benefit such as decaf for consumers to actually opt for the more sustainable alternative. So I think that can be an interesting angle for them to position the product, but it doesn't need to be. So again, they can blend with conventional coffee with caffeine, but also with decaf. And then to your first point about that it's the branch challenge to position is I think to a large extent that's true. of course it's also the for copy to convince the coffee brand to take the leap and actually start piloting and start putting initial products on the shelf. even though they will not be able to influence the actual, let's say, label or packaging the end. Of course, they need to do quite some heavy lifting in the backend to convince these ⁓

Alex Shandrovsky: Right. And once the thought process, like you see the chocolate prices have crashed, right? So you had this massive, massive speak spike around, you know, a year ago, and now the prices crashed tremendously. So from 12,000 to like, two and a half, three, it's not back to where it was before, but definitely crashed. Are you worried if those prices crash for coffee then? the value to this product will change as well. And the only value exists to this product is if the prices remain high or is your belief that though the prices are not going to crash and even if they do crash, it's only for a short period. It's not going to be a long period. We think this crisis is going to continue. with chocolate, yes, there's a crash now, but just wait a year. It'll go back up to five, six, seven, eight, right? It's just a matter of time.

Tom Doornik: Yeah, to be honest, it's not really a risk we foresee at the moment. I think if you look long, long term and I think look at some macro trends being earth warming up, the amount of people increasing on that same earth, people general, or at least overarching becoming more wealthy and drinking more coffee. And think that means we need more coffee to currently supply the market demand that we foresee, whilst the actual supply will be going down due to climate change. So the fact that we might see ⁓ lower prices in a few years, ⁓ knows? I think the ⁓ trend will be upwards and no changing that. the way we see it going currently. So we need an alternative, if you want one that's still affordable because of course there will always be pockets the market for more expensive, quality coffee, something we still very much support also from Doon's perspective. but we also see a serious market demand for affordable coffee. I think that's exactly where they are tapping in and still ⁓ might go down. In general, they will fluctuate, but long, long term, it will be upwards trending.

Alex Shandrovsky: Okay, so you drew this very beautiful picture. What is your biggest concern? Like, you know, what was the big subjection they had to overcome in your mind when in your ⁓ IC committee, man, like this thing that this is our concern, it wasn't that we just don't know the consumer is ready for this. Was that the biggest concern or the taste is just not there yet? like, what was the thing that you felt you're worried you the most? And how did you convince the IC to say no, like we We know the risks, otherwise this wouldn't be venture. It would be just a bank giving a loan. So there's a venture part of it, meaning that it's probably going to fail. But what was the thing that was the biggest concern? And how did you guys convince yourself that, you know what, it's OK, we got this?

Tom Doornik: Sure. Yes, I think commercial risk is one, as ⁓ Ventures being we can take commercial risk. I the main risk foresaw and it's also very much tied to us as an investor is to what this will change the broader market. So to give you some context to that answer, Dune Ventures is a investment fund, part of the Dune meaning we don't have a very typical GPLP structure. have money that is ⁓ at realizing systemic change. And of the questions we got is how does this actually change the coffee industry? Because it's partly climate, partly social, but to extent will this actually help regenerate, let's say, degradated lands? I think our here is that don't have a very typical GPLP structure. We have that is ⁓ aimed at systemic change. think our or at least the way we foresee it, the future market is that there will be two segments, very high quality, organic, preferably regenerative coffee brands. And then next to that affordable, lower quality coffee, ⁓ still organic in coffee can play an important role to lower cost while not compromising on taste. And ⁓ think to that, it can also help relieve pressure from the coffee industry. because they're now trying to keep up with current demand. They might argue differently, but I think overarching their practices are far from sustainable. And we hope that by having alternatives like Coppy, we can actually reduce the pressure on the coffee supply chains in order to give these big brands also more room and more time to actually help. regenerate the lands that they have done quite some harm to. And IC, as you said, that was of the main questions. How does this actually then change existing system? And I think what I just described is ⁓ the answer to that that got us through.

Alex Shandrovsky: I love that. I love that. I want to push on something just from my own knowledge from the chocolate industry. The objections I faced when I was in there was that there was a certain pocket of ⁓ industry that really ⁓ with cell cultured cocoa or upcycled cocoa because so much of the narrative around smallholder farmers in developing countries, right? So, you know, putting dollars into a more sustainable practice, let's just say, sustainable practice that's using upside ingredients or cell culture will have a direct impact on the poorest parts of society. So you may be putting out in Ghana, 15 % of all their exports was cocoa. So if you're threatening that supply chain, you're threatening those livelihoods of small farmers. Is a similar issue with, and that was a bit of a genuine concern we had ⁓ in committees. That was a very big question mark. In addition to why because the the coffee the chocolate industry invested so much in that narrative as well I'm gonna put is it true is it not put let's put that aside But the narrative of the chocolate industry is saying like we are supporting smallholder farmers where we're developing better lifestyles for them You know, that's kind of that's a narrative if it's true or not, let's put that aside But that was a so they had to they invest in a supply chain that looked a certain way and now here we come saying hey It could be cheaper. It could be better. could be that but it directly impacts those farmers. How do you deal with that? So Was that something that you had to look at as well about what the impact in those other countries like say Brazil is going to look like if you are wildly successful?

