Mitchell Lench, Treetops Capital

Dr. Lisa Belisle:

Mitchell Lensch is founder and Chief Investment Officer of Treetops Capital, an impact investment management company founded in 2008. He previously worked in finance at several institutions including bank of America and Credit Suisse. Thanks for coming in today.

Mitchell Lench:

Thank you for having me.

Dr. Lisa Belisle:

Talk to me about Treetops Capital. What is that and what are you doing in this job?

Mitchell Lench:

So Treetops Capital is an impact investment management firm. Impact investing, in case you're unfamiliar with it, is investing with deliberate impact, generally social and environmental impact, but also trying to achieve financial returns. So there are certain areas that you can have both you can have a market based solution to a problem as opposed to just using philanthropic dollars to achieve that goal. And within the impact investing world, we focused our first fund was in the microfinance area where it was focused in Asia, Africa and Latin Americ. We also have a fund in Romania focused on agribusiness, so missing links into the value chain in terms of the agricultural market there. Then more recently in Maine, we've been focusing on aquaculture investments.

Dr. Lisa Belisle:

How did you get interested in this type of work?

Mitchell Lench:

My interest in it really started back in graduate school. I went to a program, it was an international public affairs program at Columbia that early on in my career, before even my career really started, the whole area of sustainable development was really starting to emerge. At that time it was kind of after the 70s and 80s. There was a lot of money being thrown at issues and with famine relief that weren't very effective. And what I kind of learned in the graduate program is that in order for programs to be sustainable, development to be sustainable generally, there needs to be a market based element to that as well. So you don't crowd out local, say if it's a famine issue, local farmers. And through that program, it was kind of a good combination of learning about economic and political development, but also getting some hard skills in business and finance.

Dr. Lisa Belisle:

As you're talking, I'm remembering the 80s and I guess even into the 90s a little bit where we were trying to solve problems like failing farms or famine across the ocean and you know, hands across America, like big relief programs that we all wanted to join into. And even then there being some skepticism as to whether these things actually worked. Was this some awareness that you became? Is this something you became immediately aware of when you were watching this all unfold?

Mitchell Lench:

Well, yeah, I mean, I think I learned more from some of the people who had been living through that for those years where they realized there were a lot of unintended consequences to very. What were good intentions of famine? For instance, the famine relief issue. And so what really we focused on is how do you harness the market based issues and locally, how do you make sure that you're working within either the local capital markets or working with local business people? At that point, microfinance, which was hardly known to anyone, was a big buzzword and learned about how you can empower people with small business loans and how that can really affect people's lives much more than necessarily giving them a small donation.

Dr. Lisa Belisle:

So give me an example of an unintended consequence.

Mitchell Lench:

Unintended consequence in terms of, for instance, the famine issues were there was a lot of food flown in from the US and Western Europe into. It was mainly in Africa at the time where the famine was occurring. And what would happen is that the local farmers could not compete with all the free food coming in. And then they went out of business and they couldn't pay their bills and keep their farms going. So then you have a continuous circle of famine because you've kind of eliminated a lot of the farmers who are involved in that market.

Dr. Lisa Belisle:

It's actually really distressing to hear that that goes on, especially given that most people who donate to a relief effort are hoping to do good, not hoping to perpetuate a problem.

Mitchell Lench:

And I think now in today's world and development world, whether it's the UN or UNICEF or World Bank, I think almost all the development institutions, and I've worked with a lot of them, they have this awareness and they're very aware of how you don't crowd out local markets when you're trying to solve an issue. So I think we've moved on far from back in the 70s and 80s.

Dr. Lisa Belisle:

Tell me how your organization has gone from focusing overseas to focusing on something that's very close to home in aquaculture.

