Family run business with high ethical standards gets big investor backing at IPO


Last week, a family-run farming business made a mark on the US stock market, proving the traditional way of life can chime with modern investors.

Texas, Austin based Vital Farms, a pasture-raised egg and butter business, secured nearly $205 million in its IPO debut on July 31. By the close of its first day of trading, its stock had risen by 60% and the company rounded off the day with a market cap of $1.38 billion.

The firm is backed by Manna Tree, a venture capital firm dedicated to healthy food and farming, co-led by Ellie Rubenstein, daughter to David Rubenstein, co-founder of Carlyle Group

Founded in 2007 by Matt O’Hayer and his wife Catherine Stewart, Vital Farms began life on 27 acres of Texan farmland with a small flock of hens. Today, the company calls itself the “leading pasture-raised egg and butter brand” and “the second egg brand in the US by retail dollar sales.”  The firm is backed by Manna Tree, a venture capital firm dedicated to healthy food and farming, co-led by Ellie Rubenstein, daughter to David Rubenstein, co-founder of Carlyle Group, the private equity firm.

Working with 200 other family-run farms across the country, they produce and package 3 million pasture-raised eggs daily which are stocked in more than 13,000 grocery stores.

Unlike other public listings this year, Vital Farms is no smart-tech effort but a “back to basics” farming business. With Covid-19 leaving the tech IPO market in a state of limbo, what spurred investor interest in this seemingly old-fashioned enterprise?

Talk of low food standards in American farming, often heard in other countries when trade deals are talked about, cannot be applied to an entire industry and the flotation of a business that offers sustainable dairy products is a good way to change the conversation. 

In particular, Vital Farms’ mission to combat unethical practices at play in the egg industry, such as the mass culling of male chicks, by producing eggs to higher animal welfare standards is an encouraging development. 

The rise of factory farming in the mid-west and its impact on decades-old family farms could have also made a family business like Vital Farms – along with its cooperative structure working with other small-scale family holdings – an alluring choice for impact-minded investors.  

Vital Farms’ commitment to high product quality is evident in their main egg sorting and packaging facility, located in Springfield, Missouri, where they have “the highest food safety certifications available,” according to a recent company statement. They also confirmed that a portion of the funds will be directed to expand the facility.

During the Covid lockdown period, consumers faced egg shortages and steep price increases as they clamoured to buy pantry friendly products. In a recent company statement, Vital Farms’ CEO Russell Diez-Canseco said the “specialised” nature of their eggs, compared to other “conventionally produced” shell egg products ensured they remained at the same price during the pandemic. 

He also said it was likely that the price of Vital Farms eggs would be insured against future market disturbances. In contrast, Cal-Maine Foods, a public company and America’s largest producer and distributor of fresh shell eggs, saw sales drop by 10% and net income nosedive by 65% during this period.

Vital Farms is also committed to social impact investing. Their B Corp Certification means they have to uphold ethical values throughout their supply chain, whilst as a public benefit corporation, their commitment to positive environmental impact is an integral part of their charter.

The fact that Vital Farms recorded $140.7 million in sales in 2019 and pulled off a successful IPO, shows family values can succeed in an era of vegan activism and arguably more interesting tech-driven offerings. 

Support from Rubenstein’s venture group did no harm, and Manna Tree has raised a $141 million fund in March to spread its interests in the food health and wellbeing space further. It also invests in Verde Farms, which rears antibiotic-free and pasture-fed beef.

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