Tom Doornik: Yes, I think from our perspective, you need both. So you need to have a solid alternative to relieve pressure, but you also need to find a solution to actually help these small horticultural farmers or ⁓ their way of working ⁓ giving them the tools ⁓ finances to transition farms to more organic and regenerative practices. So from our perspective, need both. We can also ⁓ and invest in, let's say both. From diligence, this was not a topic that was very much upon by coffee brands. You also mentioned whether or not it's ⁓ I don't know if this is for them that's very high up priority list. From our perspective, it is. So still need great initiatives, projects, entrepreneurs ⁓ that problem. ⁓ also still something we're ⁓ to ⁓ looking into. So B2B players or consumer brands actually helping farmers turn their farms regenerative farms and then selling those coffee beans ⁓ or a brand. But we also need to relieve the pressure. I think that's something we also are very convinced upon. So yeah, I think that's the summary there.

Alex Shandrovsky: awesome. If I'm a listener to this podcast and I'm a CEO and ⁓ I have an agri-food tech company, which area you guys looking at now? Why should I call Tom? ⁓ Where I be? sounds like I'm pre-seed seed, I'm basically maybe like a pre-two, pre-to-five of valuations, relatively early. what kind of areas are you guys thinking about a lot right now that if a founder is listening to this podcast, they'll say, hey, I probably should call Tom right away and we should have a conversation.

Tom Doornik: I think specifically in food and ag, there is few things to cover. So in general, if you're ⁓ related to regenerative agriculture, we're to speak. ⁓

Alex Shandrovsky: How would you define regenerative agriculture? What would be the definition? Because it's evolved through time. So would you define in your mind? Maybe you give us a few examples of what it is. Now, obviously planting legumes, ⁓ regenerative for the soil. increasing the adoption of a certain crop like that could be very beneficial. Any additional examples that you'd say, hey, this is interesting to us?

Tom Doornik: Yeah, I think it can also be like a smart composting or biochar propositions. I think in general, the way we look at regeneration is that if you wanna make an impact, I think it's on the one hand about resource efficiencies. So how can we make better use of the resources that we have at hand? That's one part of it, but that's more. So how can we make better use of the resources that we have at hand? I would say and incremental. The way we look at impact is regeneration, meaning how can we actually restore or regenerate the harm that we have done over the years. I would say reactive and incremental. The way we look at impact is regeneration, meaning how can we actually restore or regenerate the harm that we have done over the years. So in the case of soil, that means restoring soil health. that's still in itself is a very ⁓ topic, but can be anything from, as I said, biochar, ⁓ composting. We also look at blue economy, meaning things related to seaweed, oysters, regeneration, artificial reefs. ⁓ covers quite a lot and it can be the actual food itself, but also packaging. As said, it can be B2B, so ingredients, can be enabling plays, so platform, software but also consumer brands, basically anything in that value chain that contributes to ⁓ regeneration. and founders in pre-seed seed, the Benelux, DAG, Nordics reach out to us because we're very to speak.

Alex Shandrovsky: Okay, perfect. Australia, APAC is not within range. Israel?

Tom Doornik: No, I think with quite a wide focus sector wise, we're a relatively small team of eight nine with a portfolio of almost 70 investments. So we said we need to focus quite a bit. ⁓ with the sector that means keeping it somewhat selective it comes to the geographies we focus on. ⁓ And I think still it's that we can cover. ⁓

Alex Shandrovsky: Thank Perfect. Yeah, absolutely. And Tom, last question. You've been very generous with us, give us a lot of wisdom. How can we give back to you? If I'm a listener and I'm listening and I say, I really want help or I want to be of value to Tom, what are you looking for in the next six to 12 months? What kind of conversations do you want to be having?

Tom Doornik: So I think there's two ways. of them is following our LinkedIn page, very simple. But think more importantly, and I think that also sets us apart as an investor, we're really looking for consumer brands as well. I think many investors, there's quite some... doubts or hesitancy about brands, seeing them more as marketing wrappers and actually see them as a very valuable tool to drive impact because in the end you need to convince consumers ⁓ I think we've seen plenty of great examples of how that can be done. So you have a consumer brand in FMCG, electronics, basically you use on a ⁓ daily or regular basis with a serious angle,

Alex Shandrovsky: Bye.

Tom Doornik: then reach out to us because yeah, that for us is a key driver and also think something we can really bring to the tables that we're, would say one of the few investors that actively look for impact brands to drive change.

Alex Shandrovsky: well thank you so much for making the impact of this conversation. It was really great. ⁓

Tom Doornik: Likewise, thanks for your time.