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Alternative Investing Through Land and Coffee with Josh Ziegelbaum
Episode 3673rd July 2022 • Real Estate Investing with the REI Mastermind Network • REI Mastermind Network | Real Estate Investing
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Josh Ziegelbaum currently serves as Director of Investor Relations at Legacy Group and is based in Fort Lauderdale, Florida. He is responsible for managing investor communications, onboarding, individual and commercial clients, as well as overall support of company initiatives. The dynamic work experience Josh has gained throughout his career gives him a unique perspective on both sales and operations.

Prior to joining Legacy Group, Josh worked as Vice President of Business Development for Lifeafar Capital, a boutique private equity and asset management firm where he led his team’s capital-raising efforts. Before that, he was a Private Banker for Wells Fargo with a focus on complex credit needs and investments in public securities. During his time at Wells Fargo, Josh climbed through the ranks and received multiple internal recognitions and awards for his efforts. He most recently managed a book of business for high-net worth individuals and business owners in Miami Beach. Josh is originally from New Jersey where he studied economics at Rutgers University, and received a Series 7 license in 2017. He is known for his passion around building deep relationships with his clients and for consistently acting in their best interests.

We chat about:

  • Alternative investments outside the U.S.
  • Farmland as an alternative investment
  • Why alternative investments are becoming more popular with investors
  • The importance of producing a positive environmental and social impact
  • The Green Coffee Company, a Legacy Group portfolio company and Top 3 producer of coffee in all of Colombia, and its additional portfolio investments

Connect with Josh at https://legacy-group.co/

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"You can invest 10,000 hours and become an expert or learn from those who have already made that investment." - Jack

Transcripts

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Welcome to the REI Mastermind Network where host Jack Hoss gathers amazing stories from leaders in real estate investing.

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In each episode, our guests will tell you what they're doing that works what they've tried that failed, and best of all, you'll learn actionable steps to take your real estate investing.

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To the next level now, here's Jack with another value packed episode.

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We have Josh Ziegelbaum with us here today.

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Josh, I really appreciate you.

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Time and for those who would like to follow along, I'm going to direct everybody to your website, legacy-group.co.

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Remember it's that debt dot C. Oh I, I sometimes just memory. Just type the M on the end of those so I'm emphasizing that so legacy-group.co and legacy.

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And his team.

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They focus on alternative investments outside of the United States and we're going to dive into a few of those things.

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And what that means.

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But I really appreciate your time, Josh.

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And thanks for being with me.

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Yeah, thanks Jack.

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It's a pleasure to.

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Be here as.

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Well, so you know there's going to be a lot to unpack here and and I think it's best to hear directly from you.

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What exactly does Legacy Group do?

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Sure, sure, great question.

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So, my name is Josh Ziegelbauer as you mentioned.

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I'm the Director of Investor Relations at Legacy Group and what we do is we open unique investment opportunities up for our investors.

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Primarily our US based investors were a private equity firm that focused focuses on real assets outside the US. We currently have it.

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Portfolio company of ours.

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The Green Coffee Company, which I'll.

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Get to in a moment, but essentially, we're the second largest producer of coffee in the entire country.

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So really, we provide passive investment opportunities to high-net-worth investors.

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We open up interesting markets that they otherwise wouldn't have access to through traditional methods, and we're really just getting started here so.

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We have a portfolio of companies which we brought to the market and we're looking to continue to accelerate over the coming years here, but we have a very active approach in our management.

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We make all the management decisions on behalf of our investors.

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We sit in the board meetings, and we really do everything we can to drive these businesses.

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Howard, so we deploy our capital in businesses that we either started from scratch or that we believe in and then we open those up for investors to participate alongside of.

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Us so you know a lot of people they start with any kind of real estate investment or business investment in their backyard.

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Why did you guys jump into this International Space?