Mitchell Lench:

So I moved up to Maine in 2011 and when I moved to Maine I was determined to do something more local. And I had spent most of my career in developing markets and I find it interesting and I think there's huge needs that still occur. But also I had this urge to do something closer to home. Not to mention I have a couple kids and I wanted to not be on the plane as much when I came to Maine. I started going to some of these aquaculture conferences that U of Maine were putting on and learning about different parts of that market. And aquaculture particularly got me became interested because one, Maine has a very good infrastructure for aquaculture. I think in terms of the US we may be the leading state in aquaculture. We have a lot of universities and research centers involved. But also from helping the oceans and from a sustainability issue, I think aquaculture has to be part of the whole problem we're having with overfishing and different degradation of our waters. So that's how I kind of, I started learning just by going to some of these sessions being put on and then, and then I started, I got involved in an investment in a yellowtail onshore farm called Acadia Harvest, which was the first yellowtail farm really in the US and really interesting technology they were using. The fish were being bought by some very high end restaurants and distributors love the fish and it was a way to have more local fish without overfishing. In terms of the water, Yellowtail is a tuna. There is a yellowtail tuna. And I actually don't, I don't know exactly which part of the species of yellowtail in terms of the broad, but it's, you know, if you go to, it's a high end fish that you, if you go to a sushi restaurant. Yellowtail is quite, quite common. And that's one of the, where I think one of the opportunities is in the aquaculture market is on the higher end fishes that are generally flown in. 90% of the fish that we eat in America is not only, it's not only brought in from other countries, but it's flown in. So the, so if you can kind of eliminate flying in fish from say Japan or other places and growing it locally, it has a huge impact, I believe aquaculture.

Dr. Lisa Belisle:

So you've just described one type of fish, does it also include things like oysters, mussels, seaweed, or is there some other broader definition?

Mitchell Lench:

Yeah, I mean there's, you know, sometimes there's other terminology in terms of mariculture and the rest, but it's all under the aquaculture umbrella. And Maine I think is most known for its shellfish aquaculture as well as seaweed which is becoming a very big part of this industry in terms of aquaculture. And I partnered with a fellow named Talif Olson who had been one of the pioneers in farming seaweed. And we created a business called Oceans Balance. And you know, our goal is to try to mainstream seaweed into Americans diets. So it's not this exotic ingredient, but it's more of something you would eat in your everyday soup or stew. And it has so many positive benefits both for the ocean as well as for your health. And not to mention it has glutamates, these amino acids which gives this umami flavor so you can reduce some of the salt intake. In terms of other food you're eating.

Dr. Lisa Belisle:

You're definitely singing a tune that I have sung before. I love seaweed. I think it's really important for health and I actually, I, I believe that we are going to see with its increased use, decreased thyroid problems in our population in the state of Maine.

Mitchell Lench:

That's something a lot of people are unaware of, but it does in terms of the iodine and regulating thyroid issues and plus all of the other vitamins, 60 some odd vitamins and minerals, it is just this wonder food. And one of the things that impressed me most about seaweed, especially looking also at finfish aquaculture. The issue you have in finfish aquaculture, one of the tough challenges that everyone's really trying to focus on is the input of forage fish, small fish to feed the aquaculture fish. It's not a very sustainable business model. So they're coming out with other ingredients that can be used that are not forage fish to have fish meal. But in seaweed, it's the only zero input food I'm aware of. Where there's no other feed that's required that's not naturally occurring in the ocean. There's no pesticides, there's no fresh water. So from just a pure sustainable type of food source, it's unmatched as far as anything I've looked at.

Dr. Lisa Belisle:

It also is known as something that essentially detoxifies the environment. I know that when they had their, the nuclear reactor problem over in Japan that they were finding that the seaweed was Using. They were using it as kind of a giant sponge, I guess, to soak up a lot of the stuff that was being spewn out there.

Mitchell Lench:

That is definitely the case. And we're looking at issues in terms of coastal remediation, in terms of planting seaweed along more polluted parts of the coast, whether in Maine or elsewhere. This is something the Nature Conservancy is also evaluating. But you may be familiar with the work that Nicole Price is doing at Bigelow Labs where she has sensors around seaweed farms looking at how it changes the water column from absorbing CO2 and nitrogen and phosphorus. And so the studies are showing that it has a halo effect in the area where you plant seaweed, which is positive from an acidification perspective, which also has an impact on our shellfish because the acidification is impacting the growth of shellfish. So I think there's all these untapped applications for seaweed way beyond just the food and fertilizer which you hear most about. The Department of Energy, just to give you an example, just put out call for proposal and they gave out grants for $22 million. Maine absorbed some of that to scale up seaweed farming. They're looking at it both from an energy source of biofuel, but other applications as well, because there's beyond food. You have food and fuel, you have fertilizer, you have animal feed, and the list goes on from there.

