I caught up with Dr. Cathy Key last Thursday. Cathy is the chief operations officer for World Tree. It’s one of only two revenue-sharing companies in our portfolio (the other is Napa Valley Distillery).
Revenue-sharing investments can be highly profitable. In the case of World Tree, you don’t get shares when you invest. Instead, you’re investing in a tree planting season. In return, when the trees are harvested in 10 years, you get 25% of the revenue. We recommended you invest in both the 2020 and 2021 planting seasons.
World Tree is raising money in a new round on the Wefunder portal. The carbon dioxide-gobbling Empress Splendor trees being planted right now are for the 2021 planting season. In normal times, this is the time of year it advises farms and plantations on the best practices of planting Empress Splendor trees. I asked Cathy whether the coronavirus has disrupted any of these activities.
“Not really, we’re not in bad shape,” she said. “It could be much worse. As long as our trees are in the ground, they will keep growing. That’s the most important thing.”
“We’re incredibly grateful to be able to do the things we need to during these troubling times,” Cathy added. “My heart bleeds for the businesses that have had to shut down.”
Cathy told me that just that morning they had gone through various worse-case scenarios and put in place a number of contingency plans. “We’ve tried to look at all the possibilities. We’d prefer to go on as is. But we feel comfortable cutting back on our plans if it comes to that.”
World Tree has already cut back on its travel. Normally, World Tree would be out in the field visiting farms, doing audits (of the trees) and advising farmers on issues like pruning right now. But the coronavirus has put a stop to farm visits. Instead, World Tree is using things like video calls and photos to connect with and advise farmers.
It’s had two farmers drop out of the planting season so far. But neither farmer dropped out because of the COVID-19 pandemic.
Farmers are an amazingly resilient lot and used to duress, Cathy explained. “Fifty-six percent of farmers in the U.S. made no profit last year.”
Cathy is keeping a close eye on the calendar these days. Planting season ends in late May. But World Tree’s planting is on schedule.
“Farmers are carrying on and doing the planting,” Cathy said.
“As a long-term business, we’re going to get through this,” Cathy added. “But if [this is] merely the first of a series of pandemics, then it won’t just be us in big trouble. The whole world will be in big trouble.”
That’s a sobering note to end on. But it’s a point worth making. We’re in the midst of a very serious public health crisis. And it’s wreaking havoc on the economy. How to invest is just one problem – but a big one. Investors need to make sure they emerge from this crisis financially whole. So we’ll continue to report on how startups are responding to the pandemic. But even more important is the health and well-being of your family and loved ones. And we can’t lose sight of that.