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Sure, sure. So, we really identified Colombia as a market with a tremendous amount of opportunity that was really untapped as far as sophisticated asset managers are concerned, the background of the two partners Cole Shepherd, our founding partner, he has a background in M&A. He's worked throughout the world throughout Asia.

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Throughout Bermuda, and he stumbled upon Metagene in his travels, and he fell in love with it, and saw that it was ripe with opportunity.

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So, we actually started with some real estate investing locally that that switched and eventually evolved into an agriculture project, which is the green coffee company and really it.

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It's just such a fragmented market.

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That has a tremendous amount of growth opportunity, and we just didn't see asset managers really deploying their or developing special businesses, especially in the coffee industry.

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It's highly fragmented with very small farmers making up the majority of the land holders there.

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So, we identified a chance.

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To really scale and sophisticate the business, bring First World practices to a somewhat undeveloped area and use those to grow and scale a business which we have a goal of taking public here in the US actually.

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So, while the assets are all in Colombia primarily, we have US based structures for our investment products, so our investors are actually investing in a US based holding company where all the assets flow up to the parent to them. So that's a way in which we get our guys comfortable with international investing.

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Theoretically it's domestic as far as our investors are concerned, but we wanted to open up other markets, allow real estate investors to get exposure to alternative assets.

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And really, most of our investors are primarily real estate investors and they use our projects as means of diversification into new asset classes and new markets.

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Sure, so you've brought up the green coffee company a couple times here and now let's start with that entity and how that that piece of the puzzle works, because I think it might clarify exactly how this whole process works.

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So, was Green coffee company something that you went through this through your?

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Syndication for the lack of a better way of this.

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Driving it, is it something you acquired?

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Is it something you started from scratch?

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How did how did that hole?

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That piece of it come to be.

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Sure, it was started from scratch from the ground up.

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We actually seed funded the project from a number of real estate investors through somewhat of a syndicated model.

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we did our seed round back in:

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Flow and and and essentially, let's just say kind of.

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Give people the.

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Chance to invest in in agriculture in Colombia or where they otherwise would never have access to because there's no one doing what we're doing.

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Like these types of projects really don't exist, so it was started from the ground up.

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We built it and scaled it over the years.

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doubled our land holdings to:

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Doing so, it was started from scratch.

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We've done it through a series of acquisitions we acquire farms in a geographically centric region.

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It's currently in Celgard.

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It's a town about two to three hours outside of meta gene, and it's all been done from the ground up through acquisitions.

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Sure, so with all that did, did you and.

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Or your partners have some background when it come to came to the coffee business.

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Or is that something that you looked externally for that type of expertise?

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And how did you build that team?

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Sure, that's a great question, so our backgrounds are the following, so my backgrounds in financial services.

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I was a private banker before joining up with Legacy Group and I was a relationship manager for high-net-worth clients and business owners in Miami Beach, initially in Central Jersey but moved down here a few years ago.

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And that's my background.

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Wealth management at my series seven was kind of working with public securities doing some real estate investing myself on a personal level, but not in agriculture specifically.

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Until the green coffee company.

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Cole Shepherd, the founding partner. His background is in M&A and corporate advisory, so he has a heavy background there.

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He's worked with some agricultural companies before starting or founding the GCC, but really primarily background in M&A and accounting and then the other partner, Adam. Jason is a full career as a corporate attorney.

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In the.

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Yes, both of them lived down in Columbia full time in Metagene. I support them from Fort Lauderdale here, but as far as who's spearheading the operations, we hired a 25-year veteran of the agricultural business to be our CEO. That's Boris Lunar, and we've also hired a CFO who is.

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Leonardo Sanchez.

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He was previously working for Fox Latin America, our chief agronomist.

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So, we put in place Marino Restrepo.

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He was the agronomist for Starbucks Colombia, so we really.

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We've hired out a lot of that agriculture talent.

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I would say you know, as far as how we've done this and built it.

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started this whole project in:

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That is correct.

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in Colombia, and that's with:

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In Colombia.