Dr. Lisa Belisle:

Does it interest you that you have all of this financial background, but you've really gotten drawn into the science of this and more than science, sort of the ecology and all of the sustainability factors that are involved, that's a much bigger thing than just understanding finance.

Mitchell Lench:

It is. And I think the kind of marrying those two parts together, having some. I'm really happy that I did spend some years working for some big financial institutions and learning how the markets work, how some of the financial technology and learning some of those skills. So having that exposure, plus some development exposure and putting those together, I think is a good combination. And I'm seeing more. You know, what's really encouraging to me is I'm seeing more and more students now who are kind of following that type of path, where there's now kind of a defined world of like impact and investing and other areas of social entrepreneurs where it really didn't occur back when I was in school. But now that's becoming more mainstream. And I think a lot of issues that we're facing, where you have people who kind of come from cross disciplines like that, some important issues can be Solved.

Dr. Lisa Belisle:

Talk to me about Fish 2.0.

Mitchell Lench:

Fish 2.0, which I just got back from last week. It was at Stanford University. They hold this about every year or two. What they do, they've put it together as a contest to bring all different types of sustainable seafood and fisheries technology companies together to pitch new ideas. And the reason they have it out at Stanford is you have Silicon Valley and you have a lot of new venture capitalists who are interested in maybe taking some of their earnings and wealth and putting it to some good use in terms of some of these new technologies that are emerging. So some of the areas that they're focusing on are these alternative fish feeds. So aquaculture becomes more sustainable. They make fish feed now out of algae or algae products, out of black soldier fly larvae, a whole mix of things. And these were companies that presented on that also things like bycatch. So fish that are caught out on fishing vessels that the fishermen don't actually want, and they have now smart releases in their nets to allow those fish to survive. Whole slew of interesting new developments going on in the seafood world from the consumer perspective all the way to the fishermen and aquaculture. And it's just a great gathering of people. And there's really one or two people put this all together, and I think they're having tremendous success in changing the way our oceans are fished and protected.

Dr. Lisa Belisle:

What lessons do you think that we here in Maine can learn from work that is being done across the nation and really across the world?

Mitchell Lench:

I think Maine in some ways is a leader within the US In a lot of aquaculture technology and new developments. But also there's a lot of issues going on overseas that I think Maine can learn from. And my own hope is that Maine becomes more of also a technology hub with aquaculture, where we have some of the bioscience, maybe people from Boston moving up. I know the Gulf of Maine Research Institute is very interested in encouraging that and some other institutions here in Maine. We have, I think, almost all the right ingredients to really create a viable industry outside of just the production of farmed fish. But a lot of that, I think, requires bringing in some new people as well into the state who have certain science backgrounds to help this technology move forward.

Dr. Lisa Belisle:

How do we get the people who have lived in Maine and have fished and farmed along the coast really for hundreds of years, how do we get them to into conversations with people who are more on the technology side of things?

Mitchell Lench:

So I think there's quite a bit of education going on right now with coastal communities with fishermen. The Island Institute is doing some great work. They just did a whole seaweed study to bring more fishermen and lobstermen into the seaweed industry. U of Maine puts on a whole slew of programs which we're involved with some in terms of teaching aquaculture and the science of aquaculture to both students, but also to adults, to teachers. We did a talef and my colleague Lisa Scaly did a boot camp for teachers this summer with the University of Maine to start getting them educated in terms of how aquaculture and science mix together. So I think there are some really interesting developments going on and I think just if more people get involved in doing that, we'll see some transition going on with some of the communities, local communities.

Dr. Lisa Belisle:

And I would assume that there are things that people who are in aquaculture and biotech could actually learn from individuals who have been out there doing this type of work for decades.

