Funds Shaping a More Sustainable, Cleaner Economy - Introducing Arborview Capital

Introducing Arborview Capital and the 2017 Best for the Environment Funds

October 10, 2017 - Entrepreneurs are seeking ways to build a better relationship between business and the environment, and some are even building solutions to pressing environmental issues into their business models and goals. Fund managers, like Arborview Capital Partners, are putting money behind these businesses in order to build a more sustainable economy.

Vital Farms’ eggs come from pasture-raised hens who are raised in systems that are healthier for the animals and the plant.

What do a pasture-raised egg brand, a smart sprinkler-controller manufacturer, and a lighting and water-efficiency retrofitter have in common? They are all part of Arborview Capital Partners LP’s portfolio, which has earned the highest-possible rating from the GIIRS assessment three years running in the environment section. Arborview has invested in a diversity of sectors, with agriculture, energy and technology among them, with an explicit focus on working with companies that are having an environmental impact.

For example, portfolio company Shenandoah Growers is one of the largest providers of organic herbs in the United States and utilizes vertical farming, conventional farms, and greenhouses. Shenandoah Growers was founded in 1989 as a family-owned herb farm nestled in Virginia’s verdant Shenandoah Valley. Twenty-five years later, it has grown into one of the leading providers of fresh herbs in the United States.

SGI built the country’s first USDA certified organic greenhouse, which employs patented and proprietary technology with best-in-class water efficiency, irrigation, fertilization, LED lighting and nutrient systems. SGI’s vertical farming uses less water and land resources and limits pollution and other negative impacts on the environment.

SGI employs a closed water system in which all access water is collected, filtered, and reused. This approach utilizes less than 2 liters of water per square meter per day, or one-tenth that of any open loop or outdoor system. SGI’s best-in-class greenhouse technology employs gutter systems and LED nurseries to produce 800 units per square meter per year, utilizing 0.5 kWh of energy per unit on average. In comparison, output from a traditional greenhouse growing in the ground produces 100 units per square meter, utilizing 3.5 kWh of energy per unit.

Arborview is among the 2017 Best for Environment Funds honorees. You can review a full list of this year’s honorees along with links to all of our Best for the World Funds coverage.

To learn more about what makes a fund a top environmental performer, we heard from Brian Lee, a partner at Arborview.

Arborview Capital was founded in 2008 to invest in high-growth, impact-focused companies that can deliver top-tier private-equity returns to our investors. All of our portfolio companies are mission-driven in areas such as energy and water efficiency, resource efficiency, sustainability, and health and wellness.

Our firm’s core mission is to work closely with like-minded entrepreneurs and management teams to 1) create best-in-class businesses that prioritize both shareholder and stakeholder value, and 2) help our portfolio companies scale and grow while building a more sustainable and cleaner economy.

Over the past decade, we have seen firsthand the growth in the number of talented and motivated entrepreneurs that have dedicated themselves to solving critical and long-term environmental and sustainability problems. Companies like Rachio that have created solutions to water shortages and drought. Companies like LRI Energy Solutions that have dramatically reduced energy and water costs for their clients and customers. Companies like Vital Farms and Shenandoah Growers that ensure that the food we feed our families is healthy and produced ethically. The success of these companies is driven by a secular shift in consumer demand that is now attracting the attention of larger, more established businesses looking to invest in or acquire emerging leaders that are growing at rates well above the broader market.

Rachio design smart sprinkler-controller systems, improving water efficiency and saving resources.

Recently, one of our portfolio companies, Drexel Metals, made it a strategic priority to analyze and then improve its impact on all of its stakeholders. By shifting its supply chain from a centralized “hub-and-spoke” model to a more localized sourcing model, the company saw a significant reduction in both material and transportation costs (as well as carbon footprint), which drove significant margin expansion and growth in profitability. In addition, the company instituted a companywide profit-sharing program that allowed all employees to share in the financial success of the business. Its GIIRS rating reflected these types of improvements: From 2015 to 2017, Drexel improved its rating from 46 to 62 to 100, and the company was on a path (until it was acquired) to become the only Certified B Corporation in its industry.

For Arborview, the GIIRS rating process is a reflection of the alignment that we seek between the investors that trust our firm to invest their capital and the entrepreneurs that are creating incredible companies to solve key environmental and sustainability problems. These companies strive to become best-in-class on behalf of all stakeholders and want systems to track, report and compare their progress. We and our fund investors benefit from the accountability and the culture of continuous improvement that the GIIRS rating process helps to support.