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Yeah well, so does most of the product go to the US then.

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Yeah, we have sales channels in the US, and we also sell domestically in Colombia to the collective groups we have buyers in Asia and Europe we sell to some of the largest trading houses in the world such as superfina and skin.

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But we do have some domestic sales channels here in the USI should mention this as well.

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What we do is we are whole.

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We sell wholesale unroasted coffee, so it's not a brand that you would necessarily see in stores today.

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However, we did recently add the product to Amazon for our investors and followers to it.

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Joy, but we sell domestically in Colombia internationally to the US and other parts of the world as well.

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But as we look.

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To go vertical in the coming years here, we intend on either acquiring or building out roasting channels in the United States so we can go further down the value chain.

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Make more margin per pound and you know.

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Create more long-term value for ourselves and our investors, sure.

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And some of the people that listen to the show they actually are into land investing, you know, buy sell land raw land, but that's primarily in the United States.

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What differences have you found dealing with land investments like this in Colombia?

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Sure, well as I kind of mentioned earlier, the market is incredibly fragmented there, and so it's like smaller landholding families that have owned these farms for generations.

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It's not an inherently liquid market.

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You have to literally go and negotiate with the families in person, out in the mountains.

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In Colombia it's very different and.

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Higher barriers to entry.

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I would say you can't, just you can't just kind of up and go and kind of look on animals and start identifying properties that are available.

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It it's really off market and I would say that's kind of the primary differentiating factor and then a lot of it's like in person negotiations.

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And and finding opportunities, we have conversations for years before they.

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They end up in acquisitions in many cases.

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Sure, so is there like a lot of different processes regarding any kind of governmental agency entities and stuff you have to deal with down there too?

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Or is it fairly similar?

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It's similar in certain regards.

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I mean there.

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Do you hold title to the property?

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I mean it's similar in that sense, a lot of it's done through attorneys and notaries people that handle the transactions.

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You could work with a broker, but you know a lot of these transactions are direct buyer to seller, at least in our case, that's how we were able to.

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Buy it distressed pricing really add value somewhat value.

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Add investing is what we do with off market deals I would say it's similar in certain regards in terms of holding title, but the process is different for sure, and the documents are all in Spanish and other things, so you need to really have the team behind you.

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It's able to execute, make sure everything is done in a clean, professional manner and that all the assets are protected and as mentioned that they all actually flow up to our parent company in EU.

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S so we have operating subsidiaries in Colombia, one of which holds title to the land, the other does the operation.

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Options and then our holding company owns both of those, so we indirectly hold title everything here in the US, so it's a bit different in that structure. I would say than what you'd find here with direct land purchases.

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Right?

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OK, well you know with all of that it started with this with the coffee company you're adding value by converting this additional raw land into coffee, producing like it.

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It becomes a business at the.

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That point you said you're adding value, how?

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How is the land increasing in value then?

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Like can you give us a gauge of how?

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Much more valuable it becomes when you're when you're converting it to a coffee producing land like this.

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Sure, sure, so I should mention that the farms that we acquire are generally already coffee farms.

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And then what we do is we improve on them.

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Right?

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We plant additional trees; we make the existing trees.

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Here we have technologies that monitor the soil that monitor the delight the rain, and we really increase the production levels on the land, which increases revenue.

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And as you know, creates more profits.

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So as the land becomes more bears, more coffee cherries at a higher production rate.

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The value of it inherently increases and then kind of beyond that.

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Coffee is an interesting space or agriculture.

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Because your land value is somewhat tide to the commodity itself, so we've seen a massive surge in the price of coffee over the last 12 months.

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I mean it's hitting multi year highs, almost 250 a pound. As of this recording and so people in earlier rounds we've acquired all the existing all these farms.

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And then the commodity in which it's produced on the farms has gone up exponentially.

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That's also assisted us, but that's not so much in the value outside.

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But that goes on.