Mitchell Lench:

Yeah, that's absolutely correct. I think it's a two way street in terms of the knowledge base. And the Main Coast Fishermen's Association, I think they do a really good job in terms of bringing the fishermen together with other constituents so we learn from them. And it's not just scientists looking at this in a very sterile environment. I'm a trustee at the Nature Conservancy in Maine and very focused right now on marine science and changing the focus away from just forestry, although forestry is still a key part into looking at different solutions, whether it's from a river, the Penobscot river project, to projects in the Gulf of Maine.

Dr. Lisa Belisle:

One of the things that has been happening lately is conversations around bringing environmental regulations, deciding whether they belong more at the state level, more at the national level. And this, it seems like it would be really a problem if we decided that every state should really be responsible for whatever was going on within its borders and ignore the fact that the borders really don't mean anything to the trees and the rivers and things that grow.

Mitchell Lench:

Yeah.

Dr. Lisa Belisle:

What do you think about this?

Mitchell Lench:

Yeah, I think there is some issues, I think right now being decided at a local level. Luckily, I think within for Maine, the local momentum for creating sustainable aquaculture and some other programs is moving in, I think a good direction. And Maine can act as, I think, a demonstration state for other states in our country that may be not as progressive. So in terms of that balance between federal, there has to be, I think, some strong federal regulations. And in some ways the US has some of the strictest regulations. And I'm talking now about aquaculture because that's an area That I. I see this the most, and what's going on is you were mentioning between federal and state, but it's also international, so the lowest common denominator countries a lot of times is where the production flows to, so some parts of Latin America or some parts of Asia. And really what I would like to see is, even at a federal level, more encouragement of sustainable aquaculture in the US So we don't have so much production going overseas where we're not really paying attention, because what's happening in South America can really impact us where we live as well.

Dr. Lisa Belisle:

What would you ideally like your children to grow up with? I know that you have two children, you're married, you live in Cape Elizabeth. You mentioned that when they were younger, you really wanted to kind of. Of be more available to them as a parent. What type of world do you want to see them live in?

Mitchell Lench:

One of the main reasons I wanted to move to Maine and with the kids is having grown up, coming to Maine a lot as a child and the nature here. I think just living in Maine with the wilderness and being exposed to it and the people around you, I think that has the biggest influence on my kids in a very positive way. I also, I try to expose them to some of the issues going on without scaring them, some of the ecological issues going on in the world and showing them where they can have some impact in their lives. But I think Maine, with so much science, like with so many institutions in Maine, whether it's GMRI doing the program for sixth graders or fifth graders,

Mitchell Lench:

have an awareness that, I know, like going back to, you know, cities where, you know, we have some friends, you know, the kids are not growing up with that type of awareness around them. So I'm actually pretty hopeful that my kids will be pretty evolved by the time, you know, they get to be adults. And hopefully they pursue something that, you know, they're. They're very thoughtful in terms of, you know, what their career, the impact their career can have on the world.

Dr. Lisa Belisle:

What is your most interesting or exciting venture as of right now that Treetops Capital is part of?

Mitchell Lench:

So one of the most exciting ventures right now is a project we have going on in Romania, which is a mushroom compost factory, which sounds kind of esoteric and not something very well known, but they're actually very complex factories or farms to put together, and they're large investments. Romania, for years, for decades, they had imported compost, which is a very heavy substrate to import from Hungary and from the Netherlands. And that was having a, you know, just dampening any prospects of growing a real mushroom industry in Romania. And there was a lot of mushroom farmers who were just not able to compete with other countries. So we built, with the help of the US Government as well, providing some financing and then private investors, a full commercial scale production facility for compost, which is now producing compost for small farmers through mushroom farmers throughout Romania. So that's exciting.

Dr. Lisa Belisle:

That is fascinating. And along with seaweed, compost is another one of my favorite topics. So I feel like we've got we're on the same wavelength here. I appreciate your coming in today. I've been speaking with Mitch Lensch Mitchell, who is the founder and chief Investment officer of Treetops Capital, an impact investment management company founded in 2008. Keep up the good work.

Mitchell Lench:

Great. Thank you very much.