No doubt … Canada knows the agriculture industry. It’s one of the world’s largest producers of grain, durum wheat and canola, and home to more than 4 million cows and roughly 26 million pigs, making the nation one of the world’s largest exporters of beef and pork. Recent growth in the middle classes of markets such as India and China however, has increasingly put pressure on the world’s food supplies, and increased global demand for meat, dairy and cereal products in particular. That spells opportunity for many Canadian companies.
Avrio Capital (Avrio) is a Canadian venture capital fund, focused on helping Canadian companies develop sustainable solutions to the world’s growing agriculture demands. Initially a division of Farm Credit Canada (FCC), Avrio became an independent venture capital fund in 2006.
“The world needs more food in the immediate and long run,” says Jim Taylor, Partner with Avrio. “There are two ways to produce more – heavy science to high-producing parts of the world, or low tech solutions to emerging markets.” For example, in Canada we focus more on developing new technologies and finding areas where we can increase our growth strategy, whereas in developing nations there is a bigger focus on improving growing conditions.
Avrio Capital has specific guidelines for the companies it chooses to invest in. It considers not only the stage of the business, but also the region and community it works in, industry and overall benefits to the sector. With a focus on business growth, they work primarily with small or medium-sized companies.
And companies that receive funding from Avrio get more than financing; they also get an opportunity to refine their business. “We invest in companies we believe in and that we want to see grow,” says Taylor. “To do this we offer access to an advisory board of experts in the industry, including support for strategic planning and branding.”
EDC has been an investor with Avrio since 2006, and also helps connects Canadian companies to potential buyers around the world.
“EDC can help take these small and medium businesses to the next level after an Avrio investment,” says Rob Sturgeon, EDC Senior Investment Manager. “We want to help these smaller businesses to succeed, and help drive Canadian innovation as much as possible.”
“When Avrio started, there was really limited competition,” says Taylor. “Now there are more companies to invest with, and more opportunities to invest in, as the demand for agricultural R&D grows,” adds Taylor. “The bottom line is that most Canadian agriculture business will need to pursue foreign markets to grow their business. Certainly, all of our clients ultimately have an export goal.”
As a large nation with a small population, Canada produces much more than it consumes. As a result, agriculture-related goods and services made up 16 per cent of Canada’s total exports last year, but is expected to grow in tandem with new market demands.
Manitoba Harvest: Reaping the benefits of Avrio support
One of these clients is Manitoba Harvest, a hemp food manufacturer out of Winnipeg, Manitoba. They are a portfolio company in Avrio’s first fund, and have since received follow-on investment rounds from Avrio. “This support has been instrumental to our growth,” said Mike Fata, CEO of Manitoba Harvest, “we have seen a 500 per cent increase in our business since the initial investment.”
For example, they were able to expand their business with key distributers, double the capacity of their Winnipeg facility and develop a new branding strategy. Their products can now be found in warehouses across Canada and the United States including Whole-Foods Market, Loblaws, Safeway, and Costco.
“Right now we are really focused on the US as our biggest opportunity market” says Fata, “but there has been a lot of interest from Asian markets, primarily in our hemp oil. So who knows what the future holds.”