The team at World Tree wants to enter the hardwood market all while making an ecological impact on the world. The Empress Splendor tree offsets the carbon footprint of up to not one, not two, but four people. Founder and CEO Wendy Burton recognized the potential behind this incredible tree and created dispersed farms across the US and Latin America. The fast-growing tree can then be used for hardwood and lumber.
We sat down with Wendy and COO Dr. Cathy Key to learn more about the genesis story of the company, the business model, ecological impact, and more…
For those who don’t know, what is the genesis story of World Tree?
I’ve been a tree lover since I was a little girl. I would see the loggers taking the trees away and cry. When I came across the Empress Tree over 20 years ago I knew I had found something special. The tree grows very fast, reaching maturity in just 10 years and has huge heart-shaped leaves. But the biggest thing for me is that she regenerates. When you cut down an Empress the tree regenerates from the stump, making it a sustainable source of timber.
What is the Empress Splendor and what makes it so special?
The Empress Splendor is the fastest growing tree in the world. It can grow up to 20 feet in its first year and reaches maturity in 10 years. This fast growth rate is fueled by carbon. The tree literally eats carbon for breakfast, using a very efficient form of photosynthesis called C4. While most trees absorb between 2 and 9 tons of carbon per acre, Empresses absorb between 37 and 90 tons of carbon per acre.
The Empress tree also absorbs nitrogen from the air, which means the leaves provide a natural fertilizer. We can grow Empress trees in areas with depleted soil and restore health and vitality to the land.
The flowers of the Empress attract pollinators. One acre of trees supports bees to produce 100 jars of honey a year.
The lumber of the Empress is light, strong and water resistant. This unusual combination of properties make it ideal for furniture, veneers, surfboards and musical instruments.
Where can the tree be grown? Are certain conditions required? What is the approximate survival rate?
We grow the trees in the Southern USA (places like Georgia, Alabama and Northern Florida), Western Canada, Costa Rica, Guatemala and Mexico. The trees prefer warmer climates with good rainfall that do not get too cold in the winter. We currently have 2000 acres under management with over 100 farmers in five countries. Survival rates vary by region and year. We have seen as low as 40% in some areas during bad years, and over 90% in others. We diversify our farms to spread these risks.
Is there technology you use that helps determine best planting sites or increase tree survival rate?
We use GIS mapping systems that are connected to the latest government and academic data on temperature, rainfall and soil profiles. When a farmer applies to be in our program we feed their coordinates into this system to determine if their planting site will be suitable. We also back up our findings with farmer interviews and onsite visits.
How do you plan on allocating funds raised in this round to scale the business?
This year we are raising up to $10 million to plant 3000 acres. Our planting areas will be USA, Costa Rica, Guatemala and Mexico. The three biggest expenses are purchasing and shipping the trees, farmer support and management costs. Farmer support includes finding and training the farmers, onsite visits and audits. Management costs relate to the costs of paying our staff to oversee the program. Over half the funds are used in these three areas.
The rest of the funds are used for activities including marketing, accounting, legal, office overheads and selling the lumber. We also have a contingency fund for unexpected expenses.
Do you have any competition, if so, how do you differentiate?
There is a company called iPaulownia in Europe who have a similar business model.
What is the timeline for your business? How do you incorporate time for the trees to grow when mapping out profitability?
Each year we bring in a new group of investors to fund a vintage of trees. These trees take 8-12 years to mature and harvest and we expect to distribute profits in that time frame.
What are the biggest risks associated with your business?
One of the biggest risks is damage to the trees due to issues like weather, pests or disease. So far, disease has not been a factor but we have seen issues like leaf cutter ants who think Empress leaves are very tasty. We have developed earth friendly ways of dealing with that issue.
We are not onsite managing the farmers, so there are risks associated with proper tree management.
This is the main reason we diversity the trees over hundreds of farms. We mitigate the risk to our investors with a ‘many eggs in many baskets’ approach.
Please see our offering documents for more information on risks.
What does your business model look like?
Our Eco-Tree Program is a partnership between farmers, investors and World Tree. Each year we bring in a round of investors to fund a new season of trees. Every $3000 invested funds one acre of Empress trees. We plant the trees with farmers and train them how to grow and care for them. The trees reach maturity in about 10 years (range is 8-12) and World Tree harvests them for their lumber. Any profits from the sale of the lumber are shared 50% to the farmer, 25% to farmers and 25% to World Tree.
As you think about the business 5-10 years down the road, what do you see exit opportunities looking like?
We have a built-in exit for investors, at 8-12 years. Investors receive dividends on the profits we make from selling the lumber from their vintage. A well managed farm will produce about 30,000 board feet of lumber which we can sell in the current market for between $3 and $14 a board foot depending on quality. Of course, we can’t predict the future but we have built models based on price and yield.
If we get an average board foot price of $8, and 10% yield returns to investors are predicted to be $4,744 per acre. We are targeting at least 75% yield which could produce investor returns of $35,000 or more per acre on their $3000 investment. It is important to understand that these are forward looking projections and we can’t predict the future, so investors should read our Offering documents to understand risks and returns fully.
Can you talk more about the ecological impact of your business and product?
Carbon emissions are one of the primary drivers of global warming. While many companies are developing technologies to extract carbon, World Tree looks to the natural world for our inspiration. Mother Nature contains at her very essence the ability to heal and regenerate. This is embodied in the Empress tree, which has naturally evolved a very efficient form of photosynthesis that draws down extraordinary amounts of carbon dioxide. In fact, in every year of growth, 1 acre of Empress trees will clean up the annual carbon footprint of up to 4 people.
In addition to her carbon eating qualities, the Empress tree provides other important benefits. Her nitrogen fixing leaves and root systems provide a natural fertilizer to the soil, and her springtime flowers support honey bees. One acre of trees can produce 100 jars of honey a year.
The United Nations’ Sustainable Development Goals were developed to focus our intelligence and creativity to solve some of the world’s biggest problems. The Eco-Tree Program impacts 7 of the 17 goals. We are proud to be running a program that defies regular conventions of what’s possible. Our business model is designed to tackle poverty and provide economic growth to farmers in North and Latin America. This is critical. To really reverse climate change and to address social inequality, we need to create economic models that are inclusive, cooperative and non-partisan.
We at KingsCrowd are excited to see where Wendy, Cathy, and the team take World Tree. World Tree is currently raising funds on the Wefunder platform via Stock with a $8.03M pre-money valuation.