Jack McCarthy·December 21, 2023

Building a $350m Holdco of Farms | Jack McCarthy Interview

Jack McCarthy, an ex-McKinsey and ex-TPG private equity professional, co-founded Gold Leaf Farming with agronomist Brandon while at Stanford GSB after a farmland-tech marketplace idea fizzled for lack of a real pain point. Instead they identified a capital/talent mismatch in specialty agriculture: aging mom-and-pop almond and pistachio growers in California with no succession plan, and talented young farm operators with no access to the capital needed to buy land. Starting with seed capital from two angel investors in a quasi search-fund structure, Gold Leaf has grown over about six years from a $2m first deal to roughly $350m of farmland assets (about $250m equity, $100m debt) across 12,000 acres of almonds, pistachios, and a small mule/date operation, funded by ~200-250 mostly sub-$1m-check individual and family-office investors. The model borrows from search funds, real estate, and franchising: Gold Leaf buys and redevelops underperforming farms (often converting row crops or aging orchards to organic almonds/pistachios), uses a proprietary GIS/data tool built on USDA yield data and water rights to underwrite deals in minutes, and gives farm managers real equity and autonomy so they treat properties as their own. McCarthy explicitly frames the business as a long-duration, low-leverage compounding vehicle modeled on century-old family agribusinesses like Cargill and Driscoll's rather than a PE fund with an exit timeline, while acknowledging the industry's slow single-annual feedback loop and reliance on hard-to-verify seller financials as persistent challenges.

Deal facts

financing structure: First deal was $2m of equity; portfolio overall capitalized with roughly 40%/30% LTV debt on individual farms (moving toward less leverage over time); no institutional PE-style debt loads
notes: Started with seed capital from two individual investors (Brian and Scott) who funded salaries/legal for ~2 years in a quasi search-fund structure. Year 1 deployed $2m of equity, year 2 $8m, year 3 ~$20m; today ~$250m of equity and ~$100m of debt = ~$350m of total farm asset value across ~12,000 acres (6,000 almonds, 6,000 pistachios, plus a small mule/date operation). Reviewed 1,100-1,200 farms to find ~20-something acquisitions (2-3% hit rate). Investors are ~200-250 individuals/family offices, mostly sub-$1m checks, all accredited. Firm earns a 20% carry/promote on the single LP (Gold Leaf Farming LP) plus management fee; grants 5% of farm profits to the operating team (asset managers, farm managers, accountants) as an incentive pool.

Why this business

Jack McCarthy and his business-school friend Larsson (whose father was an almond farmer) set out at Stanford GSB to apply tech to specialty agriculture's opaque, phone-based supply chain, but concluded via lean-startup style customer interviews that no participant in that chain felt enough pain to change behavior ("it kind of just works"). In talking to dozens of people in California agriculture they instead spotted a structural mismatch: land is a ~$3 trillion US asset class that's almost entirely mom-and-pop (average almond grower has 100-200 acres, average farmer age 60-70) with poor succession plans, while talented young agronomists who actually know how to farm well can't access the $10M+ of capital needed to buy land at scale. Gold Leaf was built to marry outside capital (from individuals/family offices who want farmland exposure but no way to access it) with that operating talent, using a search-fund-like seed capital arrangement from two early investors to get started.

What's working

A proprietary sourcing/underwriting 'strike zone': a GIS-based data tool combining USDA yield data, water district and water-rights information, and historical production data lets the team assess in about 5 minutes whether a new farm-for-sale opportunity fits their focus areas (almonds and pistachios in California's Central Valley plus a pistachio expansion in Kingman, Arizona)
Valuing farms on projected cash flow/production potential (with organic-conversion upside baked in) rather than on comps or a multiple, in a market with almost no institutional competition
A franchise-like operating model where farm managers and asset managers get real autonomy plus equity (5% team profit pool) so they run their properties like owners, which drives retention, recruiting, and hustle (e.g., a foreman checking an unknown car at 6am on a Saturday)
Concentrating unusually high-caliber talent (agronomists, Stanford-educated managers) in an industry that historically hasn't invested in people or technology, paired with real ag-tech (Fieldin equipment tracking, aerial imaging for tree stress, soil moisture sensors) to drive water efficiency and yields
Buying countercyclically: deploying more capital during down periods (low almond prices, high rates) the way admired multi-generational family growers have historically done, and using minimal leverage since it barely improves IRR on multi-decade holds while adding commodity-price risk
A clear mission/culture ("leave the world better than we found it," candor, family-first, act like owners) that the founder credits for making recruiting progressively easier

What's hard

Farming has a single annual feedback loop per crop (almond trees take 6 years to mature, pistachios 9 years), so learning and proof of concept are inherently slow compared to most businesses
The original tech/marketplace idea failed because no one in the specialty-crop supply chain felt enough pain to change how they operate — a rediscovery of the 'must be 10x better' bar for disruption
Small farm sellers typically have only tax returns, not detailed financial packages, so diligence relies on USDA/production-history data and physical inspection (water rights, tissue and water samples) rather than clean financials
The founder is explicit he is 'not a farmer' himself (drives a Subaru, had to borrow his co-founder's truck to look the part when meeting growers) and relies entirely on his agronomist co-founder and farm managers for operating expertise
Valuation in the industry is unusually unsophisticated/non-institutional (farmers often price land at a flat per-acre number regardless of actual cash-flow potential), which cuts both ways as an opportunity and a diligence challenge
Growth is inherently cyclical and can't be forced — the team has had to sit patient through periods when prices/valuations were high and deploy aggressively only in downturns, unlike a business that can scale on demand

Notable quotes

There's about 7,000 almond growers for example, and while there are some large ones like us, mainly it's a small family business.

There's a big problem in that the folks that own the land, the farmers that own the land, if they were successful a lot of times their kids went to college and they're a doctor in LA now and they don't have a good succession plan. There's also a lot of young talent that studied plant sciences, they know how to operate the farms but they don't have 10 million to buy a sort of scale farm.

I think we did a lot of the classes that I think are common in entrepreneurial places like lean startup type methodology where we're interviewing people trying to find where the pain is... nobody feels the pain... I think you got to be pretty different, 10 times better, 10 times cheaper to get somebody to do things really differently.

I worked out of my closet, my co-founder worked out of his truck... there's a Dollar General by our first property that we still talk about is like that was our office... I drive a Subaru, I live in the Bay Area, I'm very overt about like I'm not a farmer but my co-founder is, and so in the early days we would kind of jokingly park my Subaru at the Dollar General, hop in his F-150 and drive over to meet people.