Agriculture investing specialist firm Avrio Capital is looking at raising a $125-million fund, its biggest yet, to back more companies in the food production businesses.
Calgary-based Avrio's three late-stage venture capital funds so far have been in the $75-million to $100-million range, with investors including Alberta Investment Management Co., Export Development Canada and Farm Credit Canada. Now, with agriculture more of a hot spot in the venture capital markets, there is enough interest to bump that up.
When the firm was getting going, the idea of a late-stage venture fund focused on the agriculture business in Canada didn't get much respect. The team at Avrio raised money and started investing in everything in the food-production chain, from making the farmer in the field more productive to manufacturing better snacks. Now the firm is getting a push from investors to raise even more money to do more deals, and co-investing with famous names in the VC industry such as Kleiner Perkins Caufield & Byers, probably best known as an early backer of Google Inc. Avrio and Kleiner together back VoloAgri Group Inc., a specialist in plant breeding.
When the principals behind Avrio first started talking a decade ago about launching an agriculture fund, they would go to investment conferences and "people would laugh at us," said Jim Taylor, one of the firm's co-founders. "No word of a lie: Giggle and smile and say 'Good luck with that.' It didn't take too long before everyone was trying to get on the bus."
The firm has now done about 65 transactions. There are companies ranging from baby-food makers to organic milk producers to makers of technology to vary fertilizer application depending on what each acre of a field needs.
The most recent deal was the sale of Wolf Trax, a Winnipeg-based maker of micronutrient coatings for fertilizer that enable the chemicals to be targeted at specific areas of a field.
New York Stock Exchange-listed Compass Minerals International Inc. said last week it is buying Wolf Trax for $85-million (U.S.) in cash. There were more than half a dozen bids in the process, which was run by AltaCorp Capital.
Wolf Trax is part of the focus Avrio has on technologies that can make land more productive – such as farming techniques, nutrition and monitoring what happens in the field.
"We think we identified this theme early," Mr. Taylor said. "This is a big exit and we're going to see another one soon."
There are many more opportunities in western Canada, the Avrio principals said. However, opportunities such as VoloAgri are coming from further afield. VoloAgri is based in the San Francisco Bay area – not far from Kleiner Perkins.
"Some of the other venture capital funds around the planet are starting to take notice," said Avrio co-founder Aki Georgacacos. "We're co-invested with Kleiner Perkins on a deal. They're coming to us now saying, 'we are looking at this deal, what do you guys think?' It validates the story."