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It's kind of bolted on top of what we've done on an operational level it.

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It's kind of a what I would say are the main points there.

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OK, so the coffee was where you started.

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What have you been branching off into you?

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You mentioned you have a parent company, but what other type of investments does the does your company do?

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Sure, so we look for innovative investment opportunities in Latin America as of now.

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Specifically in Colombia we have an investment in a company called Polygonous.

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It's a legacy group portfolio company. They do 3D art and design, e-learning. They're heavily involved in the metaverse.

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Space creating characters and such for video games and digital art in certain productions like digital Video Productions, the company has grown massively.

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We made a seated investment into them several years ago, which has grown multiples of that, so we own an equity position in POLYGONOUS at legacy.

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Group, it's not one we for which we've opened up to our investors as of yet.

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We hope to do so at some point in the future.

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Depending on their capital needs and then we're actively diligence ING disruptive technology companies looking at a couple of fintech type deals and different thing.

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Things and then of course what's next? I mean, we want to continue to expand like the green coffee company do more acquisitions, increase the landholdings and and go vertical in EU?

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S through the roasters as I mentioned, but couple other things in the hopper that we're working on.

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And really all specifically around Latin America.

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And metagene more specifically.

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So Polygonous has have they worked on anything we would recognize.

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It's really more focused on Latin American productions, so stuff that's going on in in Mexico, Colombia, so nothing that I could really point to.

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But when your listeners or watchers go to our website, you can find more on polygonous there there's a link to theirs and you can look at some other footage and things that they've.

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Yeah, sure.

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Done, you can also follow them or us.

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On social, but I wouldn't say anything that everyone would broadly know, but definitely a growing company.

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Sure, so just a reminder everybody the website islegacy-group.ca.

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So, then you can learn a little bit more about what Josh is talking about here, including the links to some of these businesses that they invest in.

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So, one of the things on your website that that you mention is impact investing.

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What do you mean by that that phrase?

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Sure, essentially doing right by people and doing right by the environment.

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And we do that with our everyday business practices.

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So first and foremost, formal employment in the region.

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It's something that's really nonexistent in the coffee sector in Colombo.

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Yeah, people are generally paid cash if they're injured, so be it.

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We've implemented first world employment methods.

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We provide full benefits, health care pensions.

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We really take care of the people in the communities in which we operate, and it's something you could tell when you go there in person.

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You could see how excited the.

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People are to go to work and we they're all wearing formal clothing.

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All the proper stuff.

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So really doing right by the people in the communities in which we operate.

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That's the main thing and also the environmental.

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Component we use the limited amount of pesticides in our plant.

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In our processing.

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We spray at the base of the trees in order to reduce the amount that that's put out there.

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We reduced water used in terms of our operations.

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We are using a biodegradable old planting.

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Mechanism through Ella pot.

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It's a technology that makes like a smaller biodegradable pod to plant a coffee tree instead of a plastic bag.

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So, we're moving a lot of waste in the environment there.

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Yeah, I'd say those are kind of like the main things and it's important because it's the right thing to do and also because it's rewarded in the public and private markets by investors.

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So, it's something that we're passionate about making a difference, but also the markets receive these types of companies in better light.

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When you make an impact.

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Yeah, you, you mentioned earlier too that this is kind of a well.

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It's an alternative or a way for real estate investor.

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To diversify their portfolio investments a bit, I think there's a lot of we don't know what we don't know in this in this world.

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With that being said, if somebody was going to pursue or look at alternative forms of investing like this, are there questions that they should ask to ensure that it's a good fit?

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And they're dealing with a reputable company.

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Sure, I would always ask someone that's looking at alternative investments.

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I would tell them to ask about their track.

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Record the team, the management team that's been hired.

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What is the exit strategy you know you want to make sure that the asset manager has a clearly articulated plan on how they're going to.

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Take your investment from today until an exit and hopefully a successful exit.

