Clarity Ventures' investment in soil health monitoring and farmer networks

The opportunity

In 2022, we met Sarah Chen and Marcus Williams, co-founders of TerraCycle Agriculture. They weren't pitching us another AgTech dashboard or another "Uber for tractors" idea.

They were talking about soil biology. And more importantly, they were talking about farmer economics.

Sarah had spent eight years as an agronomist working directly with Midwest corn and soy farmers. Marcus came from the tech side – he'd built supply chain software for one of the largest food companies in North America. Together, they'd identified something we'd been watching for years: regenerative agriculture made environmental sense, but the transition economics didn't work for most farmers.

The numbers told the story. Farmers switching to regenerative practices typically saw yields drop 10-15% in years one and two before recovering. For a farmer operating on 5-7% margins, that dip could mean bankruptcy.

TerraCycle's approach? Use real-time soil biology monitoring to guide a gradual transition that maintained yields while rebuilding soil health. Then connect those farmers to food companies willing to pay premiums for regeneratively-grown crops.

We invested $4.2M in their Series A.

The challenge

The problem wasn't just technical. It was trust.

Farmers had heard promises before. "Use our product and increase yields 20%!" Usually from companies that had never actually farmed. The AgTech graveyard is full of startups that built solutions farmers didn't want, couldn't afford, or couldn't figure out how to use.

TerraCycle needed to prove three things:

• Their monitoring system actually worked in real-world conditions – not just in controlled trials, but across different soil types, weather patterns, and farming operations

• The economics made sense from day one – farmers couldn't wait five years to see ROI, they needed improved margins within 24 months

• The premium markets were real – food companies talk a lot about sustainability, but would they actually pay more for regeneratively-grown ingredients at scale?

Oh, and they needed to do all this while competing against a century of industrial agriculture infrastructure and mindset.

The approach

TerraCycle started with 50 farms across Iowa and Illinois. Not pilot projects... actual commercial partnerships where farmers' livelihoods were on the line.

Here's what made their model different:

Soil as a living system

Instead of treating soil like inert growing medium, TerraCycle's monitoring system tracked the biological activity – microbial populations, fungal networks, nutrient cycling. Farmers got real-time data through a simple mobile app showing exactly what was happening beneath their fields.

One farmer told us: "I'd been farming the same land for 30 years and thought I knew my soil. Turns out I only knew the chemistry. The biology was a complete black box."

Gradual transition, not cold turkey

Rather than forcing farmers to completely overhaul their operations overnight, TerraCycle mapped out customized 3-5 year transition plans. Year one might mean reducing synthetic fertilizer by 20% and adding cover crops to 30% of acres. Each change was backed by their soil data showing exactly where and how to adjust.

This mattered more than we initially realized. Farmers could see results without betting the farm. Literally.

Market access that actually pays

This is where Marcus's food industry background proved critical. TerraCycle didn't just help farmers grow differently – they built direct relationships with food companies that needed regenerative supply chains. By year two, they'd secured partnerships with three major food brands committed to sourcing regeneratively-grown corn and soy at 15-25% premiums.

Farmers weren't just doing good for the planet. They were increasing their margins by an average of $47 per acre in year one.

The results

Three years after our investment, the numbers exceeded our projections:

• 5,000+ farms now using the TerraCycle platform across 12 states (from their initial 50 farms in 2 states)

• 470,000 acres transitioned to regenerative practices, sequestering approximately 380,000 tons of CO2 annually

• $32M in premium payments delivered to farmers through their marketplace connections

• 18% average margin improvement for farmers in years 2-3 of transition (compared to conventional practices)

• Zero yield decline in year one for 87% of participating farms (the other 13% saw drops under 5%)

But here's what really validated the model: farmer retention and referrals. In an industry where skepticism runs deep, 94% of TerraCycle farmers renewed after year one. And 60% of new farmer sign-ups came from direct referrals.

When farmers tell other farmers something works, that's the gold standard.

The impact beyond metrics

Sarah shared something with us during a board meeting last quarter that stuck. She'd been visiting a third-generation Iowa corn farmer named Tom who'd been using TerraCycle for two years. His soil biology scores had improved dramatically. His input costs had dropped 23%. But what really got him emotional was watching earthworms return to fields that hadn't seen them in 20 years.

"My grandfather would have recognized this soil," Tom told her. "What we've been doing the last few decades... this isn't it."

That's the thing about this sector. The environmental impact is measurable – hundreds of thousands of tons of carbon sequestered. But there's also this cultural shift happening. Farmers rediscovering what healthy land looks like. Rebuilding knowledge that got lost in the industrial agriculture boom.

You can't put that in a pitch deck, but it's part of why this works.

What we learned

Meet farmers where they are, not where you think they should be. TerraCycle's gradual approach respected that farming is a business first. The environmental benefits came as a result of better economics, not instead of them.

Technology is an enabler, not the solution. The real innovation wasn't the monitoring system – it was understanding the full value chain from soil to food company and building infrastructure to connect them.

Proof spreads through networks. In agriculture, early adopters matter enormously. Once respected farmers in a community validate an approach, adoption accelerates.

Carbon markets are bonus, not basis. TerraCycle built their model on improved farm economics and premium crop pricing. Carbon credits provided additional revenue but weren't required to make the unit economics work. That resilience matters as carbon markets evolve.

The path forward

TerraCycle is now raising their Series B to expand into four additional crops and 15 more states. They're also launching a data licensing model – selling aggregated, anonymized soil health insights to input companies and researchers.

More importantly, they're proving something we believed when we first invested: regenerative agriculture isn't a niche. With the right tools, the right economics, and the right market access, it can compete directly with conventional farming and win.

That's not just good for our returns. It's good for the 900 million acres of farmland in the U.S. that could be sequestering carbon instead of releasing it.

Investment details

• Investment date: June 2022

• Investment amount: $4.2M Series A

• Sector: Food & Agriculture

• Climate impact: 380,000+ tons CO2 sequestered annually

• Current status: Active portfolio company, Series B in progress

Interested in learning more about our food and agriculture investments? Contact our team to discuss opportunities in regenerative agriculture and climate-smart farming.