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So really taking a deep dive into the materials you would generally receive a private placement memorandum or an offering memo.

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So, kind of going into that in detail so you understand the transaction in detail 'cause there are some more moving parts that that.

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You would want to review, so I'd say kind of just.

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Asking every question on your mind during your diligence calls you know, usually what we do is you know someone comes into our system.

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Either they visit our website, they subscribe to our newsletter, and we give them regular educational content, but if they're interested in an opportunity, we would connect for an introductory call, tell them more about the company with certain things that we covered.

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Today and maybe a little bit deeper into the offering at the time, I get to know the clients as well.

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That's really important to us.

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Is really understanding our clients needs because not every project is a fit for every person.

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So, everything has its own holding period.

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Certain things are more income, others are more growth related.

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Projects like ours are both so kind of understanding the needs and how it would fit into your overall portfolio.

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You also want to look at like, well, what are my holdings now and how can this complement it?

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And any, besides diversifying into alternatives?

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Different opportunities in the alternative investment space, I think would give people the greatest likelihood of success and really alternative investments provide uncorrelated returns, something that I'm very passionate about and think should be part of everyone portfolio, especially with my background in public markets.

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I I'm seeing a lot of opportunities that don't exist.

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In public markets, outsized returns that can really change people lives in ways in which an index fund or residential property might not.

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Right?

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So, what's next?

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What's next for your company that you're probably looking at your next acquisition or next business?

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What, what, what's?

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Next for you.

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public in the target year of:

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That's really what we want to do.

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We're also dual tracking it for potential sale, so really scaling up the business, adding you know more land holdings, more real assets into the equation, increasing revenue over the next number of years, and then exiting that business for our investors.

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And then.

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As I mentioned, you know, kind of.

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We're looking for new opportunities every day.

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We're very meticulous and careful, and which will in the in the projects in which we pick and which we put.

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Our money behind.

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But we really want to find new opportunities for our investors that they could deploy capital into emerging markets and feel comfortable working with American professionals along the way.

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Sure, well this has been eye opening, Josh, I appreciate you giving us this this amount of time and and trying to explain this to us.

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This is a pretty new topic for everybody.

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Again, I want to remind everybody.

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Legacy Dash, Group dot CEO and you can connect with Josh and his team and see what they're up to.

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There's quite a bit of content on their website, so definitely check.

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About Josh, before I let you go, is there a question you wished I would have asked you here today?

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Who is our target?

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Who are our investors, right?

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Like who are these guys that are piercing capital into legacy groups projects?

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So, I would say almost entirely, American investors.

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If we open, we're only open for accredited investors, so high net worth individuals place capital.

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With us, a lot of the guys that have invested in our past round that we just closed the Series B round were repeat investors from our earlier rounds.

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But I would say an overwhelming amount of people in our projects are real estate investors, guys that own multifamily they own single family homes.

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They have apartment complexes.

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Trailer parks like guys like this.

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They love our project because a lot of them are heavy involved in real estate.

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'cause as you know, it's a.

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It's a great business to be.

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In of course.

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But I would say almost all of our guys are neat.

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That category summer high income earners from other.

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There's, but it's pretty interesting to me, especially coming on this show. I see a lot of parallels and maybe your audience here, and people that are involved, so I would love to stay connected with the with your group and as you mentioned, you could find us on the on our website legacy-group.co.couldalsoemail.us.investorrelations@legacy-group.co.

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Or find us on social media and we'd be happy to stay connected.

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Well Josh, this was great.

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I hope you'll consider coming back again sometime.

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This is especially as you're growing this.

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This is just a.

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Fascinating story of going from essentially starting this up to being the now the number 3 coffee producer in Colombia, #2.

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Yeah #2 to.

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Number two now.

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OK, right?

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While we were recording, they made they became number 2 and and they're gunning for number one, so this is this is awesome.

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Thank you again.

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Yeah, thanks Jack.

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Have a good day.

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